Seeking Alpha • Mar 18

Lufax: A 38% Yield Put Strategy Based On $4.63 Billion In Excess Capital

Summary Lufax trades at just 0.22x tangible book, with $9.58B TBV and $8.66B in net cash and investments, far exceeding its market cap. SBO is downsizing, with a $1.8B loan loss wall, far more than actual charge-offs; PACF now drives growth with stable 1.1%–1.3% NPLs. LU holds $4.63B in excess capital, with Ping An’s 74% stake providing governance, funding advantages, and a credible floor to downside risk. Extreme Stress Test: Even under a worst 10% charge-off scenario, total equity impairment would be capped at just $820M—a mere 8.5% hit to TBV. The downside is structurally floored. I am selling fully cash-secured $2.00 puts (Jan 2027), targeting a 38% annualized yield; assignment implies acquiring LU at just 14% of TBV. Read the full article on Seeking Alpha

Seeking Alpha • Apr 25

Lufax Holding: Well Poised For A New Economic Era Proposed By China

Summary China’s economic pivot away from the US dollar and towards the yuan positions, Lufax Holdings to benefit from increased international yuan trade and potential Chinese business dominance. Lufax Holdings is undervalued, trading at a 75% discount to equity, presenting a significant margin of safety for investors despite current financial losses. Despite risks like potential Western sanctions, current tariffs and currency volatility, Lufax Holdings is a buy due to its deep value and strategic positioning within China’s economic plans. Lufax should stop paying dividends and instead buy back its own undervalued shares to increase market capital and benefit shareholders. Read the full article on Seeking Alpha

Seeking Alpha • Dec 24

Lufax: Stimulus In China, Quarterly Improvements, And Dirt Cheap

Summary Lufax is well-positioned to benefit from China's recent stimulus policies, with significant business connections and expertise in offering business loans. The company's recent quarterly report shows improved delinquency rates, a substantial increase in new loans, and a 24.1% rise in cumulative borrowers. Despite a decrease in net income, LU's solid balance sheet and undervaluation suggest significant room for stock price improvement, with a target price of $12 per ADS. Potential risks include regulatory challenges and lower demand due to the company's operations and asset locations in China. Read the full article on Seeking Alpha

Analysis Article • Oct 22

There's No Escaping Lufax Holding Ltd's (NYSE:LU) Muted Revenues Despite A 33% Share Price Rise

Lufax Holding Ltd ( NYSE:LU ) shareholders would be excited to see that the share price has had a great month, posting...

Seeking Alpha • Sep 10

Lufax: Look Past Q2 Performance And Focus On Strategic Pivot

Summary Lufax's Q2 net loss and interim dividend omission were disappointing, but LU is expected to resume dividend payouts and deliver positive earnings in fiscal 2025. LU's strategic pivot towards the 100% guarantee business model and consumer finance loans have yielded decent results, considering the take rate improvement and consumer finance loans' strong growth. My Buy rating for Lufax remains intact, taking into account the potential turnaround next year and the significant progress made with its strategic pivot. Read the full article on Seeking Alpha

Seeking Alpha • Jun 06

Lufax Stock: Watch Future Dividends And Loan Metrics

Summary Lufax is an attractive dividend play, considering its high-single-digit percentage consensus forward FY 2025/26 dividend yields. Lufax's loan-related metrics like loan mix and take rate for the most recent quarter were pretty good, and this bodes well for Lufax's future financial performance. I leave my Buy rating for LU stock unchanged after evaluating the company's latest quarterly loan metrics and its dividend outlook. Read the full article on Seeking Alpha

Analysis Article • Mar 30

Lufax Holding Ltd (NYSE:LU) Analysts Just Slashed This Year's Estimates

Market forces rained on the parade of Lufax Holding Ltd ( NYSE:LU ) shareholders today, when the analysts downgraded...

Seeking Alpha • Mar 22

Lufax: Massive Special Dividend Overshadows Below-Expectations Results (Rating Upgrade)

Summary Lufax Holding declared a substantial special dividend of $2.42 per ADS on the day of its results announcement, which translated into a one-off dividend yield of 49.3%. LU's recent fourth-quarter results were below the market's expectations, but the company's loan mix has become more favorable with an increase in contribution from consumer finance. I upgrade my rating for Lufax to a Buy, considering its massive special dividend and the positive read-through relating to the loan mix from its latest results announcement. Read the full article on Seeking Alpha

Seeking Alpha • Jan 29

Lufax: Peer Comparison Offers Mixed Read-Throughs

Summary Lufax posted relatively weaker user growth numbers as compared to the company's key peers in December last year and the early part of this year. The market already expects LU's top line to contract in FY 2024, and Lufax is now trading at a discount to its peers on metrics like P/E and P/S. I retain a Hold rating for Lufax after taking into account the results of my peer comparison exercise. Read the full article on Seeking Alpha

Analysis Article • Nov 17

Lufax Holding Ltd (NYSE:LU) Analysts Just Cut Their EPS Forecasts Substantially

Market forces rained on the parade of Lufax Holding Ltd ( NYSE:LU ) shareholders today, when the analysts downgraded...

Seeking Alpha • Nov 14

Lufax Takes On More Risk, Makes Hong Kong Acquisition, As Its Lending Shrivels

Summary Lufax’s new loan originations fell 59% in the third quarter, as creditworthy customers became harder to find in China’s slowing economy. The online lender announced it will purchase a Hong Kong-based virtual bank from sister company OneConnect for HK$933 million, in a move to diversify beyond Mainland China. Lufax shares fell nearly 5% in after-market trading in New York after the release of its latest quarterly report late on Monday. Read the full article on Seeking Alpha

Analysis Article • Aug 28

Lufax Holding's (NYSE:LU) Dividend Will Be Reduced To CN¥0.0312

Lufax Holding Ltd's ( NYSE:LU ) dividend is being reduced from last year's payment covering the same period to...

Seeking Alpha • Aug 24

Lufax: Both Results And Outlook Were Disappointing

Summary The Q2 2023 top line and EBIT for LU came in below the market's consensus estimates. Lufax's near-term outlook is poor, considering the management's expectations of a significant contraction in new loans for 2H 2023. Lufax's shares are still rated as a Hold, rather than a Sell, as LU's valuations are inexpensive. Read the full article on Seeking Alpha

Analysis Article • Aug 24

The Consensus EPS Estimates For Lufax Holding Ltd (NYSE:LU) Just Fell Dramatically

One thing we could say about the analysts on Lufax Holding Ltd ( NYSE:LU ) - they aren't optimistic, having just made a...

Seeking Alpha • Jul 10

Lufax: Likely Undervalued, Eyeing Support Ahead Of Q2 Results

Summary China's reopening has seen a decline in the technology sector, with cyclical financials and tech companies suffering from regulatory crackdowns and a soft post-COVID reopening. Lufax Holding, a fintech company, is seen as an opportunity due to its low price-to-book ratio; it is a leading technology-empowered personal financial services platform in China. Despite a tough economic period, Lufax is considered undervalued and offers potential for investors, although prudent risk management is advised due to China's uncertain economic situation. I outline key price levels on the chart to monitor its Q2 results in August. Read the full article on Seeking Alpha

Seeking Alpha • Feb 11

Fintech Lufax Seeks Dual Listing As Pandemic Hits Profits

Summary Online loans facilitator Lufax posted a 31% drop in profits in the first nine months of last year and expects a loss in the last quarter as the pandemic hurt its small and micro clients. To reduce risks, Lufax has scaled back lending activities using its own capital. Once the stock makes its Hong Kong debut, the market will be looking to see if investors are willing to increase its value. Ping An-backed Lufax has applied to have its shares traded in Hong Kong as well as the U.S., following in the footsteps of dual-listed fintech firms OneConnect and 360 DigiTech. In October 2020, two Chinese fintech stars were poised for blockbuster IPOs. Ant Group's share sale was cancelled at the last minute, but its competitor managed to go public in New York as planned, just days before Chinese regulators launched a crackdown on online lenders. Online loan facilitator Lufax Holding Ltd.(LU), a subsidiary of Ping An Insurance ([[PNGAY]]; 2318.HK; 601318.SH), is now seeking to list shares in Hong Kong as well as the U.S. on a dual-primary basis, while an IPO by Ant Group, the financial arm of Alibaba Group ([[BABA]]; 9988.HK), is still pending. Lufax is 41% owned by Ping An and draws on credit guarantees from the insurance group for loans to small businesses, which have struggled during the pandemic. Although regulatory action did not derail its U.S. listing, the finance platform still came under strict scrutiny along with other online finance firms over the past two years. In January, the Chinese central bank confirmed that 14 major platform companies, including Lufax, Ant Group and 360 DigiTech ([[QFIN]];3660.HK), had completed a required restructuring process. Lufax wasted little time in filing on Feb 1. for a dual primary listing In Hong Kong by introduction, a process of placing already issued shares that does not raise any extra funds. Lufax was the second-biggest provider of non-traditional financial services in China as of the middle of last year, with nearly 18% of the market for outstanding loans to small and micro businesses, according to a report cited in its preliminary prospectus. The top five players together held around 68% of the relatively concentrated market. Its earnings have been buffeted by the Covid pandemic. Lufax reported revenues of 52 billion yuan ($7.67 billion) in 2020, rising to 61.8 billion yuan a year later and dipping to 45.8 billion yuan in the first nine months of last year. Profits came in at 12.3 billion yuan in 2020 and 16.7 billion yuan in 2021, while the first three quarters of last year saw a profit of 9.58 billion yuan. The nine-month revenue was 0.4% below the prior-year period, while profits fell nearly 31% as Covid flare-ups disrupted business across China. The company has predicted a net loss for the fourth quarter. Pandemic problems Small and micro businesses have always been a crucial engine for China's economic growth. By the end of 2021, China had around 140 million such enterprises generating more than 60% of GDP. Meanwhile, Lufax had 6.6 million small and micro business customers by the end of last September, with their total credit standing at 63.65 billion yuan. But growth was badly squeezed during the pandemic, when many small businesses could not operate remotely, instead relying on customers visiting their premises. Stringent pandemic controls took a heavy toll on business activities, curtailing firms' willingness to borrow and their ability to service their debt. As a result, providing relief to these companies is a priority for the post-Covid recovery phase. According to Lufax, 85% of new credit in the first nine months last year, excluding consumer finance, went to small and micro businesses. Profits came under pressure as more customers fell behind on payments, while losses from credit depreciation piled up and credit costs rose. During the nine-month period, the company's total additional lending fell a year-on-year 15.9% to 417.6 billion yuan. Small and micro businesses reported more defaults and credit impairment losses grew to 10.29 billion yuan, 150% higher than the year-earlier period and equivalent to 22.5% of revenue during the period. To cut the risk exposure on its loan portfolio, Lufax made less of its own capital available for lending. But its business faces regulatory and policy uncertainty, as Chinese authorities seek to contain risks in the online microlending sector. Lufax said in its prospectus it had suspended loan funding for three microlending subsidiaries since Chinese regulators issued a consultation paper last year on rules governing online microlending. It shut down its microloan operations in the southern city of Shenzhen and in Hunan province. It also moved to offline microlending at its operations in the western city of Chongqing. Currently, Lufax works with commercial banks and trust funds under a co-financing model, with credit insurance from Ping An Property & Casualty Insurance and its subsidiary Ping An Puhui Enterprises Management on co-financed loans to meet the risk management requirements of its capital providers. Ping An Property & Casualty Insurance provided insurance or guarantees on around 71% of outstanding loans managed by Ping An Puhui by the end of last September. Data on business information website Tianyancha shows that Ping An Puhui has subsidiaries in 29 Chinese provinces and is a key source of credit enhancement for Lufax's loans. Facing policy risks However, a central bank ruling in 2021 could hinder Ping An Puhui's efforts to provide finance guarantees across provincial borders through a network of subsidiaries. The central bank said six types of financial institutions, including finance guarantee companies, should be regarded as local institutions, meaning that are not, in principle, allowed to carry out inter-provincial business. Firms operating across province borders would have to follow transition plans developed by financial regulators.

Seeking Alpha • Jan 24

Lufax: Debt Growth Slowdown

Summary Despite the solid performance of the top 10 fintech companies, Lufax underperformed its competitors in Q3 2022 with its revenues down 22.5%. We believe the company's revenue growth was impacted by Covid-19 lockdowns across China as well as new regulations related to online lending platform loan funding requirements. We conservatively forecasted its Retail Credit segment revenue at a 5-year forward average of -3.2%. In this analysis of Lufax Holding Ltd (LU), we examined the company following its poor performance in 2022 with its Q3 revenues down 22.5%. We compared it against the top 10 fintech companies based on its Q3 performance and guidance. Moreover, we then analyzed the Chinese market loan growth to understand if the debt crisis in China had affected the company. Finally, we analyzed its retail credit segment breakdown by loan volume, and customer and revenue growth and forecasted its revenue growth for the next 5 years. Lufax Performed Poorly to Fintech Competitors Q3 2022 Revenue ('mln') TTM Revenue ('mln') Revenue Growth YoY % Q3 % Analyst Revenue Difference Stock Price Change (Q4 2022) Q4 Guidance YoY Types American Express (AXP) 50,831 24.0% -0.1% 9.20% 24.0% Card Network Visa (V) 29,310 18.7% 3.1% 17.12% 18.0% Card Network PayPal Holdings (PYPL) 27,057 10.8% 0.4% -18.02% 9.0% Payment Facilitators Mastercard (MA) 21,640 15.5% 1.7% 22.46% 17.0% Card Network Fiserv (FISV) 17,115 2.6% 0.0% 8.47% 11.0% Merchant Acquiring Block, Inc. (SQ) 16,964 17.6% 1.1% 14.42% 19.0% Payment Facilitators FIS (FIS) 14,483 2.7% -0.3% -10.22% 6.5% Merchant Acquiring Intuit Inc. (INTU) 13,319 29.5% 3.8% 0.49% 11.0% Financial & Accounting Software Lufax Holding 10,652 -25.5% -7.6% -23.62% -7.0% Online Lending Global Payments (GPN) 8,691 -6.5% 1.0% -8.08% 10.5% Merchant Acquiring Average 9.0% 0.31% 1.22% 11.90% Source: Lufax, Khaveen Investments Based on the table above, the top 10 fintech companies had positive growth in Q3 2022 with an average of 9%. Only two companies which were Lufax and Global Payments had negative growth in the quarter. In terms of analyst consensus expectations, the top 10 companies were on average in line with analyst estimates with 3 companies (American Express, Lufax and FIS Global) underperforming with a negative difference. Furthermore, 4 companies' stock prices declined in Q3 while the average stock price change was flat. Notwithstanding, the average revenue guidance for Q4 is positive and higher than the average revenue growth in Q3, thus indicating a potential acceleration in the top 10 companies' growth outlook. By Fintech types, the Card Network providers had the best performance in Q3 with an average revenue growth of 19.4% YoY in the period, higher than the top 10 companies' average of 9%. Based on Insider Intelligence, Visa and Mastercard had strong cross-border volume growth of 44% and 38% respectively and boosted their volume growth. According to Visa, travel across the US was strong and Asia Pacific and Latin America recovered. Card network providers such as Visa earn international transaction revenue (33% of revenue) for cross-border transaction processing which... arises when the country of origin of the issuer or financial institution originating the transaction is different from that of the beneficiary. In comparison, other fintech companies such as Payment Facilitators like PayPal earn transaction revenues charged on merchants and have a lower exposure to international transactions with a low cross-border % of TPV of 16% in 2021. Overall, despite the solid performance of the top 10 fintech companies, Lufax underperformed its competitors in Q3 2022. Affected by Lockdowns and Regulations Lufax Revenue Forecasts ($ mln) 2019 2020 2021 2022F Average Retail Credit 5,566 6,047 5,586 4,388 Growth rate % 8.6% -7.6% -21.4% -6.8% Wealth Management 369 270 341 285 Growth rate % -26.8% 26.3% -16.3% -5.6% Other Income 1,062 2,280 5,111 4,484 Growth rate % 114.6% 124.2% -12.3% 75.5% Total Revenues 6,997 8,597 11,038 9,157 Growth rate % 22.9% 28.4% -17.0% 11.4% Source: Lufax, Khaveen Investments In Q3 2022, Lufax's revenue had declined by 25% YoY and by % YTD 2022. In the table above, we prorated the company's segmental revenue breakdown from Q1 to Q3 2022 for its retail credit, wealth management and other income to obtain its full-year 2022 forecasted revenue which is a decline of 17% which is in contrast with its positive growth in the prior year and its 3-year average growth rate of 11.4%. From the table, our 2022 prorated revenue shows all 3 of its segments declining with retail credit having the highest decline. Its competitor Ant Group's consumer financing unit also performed poorly with a decline in net profit by 63% in Q2 2022 according to Bloomberg. According to the company's earnings briefing in Q3 2022, the company's "revenue was negatively impacted by the economic environment". Thus, we examined the loan growth rate in China to determine whether it was mainly affected by the macroeconomic environment. Investing.com, Khaveen Investments According to Investing.com, China's loan growth rate had been decelerating in the past 5 years since 2018. The average loan growth rate in China in the past 5 years was 12.4% but had further declined to an average of 12.2% in 2021 and slowed down sharply in 2022 with an average of 11.1%. Thus, since China's loan growth rate had slowed down in the past 5 years, we believe this not to be the main factor for Lufax's slowdown. Since 2020, China had imposed lockdowns across various cities in the country. In 2020, it imposed lockdowns in 19 cities but only 1 city was a sub-provincial city, Wuhan, with more than 11 mln population. Furthermore, in 2021, it reimposed lockdowns in Shijiazhuang and Xi'an with more than 8 mln population as its retail credit revenue contracted compared to 2020. In 2022, it imposed lockdowns on its largest city, Shanghai and Shenzhen as the company's retail credit revenue decline accelerated in 2022.

Analysis Article • Dec 02

Some Lufax Holding Ltd (NYSE:LU) Analysts Just Made A Major Cut To Next Year's Estimates

Market forces rained on the parade of Lufax Holding Ltd ( NYSE:LU ) shareholders today, when the analysts downgraded...

Seeking Alpha • Nov 07

Lufax: Net-Net Financial Leader Aligned With China Strategy

Summary Lufax is aligned with the new China 5-year plan strategy to grow GDP and the middle class. Lufax balance sheet and quality asset portfolio are able to withstand China's macro pressures and COVID lockdowns. Lufax can execute on near-term catalysts by leveraging its large workforce to resume growth. The current price of $1.65 yields over 10% in dividends. TBV is $5.59 and LTM P/E is 1.76x, indicating a 338% upside to the tangible book of 1.0x. We initiate coverage with a Strong Buy rating. Investment Summary Lufax Holding Ltd (LU) (herein: "the company," "LU," or "Lufax") is a consumer finance company based in China comprising two business segments targeting China's small business owners and growing middle class: wealth management and loan facilitation. Both business segments are aligned with China's 14th 5-year plan, an incredibly important aspect of operating in China. Additionally, Lufax has the financial and operational backing of the world's largest insurance company: Ping An Insurance (PNGAY). Despite currently experiencing headwinds due to ongoing COVID lockdowns in China and a weakening macroenvironment, Lufax remains profitable with LTM net income margins of 21%. More importantly, its balance sheet remains steadfast, leveraged at only 1.4x debt/EBITDA and maintaining 17% unrestricted cash/assets. For many, investing in China is understandably a nonstarter. However, for those seeking some exposure in their portfolio, Lufax currently trades at 0.3x tangible book value, suggesting a 338% upside even ignoring any catalysts and simply returning to normalized economic environment cycle. At the same time, Lufax is aggressively buying back shares, re-upping its latest program with another $500M repurchase plan. We are content to patiently wait for Lufax to resume growth in an improved environment while receiving its 10%+ dividend returns and share buybacks. Though the road back to a normal economic environment will not be smooth, we believe Lufax has a titanium balance sheet to weather these stormy times and exit as the undisputed leader in the consumer finance industry. We will begin with a look into the balance sheet and asset quality of the company, and then the risks and regulations that Lufax operates in. Lastly, we will look into valuation and catalysts. This article will only focus on the loan facilitation business since the wealth management business, though an important and rapidly growing portion of the overall business, still only amounts to 3 - 4% of total income. We conclude this article by assigning a Strong Buy rating to Lufax. Balance Sheet and Asset Quality The 2008 Financial Crisis has taught (or should have) that any investment into a financial company must include a discussion on its loan portfolio and balance sheet, especially as the world is now vacillating around a global recession. In its second quarter report, new loans facilitated by Lufax decreased 15% year-over-year, with outstanding balance of loans facilitated standing at RMB661 billion. From that total, 36% of the loans are held on the balance sheet, with 58% of the on-balance sheet loans secured (herein referred to as the "secured portfolio"). The portion of the secured portfolio for which Lufax is directly liable is 18%, or RMB42 billion. The remaining assets on the secured portfolio are insured by 3rd party insurance companies, mostly its counterparty partner, Ping An. The company has stated that virtually all of its directly liable loans in its secured portfolio are backed by real estate assets. Naturally, "real estate-backed securities" sparks dreadful images, such as the 2008 Financial Crisis and more recently, China's Evergrande default debacle. To put things in context, real estate-backed securities make up only 6% of total outstanding loans Lufax facilitates. Total Loans Outstanding On-Balance Sheet Secured Portfolio Insured Loans Property Backed Loans RMB661 B RMB238 B RMB139 B RMB111 B RMB42 B Table: Loan portfolio breakdown of the Company (Source: 2Q FY22 Earnings) Lufax currently maintains a 1.4x leverage ratio, with RMB98 B in net assets, which more than covers the property-backed loans in case of a total wipeout of China's property sector. In fact, Lufax's cash on hand of RMB64 B alone is able to withstand such an apocalyptic scenario. This points to the fortitude of the company's balance sheet to withstand the current economic climate. The company last reported a 30+ day delinquency rate of 1.4%--relatively flat since earlier in this year during the height of China COVID lockdowns--on its secured portfolio, indicating a more reasonable write-off scenario, as things stand, of RMB0.6 B. It is only fair to note that the secured portfolio only makes up 58% of the on-balance sheet loans while the remaining RMB99 B is unsecured. This is perhaps the riskiest aspect of Lufax's loan portfolio, though management has already started to address this with increases to their loan loss provisions by 164% to RMB7.5 B as of 1H FY22. The 30+ day delinquency rate for the company's unsecured portfolio was last reported at 3.6%, a marked increase from 3.0% earlier this year, explaining management's decision to increase loan loss provisions. Still, a complete write-off of those bad loans amounts to less than RMB4.0 B, well within the loan loss provisions. Finally, we note that the company is still growing its total loan balance, targeting higher-quality customers and enterprises. The pursuit of higher-quality customers is reflected with a lower take-rate of just under 9% (which is still significantly higher than its peers); but, given the turbulent economic conditions, particularly in China, we view this as a good balance between growth and prudence. Regulations and Risks The biggest risk to an investment in Lufax is its growing share of credit-bearing risk as a percentage of its total loan portfolio. Reading through the 20-F, the company has been ramping up its credit-bearing risk portions from 2.2% to 16.6% between the years 2019 and 2021. As of Q2 2022, this portion stands at 21.2%. This is due to recent China Banking and Insurance Regulatory Commission rulings in 2020 and further in 2021, known as Circular 24, that stipulate that lending partners to commercial banks, such as Lufax, must be held liable for no less than 30% of the loan amount in an effort to spread risk and reduce stress on Tier-1 capital on the Chinese banking sector. Lufax is progressing towards complying with this new regulation by taking on risk that is either insured by 3rd parties, backed by real estate assets, or held unsecured on the balance sheet. While we will continue to monitor this risk portfolio, given the company's strong balance sheet, use of 3rd party insurers, and prudent capital conservation, this risk is currently not a concern for us. In troubling times, the credit-bearing risk can lead to devastating consequences, as Lehman Brothers demonstrated in 2008. To this point, Chinese law prohibits leverage on risk-bearing portion from exceeding 15x, a non-issue as Lufax currently maintains leverage of only 1.4x, indicating management's restraint during uncertain macroeconomic times. Third, China's Supreme Court in 2020 ruled that a lending rate cap of 24% ARR be placed on all lending companies. Lufax is ahead of this curve and, as of 2021, is well below this cap as seen in the table below. The company, perhaps due to its extremely close ties to Ping An, is well ahead of keeping up with regulations and ensuring alignment with PRC laws. Lufax APR between 2019 and 2021 (Lufax 2021 20-F) The biggest risk, as we've stated, is share of credit-bearing risk that Lufax is required to hold; in particular, there is the risk that the current Chinese economic climate may exacerbate the company's credit-bearing risk. This article laid out its view on the company's ability to withstand such risks earlier regarding the company's balance sheet, but it is ultimately up to investors to determine their acceptable level of risk. In the next section, we lay out why we believe the company's current valuation prices in a significant margin of safety to account for these risks. Valuation Perhaps the most interesting portion of Lufax, certainly to value investors, is the valuation of the company. First and foremost, it should be stated that Lufax enjoys significant competitive advantages that establish a "moat" against its competitor peer group. These advantages are: 1) its enormous lending agent workforce, 2) its extremely close partnership with Ping An, and 3) its robust, large balance sheet and industry-leading cost of capital. Regarding the company's workforce, Lufax employs over 90,000 people, orders of magnitude larger than its peers. Company LU SOFI LC UPST QFIN FINV Employees 92380 2500 1384 1497 2129 4259 Table: Total number of employees (Source: Seeking Alpha) The vast majority of these employees are boots-on-the-ground lending agents that reach out to small business owners and have enabled Lufax to scale-in and scale-out with a significant variable cost structure. This model has allowed Lufax to target different geographic regions and different economic cycles and take advantage of different growth opportunities, which is reflected by its enormous growth in net interest income since 2020 of nearly 800%. Impressively, Lufax maintains a return on equity of over 16%, net income margins of over 20%, and operating margins of 50% despite such a massive workforce, indicating a high-quality company that is efficiently run. Data by YChartsData by YChartsData by YCharts While SoFi Technologies (SOFI) has experienced larger growth in net interest income, largely due to its recent banking charter, SOFI still operates at negative operating margin and net income, along with a questionable balance sheet. As for the company's other foreign peer, Upstart Holdings (UPST) is (barely) profitable and trades at a P/E of 21 and P/B of 2.17, with operating margins in the single digits and a return on equity that has rapidly deteriorated given the current economic climate in the United States. As for the company's domestic peers, 360 DigiTech (QFIN) and FinVolution Group (FINV) are also trading at depressed levels, but nowhere near the tangible book ratio of 0.3x of Lufax. Furthermore, we believe advantages (2) and (3) come into play to set Lufax apart from its domestic peers. The company's close ties to Ping An enable Lufax to take on more leverage with much lower cost of capital, and therefore higher take rates of 9% compared to less than 4% for its peers, and larger growth drivers when economic activity in China recovers. The robust balance sheet of Lufax allows it to hit the ground running once this occurs and therefore continue to grow its customer base even during China's current economic downturn. Lastly, Lufax mostly targets a different customer base than its domestic peers, namely small business owners, which is much more aligned with China's national strategy than the personal microloan focus of FINV and QFIN. Turning to Lufax's intrinsic valuation, we eschew an analysis of cash flow in favor of tangible book and, more strenuously, an analysis of its net current asset value per share (NCAVPS), which we believe are better metrics for companies in the financial sector. Since 2017, LU has grown its tangible book value from $1.54B to $12.82B, or a CAGR of 47%. The stock of LU currently sits at $3.8B, implying a tangible book value of 0.3x, which is frankly absurd. This is lower than even Citigroup (C), a bank with a quagmire of complexities and constant missteps, lower than both its U.S. peers, who are unprofitable enterprises, and lower than its domestic peers, in which LU is significantly better capitalized. Merely rerating LU's valuation to that of Citigroup's tangible book value of 0.6x would imply a doubling in the stock price, and bringing the tangible book value to parity with domestic peers would imply a 300% return. Considering that Lufax operates out of China, we look at an even more conservative valuation: NCAVPS. In this scenario, we have the following: Total Current Assets: $52 B Less Total Liabilities: $41 B Less Restricted Cash: $4 B Total Outstanding Shares: 2.29 B Net Current Asset Value Per Share: $3.06

Seeking Alpha • Oct 24

Chinese fintech stocks sink after Q3 GDP report, Xi starts third term

With China's Q3 GDP lagging the government's full-year target of 5.5% and Xi Jinping securing an historic third five-year term as head of the Communist Party, American depositary shares of Chinese fintech have slumped in Monday premarket trading in the U.S. The action in U.S. markets comes after Hong Kong and Shanghai stock markets closed lower on Monday as the GDP figure was constrained by an industry-wide real estate crisis and zero-tolerance COVID policy. In addition, the continuation of Xi's rule means the government's policies in both domestic and international arenas will stay in place. KE Holdings (NYSE:BEKE), a popular real estate app in China, saw its ADSs drop 14% in U.S. premarket trading. Futu Holdings (NASDAQ:FUTU) ADSs -16%. UP Fintech Holding (NASDAQ:TIGR) -12%, 360 DigiTech (NASDAQ:QFIN) -9.5%, and Lufax Holding (NYSE:LU) -8.4%. Last week, SA contributor The Value Pendulum said Futu (FUTU) needs more time for meaningful diversification Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.

Snowflake Score
Valuation	3/6
Future Growth	3/6
Past Performance	0/6
Financial Health	3/6
Dividends	0/6

Historical stock prices
Current Share Price	US$1.68
52 Week High	US$4.57
52 Week Low	US$1.73
Beta	0.72
1 Month Change	-10.16%
3 Month Change	-40.43%
1 Year Change	-42.07%
3 Year Change	-68.18%
5 Year Change	-96.60%
Change since IPO	-96.73%

	LU	US Consumer Finance	US Market
7D	-12.0%	1.3%	-0.3%
1Y	-42.1%	7.0%	26.7%

LU volatility
LU Average Weekly Movement	6.2%
Consumer Finance Industry Average Movement	6.7%
Market Average Movement	7.2%
10% most volatile stocks in US Market	16.2%
10% least volatile stocks in US Market	3.2%

LU fundamental statistics
Market cap	US$1.55b
Earnings (TTM)	-US$308.36m
Revenue (TTM)	US$4.41b

LU income statement (TTM)
Revenue	CN¥29.99b
Cost of Revenue	CN¥12.78b
Gross Profit	CN¥17.22b
Other Expenses	CN¥19.31b
Earnings	-CN¥2.10b

Earnings per share (EPS)	-2.42
Gross Margin	57.40%
Net Profit Margin	-6.99%
Debt/Equity Ratio	86.0%

Data	Last Updated (UTC time)
Company Analysis	2026/05/21 21:56
End of Day Share Price	2026/05/21 00:00
Earnings	2025/12/31
Annual Earnings	2025/12/31

Package	Data	Timeframe	Example US Source ^*
Company Financials	10 years	Income statement Cash flow statement Balance sheet	SEC Form 10-K SEC Form 10-Q
Analyst Consensus Estimates	+3 years	Forecast financials Analyst price targets	Analyst Research Reports Blue Matrix
Market Prices	30 years	Stock prices Dividends, Splits and Actions	ICE Market Data SEC Form S-1
Ownership	10 years	Top shareholders Insider trading	SEC Form 4 SEC Form 13D
Management	10 years	Leadership team Board of directors	SEC Form 10-K SEC Form DEF 14A
Key Developments	10 years	Company announcements	SEC Form 8-K

Analyst	Institution
Kevin Kwek	Bernstein
Emma Xu	BofA Global Research
null null	China International Capital Corporation Limited

Lufax Holding (LU) Stock Overview

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Price History & Performance

Recent News & Updates

Lufax Faces Lawsuits Over Auditor Removal and Financial Restatement Concerns

New major risk - Financial position

Full year 2025 earnings: Revenues exceed analysts expectations while EPS lags behind

Lufax Holding Ltd Appoints Ms. Xiaodi Wang as the Chief Compliance Officer, Effective April 27, 2026

Lufax Holding Ltd, Annual General Meeting, Jun 30, 2026

Lufax Holding Ltd Announces Changes in Board and Committee Composition

Recent updates

Lufax Faces Lawsuits Over Auditor Removal and Financial Restatement Concerns

New major risk - Financial position

Full year 2025 earnings: Revenues exceed analysts expectations while EPS lags behind

Lufax Holding Ltd Appoints Ms. Xiaodi Wang as the Chief Compliance Officer, Effective April 27, 2026

Lufax Holding Ltd, Annual General Meeting, Jun 30, 2026

Lufax Holding Ltd Announces Changes in Board and Committee Composition

Rosen Law Firm Files Securities Class Action Lawsuit on Behalf of Lufax Holding Ltd Investors

Lufax: A 38% Yield Put Strategy Based On $4.63 Billion In Excess Capital

Less than half of directors are independent

Full year 2024 earnings released: CN¥5.54 loss per share (vs CN¥1.55 profit in FY 2023)

Lufax Holding Ltd Announces Board Changes

Now 27% overvalued after recent price rise

Lufax Holding Ltd Announces Appointment of Xiang Ji as the Co-Chief Executive Officer, Effective from October 31, 2025

Lufax Holding Ltd Announces Executive Changes

Lufax Holding Ltd Announces Board and Committee Changes, Effective from August 14, 2025

Less than half of directors are independent

Lufax Holding Ltd announced delayed amended 20-F filing

Lufax Holding Ltd announced delayed 20-F filing

Lufax Holding: Well Poised For A New Economic Era Proposed By China

Lufax: Stimulus In China, Quarterly Improvements, And Dirt Cheap

Lufax Holding Ltd Announces Board and Committee Changes

China Ping An Insurance Overseas (Holdings) Limited and An Ke Technology Company Limited completed the acquisition of additional 0.01% stake in Lufax Holding Ltd (NYSE:LU) from Tun Kung Company Limited, Huang Philip, Zhang Zhichun and Gregory Dean GIBB and others.

There's No Escaping Lufax Holding Ltd's (NYSE:LU) Muted Revenues Despite A 33% Share Price Rise

Third quarter 2024 earnings released: EPS: CN¥0.16 (vs CN¥0.16 in 3Q 2023)

Lufax Holding Ltd to Report Q3, 2024 Results on Oct 21, 2024

Lufax: Look Past Q2 Performance And Focus On Strategic Pivot

Second quarter 2024 earnings released: CN¥1.38 loss per share (vs CN¥1.68 profit in 2Q 2023)

Lufax Holding Ltd Announces No Semi-Annual Dividend for the Six Months Ended June 30, 2024

Lufax Holding Ltd to Report First Half, 2024 Results on Aug 21, 2024

Lufax Stock: Watch Future Dividends And Loan Metrics

New major risk - Share price stability

Lufax Holding Ltd Approves Payment of A Special Dividend

Upcoming dividend of US$2.37 per share

First quarter 2024 earnings released: CN¥1.52 loss per share (vs CN¥1.18 profit in 1Q 2023)

Lufax Holding Ltd Announces Appointment of Peiqing Zhu as Board Secretary, Effective from April 30, 2024

Consensus EPS estimates fall by 12%

Consensus EPS estimates fall by 14%

Lufax Holding Ltd to Report Q1, 2024 Results on Apr 22, 2024

Lufax Holding Ltd (NYSE:LU) Analysts Just Slashed This Year's Estimates

Consensus revenue estimates fall by 12%

Lufax Holding Ltd, Annual General Meeting, May 30, 2024

Lufax: Massive Special Dividend Overshadows Below-Expectations Results (Rating Upgrade)

Lufax Holding Ltd Proposes Declaration of Special Dividend, Payable on 15 August 2024

Investor sentiment improves as stock rises 73%

Now 31% overvalued after recent price rise

Lufax Holding Ltd to Report Q4, 2023 Results on Mar 21, 2024

Now 22% undervalued after recent price drop

Investor sentiment improves as stock rises 19%

Lufax: Peer Comparison Offers Mixed Read-Throughs

Investor sentiment deteriorates as stock falls 17%

Investor sentiment deteriorates as stock falls 20%

Consensus EPS estimates fall by 12%

Consensus EPS estimates fall by 36%

Lufax Holding Ltd (NYSE:LU) Analysts Just Cut Their EPS Forecasts Substantially

New minor risk - Share price stability

Third quarter 2023 earnings: EPS and revenues miss analyst expectations

Lufax Takes On More Risk, Makes Hong Kong Acquisition, As Its Lending Shrivels

Investor sentiment improves as stock rises 16%

Lufax Holding Ltd to Report Q3, 2023 Results on Nov 13, 2023

Upcoming dividend of US$0.031 per share at 7.4% yield

Lufax Holding's (NYSE:LU) Dividend Will Be Reduced To CN¥0.0312

Consensus revenue estimates fall by 11%

Lufax: Both Results And Outlook Were Disappointing