Tech: China-based Fintech Chain flags slowdown as coronavirus fears take a toll

For payments transactions company Fintech Chain (ASX:FTC), a major virus outbreak isn’t good for business.

The Shenzhen-headquartered company provided a trading update today where it outlined downside risks to current revenue projections as China’s economy drags to a halt.

Fintech Chain shares fell by 6.3 per cent in morning trade to 8.9c.

Fintech Chain said that while some local staff had returned to the office, the majority of its employees were still working remotely from home.

The company’s core product is T-Linx, a point-of-sale payment system that’s linked directly to customer bank accounts. FTC has 400 banks within China as clients, and is indirectly serving over 4 million merchants.

However, with the vast majority of Chinese citizens still in lockdown, the company provided a succinct appraisal of current business conditions on the ground this morning.

“During the virus containment period, China’s overall consumer transaction volume has declined, which will impact the company’s revenue,” Fintech Chain said.

The company added that short-term cashflow shouldn’t face too many disruptions as existing debtor payments were being received.

For now, the company is focusing its efforts on customer support for banking transaction loads, amid increased demand for online shopping as people stay away from public areas.

The company hopes that shift in consumer behaviour will help offset some of the negative fallout.

However, due to the uncertainty around how long it will take authorities to control the outbreak, cash-flow pressures could become more evident in the months ahead.

Fintech Chain said it expected to have sufficient financial resources to cover any cash deficit that arose. The company’s 4C filing for the December quarter showed it had cash on hand of 5.926m Chinese yuan ($1.244m).