How to read & analyse factsheets?

  • Contributor

    Hello! Many of us here don't seem to have expertise in evaluating a company financials in factsheets of p2p loans. does it make sense to learn them? can any one who is an expert in accounting explain how to do it? any help would be greatly appreciated.

  • @jonhan an experienced accountant will tell you that sometimes the numbers may be an accurate indicator of the company's financial health, and sometimes it's presented in such a way that may mislead investor's decision, rendering it useless.

    That's why we need a Due D team which the P2P platform provides, they are the professionals and we should leave it to them. We should rely on them.

    That's a joke btw, we should slowly learn how to pick notes and limit our risk exposure. But let's be realistic, investors are here only to make money, not doing homework for the Due D team. That's one of the value propositions P2P platforms provide ain't it?

    A more practical approach for me at least, is to gather all the data (factsheet especially) of the defaulted notes and analyze them, hopefully we are able to find a pattern that may help our decision making better. But unfortunately, FS doesn't allow this type of critical analysis behaviour, even though it doesn't expose the identity, names of the company or what not, it infringes their company policy apparently...

    In short, my point here is that one of the ways we can learn is by analyzing past mistakes or defaulted notes. Those who do not learn history are doomed to repeat it.

    Also, "He who understands it, earns it; he who doesn't, pays it.” - Albert Einstein

  • @ng-seng-he We paid FS for due diligent, thus we should trust FS professionalism, if FS failed exercise duty of care, investors could resort to court action for remedy.

  • Contributor


    No i see them as my first approver. Even if it passes their criteria, I must still asssess and approve before I go into the investment.

    The amount that you paid them are mostly on the administrative fees.

    The final DD lies with the investors

  • Contributor

    I think in FS articles, they did share basic financial ratios that investors should know when assess the loan

  • Contributor

    I am sitting in between @Ng-Seng-He and @Bendahara on this. FS does the first layer of due diligence, but an investor should always perform their own due diligence too.

    Otherwise is as fool as those investors trusting blindly their financial advisors’ stock picks, or investment bank research reports.

    That said, the fact that FS (and many other P2P platforms) entice investors to set-up their Auto-bot and live worry-free, should make them extra careful when performing their analysis and giving the green light to borrowers.

  • @antoniomc27 How Investor do due diligent? Do investor know borrowers' name? Are investors equip with knowledge and experiences to do due diligent? Do investors take long hours for site visits within the few hours of announcements? Sorry, many questions.

  • @bendahara I beg your pardon, how investors perform due diligent?

  • Contributor

    @horkh the information in the factsheet (if we assume it is true in the first place, which i do), is exhaustive enough to perform an acceptable level of due diligence.

    If we want to be picky with words, then it is true that factsheet reading and appraisal is not an accurate definition of due diligence. But in any case, if done properly it is a very effective “second layer” for Go/No-go into the loan offer.

  • @antoniomc27 Thanks for your kind clarifications, assumed that :

    1. Factsheet is true and
    2. FS has done due diligent properly,
      investors should rely on FS to invest, if the note is riskier, rate would be higher to offset risks.
      Thus, investors (who have no time to read factsheets, not well-verse in English or with no experience in appraising the factsheets) should rely on due diligent done by FS, coz if FS think borrowers have no ability to repay loan at the time of borrowing, FS should not arrange for financing in the first place.
      Therefore, my view: Most important is FS discharge his duty of care diligently, "second layer" to decide whether go / no go sometimes just like throwing coin.

  • @horkh there are a few due d method that i use to assess whether i should be investing in a certain note.

    1. anything beyond a C rating (10.91% PD and above), I would opt out into investing in the note.
    2. assess the profit of the company, if the interest itself it more than 50% of the profit that they make, i think it's reasonable to opt out. also, opt out if there is any negative profits on their audited accounts, opt out if there is any.
    3. see if they have any litigation case (past or ongoing), if there is, don't invest in it.

    it takes about 2 minutes to assess the website and look through these information...

  • @ng-seng-he I wonder if you can find a way to anonymously discuss trends and patterns from defaulted fact sheets, would that work? @vamsi7 please advise.

    Like if you say Default Loan ID A, B, C and D all have personal guarantors who live in HDB but have landed property as assets. It's a pattern but it's not identifying specific loans or specific borrowers?

  • @horkh A year ago when I was working at FS, the rejection rate was very high, I believe around 80% of loan applications were rejected at the due diligence stage. But it is ultimately all about trust here. No amount of proper due diligence can account for unforeseen circumstances. So to me, it's equal weightage on due diligence but also on recovery processes.

  • @sbrowning unfortunately we are restricted to the information that FS provides in the factsheet, and not even those factsheet can be published here as it might "infringe" the issuer's privacy. I have compiled a spreadsheet containing the information of defaulters for FSMY but am unable to share it here.

    The objective of this is just to find a pattern within those defaulters and present them to investors so they may choose to opt out from these notes which possess similar patterns in the future.

  • Contributor

    thanks everyone for your views. i agree that personal due diligence is important, hence i make this post. i dont have a accounting background, so i dont know what the numbers on the factsheet mean (save a few). i dont wish to start a discussion around the factsheet of a particular loan which defaulted, but more of a general understanding. surely that is allowed on the forum.
    i do due diligence, but not on the ability of the company to pay back, but on the borrower. some people do funny things to escape paying back a loan even if they can. if i find any red flags in the director/pg background, then i don't invest.
    in my opinion, if there are patterns to find, the platform would have found them already.
    but i do agree that a second due diligence is helpful.

  • @ng-seng-he Thanks for your kind info, what you done was analyse based on existing known financial data, not due diligent.

    1. Sometimes, beyond C grade might paid off, above C grade might default, in business world, survival based on a lot of factors.
    2. Normally businessmen report profits for tax purposes only and keep 2 or 3 set of accounts, thus do not place too much trust on financial reports.
    3. As long as a person afford, he can sue anybody in this world, thus sometime being sued mean that they have dispute with the other parties, it does not necessary mean the borrowers are bad paymasters.
      Nevertheless, everybody feel free to interpret what they see freely, you have every right to do so, thanks for sharing.

  • @sbrowning Thanks for sharing, strictly from FS point of view, I suggest FS to loosen rejection rate to achieve a default rate of around 5%.
    As a result, FS could earn more from both borrowers and investors respectively & bear no legal obligation to defaults.

  • @horkh Appreciate your input, but tell me, what else can you do other than analyzing the existing known financial data provided to us? What other due diligence can you do when there is literally no other data that is provided to us?

    On another note, if FS loosens their rejection rate any further, they would end up like FZ. Investors will lose faith when default rate goes up, and remember that when investors leave, they don't come back. I feel FS has done an excellent job in balancing the approval rate and the return to investors. High volume of notes with adequate return, no one else in the current market can come close to what FS is doing.

  • Contributor

    My god @horkh, if FS loosens the standards to have a 5% default rate, I guarantee that me and hundreds of other investors would pull out their funds and never look back.

    Remember that after service fees and income taxes, and with the current ~1% default rate, the net return is already not so attractive vs. EPF, FD, ASB, and the like.

  • @ng-seng-he
    I don't do due diligent, coz borrowers won't open book to me, I have qualifications, knowledges and experiences, but I don't have mean and time to audit the borrowers. Thus, I am not sure whether the financial data that I read on and off is genuine, but don't worry, malaysia boleh.
    For me, I just try to invest less on individual notes lately, not as gung ho as last time, in order to diversify to as many borrowers as possible, as a results, I will carry some balances in unutilised fund.
    For financial data, if I have time, I take a look then decide whether to invest more/less by gut feelings.

    "Don't worry, 1) FS is currently creative in showing low default rate by using denominator as total paid off notes + outstanding notes in order to artificially lower the rate instead of outstanding notes. 2) Besides, there is a Fz write off golden industrial standard. 3) There are more and more p2p platforms, FS should not build up an 80% rejection rate image else drive away customers, uh sorry, I mean borrowers. 4) I trust FS will slowly loosen its rejection rate so investors tolerance limit will slowly increase, I believe everybody knows the boiling fogs theory, so do FS who is run by professional." Note: sentences within quote marks are what I see strictly from FS point of views, this is not my stand.

  • @antoniomc27 I concurred with you, but strictly from FS point of view, FS will slowly increase the temperate to kill fogs, don't worry, there are still many fogs in the pond, or at ponds next to our beloved country.

  • Contributor

    @horkh at what interest rate return would you be comfortable investing with p2p firms like FS or FZ?

  • For FS, I am investing in all range of interest rates. For Fz, I am withdrawing.

  • @horkh can share more details why?

  • Contributor

    Hi, welcome @soven123 !
    You seem to be late to the (Fundaztic) party!
    Head here for more info on their shenanigans:

  • @soven123 Loss of confidence.


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