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September 4, 2019
Guangjie Jin
Chief Executive Officer
Q&K International Group Limited
Room 1607, Building A
No.596 Middle Longhua Road
Xuhui District, Shanghai, 200032
People's Republic of China
Re: Q&K International Group Limited
Amendment No. 1 to Draft Registration Statement on Form F-1
Submitted August 9, 2019
CIK No. 0001769256
Dear Mr. Jin:
We have reviewed your amended draft registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Amendment No. 1 to Confidential Form F-1
Prospectus Summary, page 1
1. We note your response to comment 1 of our letter and the revised
disclosure that you
typically pay the monthly interest on the rental installment loans and
'provide guarantee or
other form of credit enhancement.' We further note the disclosure on
page 19 that during
2018 substantially all of your leases were terminated during the rental
period covered by
the prepayment, including 34.4% terminated within the applicable lock-in
period. Please
revise to quantify the portion of your leases that were terminated
during the rental period
covered by the prepayment and clarify what you mean by 'other form of
credit
Guangjie Jin
FirstName LastNameGuangjie Jin
Q&K International Group Limited
Comapany 4, 2019
September NameQ&K International Group Limited
September 4, 2019 Page 2
Page 2
FirstName LastName
enhancement.' Please revise to state, if true, that you are
responsible for the remainder of
the loan payment if a renter terminates at any point during the
prepayment period,
describe any differences if the renter terminates during the lock-in
period, clarify when the
remainder payment is due to the financial institution and quantify the
average security
deposit.
2. We note your response to comment 2 of our letter. Please tell us (i)
the percentage of
tenants that remain in their rental units through the end of their
lock-in period and (ii) the
percentage of tenants that remain in their rental units through the
end of their lease term.
You state on page 2 that tenants, on average, stay 8.5 months, and you
further state that
34.4% of your leases were terminated before the expiration of the
lock-in period in 2018.
Please explain to us this potential discrepancy as 8.5 months appears
to be significantly
less than the lock-in period.
3. We note your disclosure on page 3 that rental payment of 63.1% of the
rental units offered
on our platform had been facilitated by financing solutions. Please
clarify whether renters
are ever obligated to enter into these rental installment loans in
order to rent your units.
Non-GAAP Financial Measure, page 14
4. We have reviewed your response to comment 3. We continue to be unclear
how
you determined it was appropriate to adjust for pre-operation
expenses, which appear to
be normal, recurring cash operating expenses necessary to operate your
business, when
arriving at Adjusted EBITDA. Please revise future filings to remove
this adjustment from
your reconciliation. Refer to Question 100.01 of our Compliance &
Disclosure
Interpretations for Non-GAAP Financial Measures.
Summary Operating Data, page 15
5. We note your response to comment 4. We continue to be unclear how you
determined
that presenting gross rental value and rental spread margin before any
discount for rental
prepayments accurately represents the economics of your leasing
transactions. Please
revise your filing to present such metrics net of rental prepayment
discounts.
Risk Factors
Our legal right to lease certain rental apartments..., page 26
6. We note your response to comment 12 of our letter and the revised
disclosure that,
according to your counsel, it is 'extremely rare' for a party to be
fined for failure to register
lease agreements. Please revise to remove this mitigating statement.
Business, page 122
7. We note your revised tabular disclosure regarding your leases with
landlords assumes that
landlords do not terminate the lease upon the expiry of the landlord
lock-in period. Please
revise to provide the percentage of your leases with landlords that
are terminated upon the
Guangjie Jin
Q&K International Group Limited
September 4, 2019
Page 3
expiry of the landlord lock-in period.
8. We note your disclosure on page 140 that 85.6% of your leases as of
September 30, 2018
had a lock-in period that exceeds 12 months. Please revise to provide the
average lock-in
period for your leases. We further note the revised disclosure on page
140 that
tenants of 21.5% of these leases are applying for a rental installment
loan. Please revise to
clarify whether tenants of 21.5% of all of your leases are applying for a
rental installment
loan and more specifically describe how the rental installment loan
impacts the lock-in
period of a lease.
9. We note your response to comment 9 of our letter. We continue to believe
that you
should disclose the average effective rent per month taking into account
tenant
concessions. Please revise accordingly.
Consolidated Financial Statements
9. Losses per share, page F-31
10. We have reviewed your response to comment 19 and your disclosure in Note
7. Please
tell us how you determined it was appropriate to reflect the
de-recognition of the opening
balance of Series C contingent earn-out liabilities of RMB44,856,000 as
an adjustment to
the numerator. Within your response, please address how you determined
this adjustment
has a continuing impact. Reference is made to Article 11 of Regulation
S-X.
You may contact Eric McPhee at 202-551-3693 or Jennifer Monick at
202-551-3295 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Stacie Gorman at 202-551-3585 or Jennifer Gowetski at 202-551-3401 with
any other
questions.
Sincerely,
FirstName LastNameGuangjie Jin Division of
Corporation Finance
Office of Real
Estate and
Comapany NameQ&K International Group Limited
Commodities
September 4, 2019 Page 3
cc: Shuang Zhao, Esq.
FirstName LastName