Lufax Holding (LU) AI Stock Analysis

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Lufax Holding

(NYSE:LU)

52Neutral

Lufax Holding faces significant financial hurdles with declining income and profitability, impacting its overall stock score. Despite operational efficiencies and positive cash flow, the negative valuation metrics and financial instability weigh heavily. Technical analysis and earnings call insights show potential growth areas but also underline persistent challenges. The stock's dividend yield offers some appeal, but broader risks must be managed for improvement.

Positive Factors

Asset Quality

Asset quality improved with a decline in the non-performing loan ratio to 1.20%.

Funding Cost

Funding cost fell to 5.7%, benefiting from ample liquidity.

Negative Factors

Financial Performance

Lufax's loss before tax widened significantly, impacting overall financial performance.

Lufax Holding (LU) vs. S&P 500 (SPY)

Market Cap

$2.43B

Dividend Yield4.73%

Average Volume (3M)3.74M

Price to Earnings (P/E)―

Beta (1Y)1.46

Revenue Growth-38.81%

EPS Growth-425.73%

CountryUS

Employees36,215

SectorFinancial

Sector Strength80

IndustryFinancial - Credit Services

Share Statistics

EPS (TTM)-0.76

Shares Outstanding866,688,900

10 Day Avg. Volume3,281,532

30 Day Avg. Volume3,744,961

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.57

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$3.20

Price Target Upside21.21% Upside

Rating ConsensusHold

Number of Analyst Covering0

Lufax Holding Business Overview & Revenue Model

Company DescriptionLufax Holding Ltd operates a technology-empowered personal financial services platform in China. It offers loan products, including unsecured loans and secured loans, as well as consumer finance loans. The company also provides wealth management platforms, such as Lufax (Lu.com), Lu International (Singapore), and Lu International (Hong Kong) to the middle class and affluent investors to invest in products and portfolios; retail credit facilitation services platform that offers small business owners with lending solutions; and technology empowerment solutions for financial institutions. Lufax Holding Ltd was founded in 2005 and is headquartered in Shanghai, China.

How the Company Makes MoneyLufax makes money primarily through two main revenue streams: retail credit facilitation and wealth management. In the retail credit facilitation segment, the company generates income by connecting borrowers with financial institutions, earning fees for facilitating loans. Lufax's wealth management segment earns revenue by offering a variety of investment products through its platform, charging management and advisory fees. Additionally, the company benefits from strategic partnerships with financial institutions, leveraging these relationships to expand its product offerings and customer base.

Lufax Holding Financial Statement Overview

Summary

Lufax Holding is experiencing financial challenges, with declining revenues and profitability. The income statement reflects negative profit margins, while the balance sheet shows manageable leverage but potential instability due to declining equity. Positive cash flow generation is a strength, but the company must address revenue contraction and manage leverage for long-term health.

Income Statement

Neutral

Lufax Holding's income statement reveals declining revenue trends and negative profit margins. The TTM (Trailing-Twelve-Months) data shows a net loss, with a net profit margin of -16.7% and negative EBIT margin. Revenue has decreased significantly from the previous annual period, indicating financial stress. However, a strong EBITDA margin of 58.6% suggests potential operational efficiency.

Balance Sheet

Neutral

The balance sheet indicates a moderate level of debt with a debt-to-equity ratio of 0.56, suggesting manageable leverage. The equity ratio stands at 40.9%, indicating a reasonable proportion of equity financing. However, the decline in stockholders' equity and total assets over recent periods could signal potential financial instability.

Cash Flow

Neutral

The cash flow statement shows a positive free cash flow and a high operating cash flow to net income ratio, indicating strong cash generation relative to reported losses. However, the free cash flow has decreased from the previous year, and the free cash flow to net income ratio is negative due to the net loss.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
20.24B	41.68B	50.45B	54.31B	43.13B	40.92B
	Gross Profit
10.84B	28.99B	36.84B	45.31B	36.36B	35.52B
	EBIT
-1.12B	14.80B	13.41B	23.50B	17.99B	19.45B
	EBITDA
11.86B	0.00	0.00	0.00	0.00	0.00
	Net Income Common Stockholders
-3.38B	886.87M	8.70B	16.80B	12.35B	13.33B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
35.02B	39.99B	43.88B	34.74B	24.16B	7.35B
	Total Assets
0.00	237.02B	349.26B	360.43B	248.89B	149.53B
	Total Debt
0.00	44.86B	53.11B	44.80B	28.94B	13.94B
	Net Debt
35.02B	4.87B	9.23B	10.05B	4.78B	6.59B
	Total Liabilities
0.00	143.34B	254.48B	265.87B	165.74B	101.39B
	Stockholders Equity
34.95B	92.14B	93.19B	93.05B	81.56B	48.04B
Cash Flow		Free Cash Flow
8.65B	14.98B	4.33B	4.83B	6.91B	2.01B
	Operating Cash Flow
8.70B	15.03B	4.46B	4.99B	7.12B	2.19B
	Investing Cash Flow
-3.41B	-5.94B	8.45B	313.82M	-15.00B	-11.01B
	Financing Cash Flow
-14.04B	-20.55B	-9.92B	-2.45B	24.87B	-2.61B

Lufax Holding Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.64

Price Trends

50DMA

2.86

Negative

100DMA

2.67

Negative

200DMA

2.70

Negative

Market Momentum

MACD

0.03

Positive

RSI

47.65

Neutral

STOCH

34.88

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LU, the sentiment is Negative. The current price of 2.64 is below the 20-day moving average (MA) of 3.04, below the 50-day MA of 2.86, and below the 200-day MA of 2.70, indicating a bearish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 47.65 is Neutral, neither overbought nor oversold. The STOCH value of 34.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LU.

Lufax Holding Risk Analysis

Lufax Holding disclosed 105 risk factors in its most recent earnings report. Lufax Holding reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Lufax Holding Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QFIN	84 Outperform	$5.69B	6.67	27.18%	3.03%	3.88%	56.29%
LX	79 Outperform	$1.35B	9.12	10.77%	1.48%	10.06%	0.04%
FINV	77 Outperform	$2.27B	6.96	16.47%	2.71%	2.51%	7.06%
JFIN	74 Outperform	$618.36M	4.22	38.42%	7.50%	19.46%	-22.51%
TIGR	71 Outperform	$1.14B	20.31	10.62%	―	43.68%	77.18%
Sector *	63 Neutral	$12.86B	9.19	9.16%	4.78%	16.31%	-8.97%
LU	52 Neutral	$2.43B	―	-3.79%	4.73%	-38.81%	-425.73%

* Financial Sector Average

Performance Comparison

Lufax Holding

2.64

0.67

34.01%

FINV

FinVolution Group

8.75

3.70

73.27%

Lexinfintech Holdings

8.21

6.51

382.94%

QFIN

Qifu Technology

38.25

19.60

105.09%

TIGR

Up Fintech Holding

7.24

3.76

108.05%

JFIN

Jiayin Group

11.66

5.45

87.76%

Lufax Holding Earnings Call Summary

Earnings Call Date: Mar 11, 2025 | % Change Since: -11.41% | Next Earnings Date: Apr 28, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with notable growth in consumer finance and improved asset quality, but also significant challenges including decreased income and a quarterly net loss. While there are positive developments such as the acquisition of a new lending license, the financial performance shows areas of concern.

Highlights

Growth in Consumer Finance Business

New consumer finance loans increased by 27.8% year-over-year and accounted for 52% of total renewal sales in the third quarter.

Improved Asset Quality

The asset quality of consumer finance loans stayed strong, with the NPL ratio decreasing to 1.2% from 1.4% in the second quarter.

Decreased Operating Expenses

Total operating expenses declined by 35.9% to RMB 3 billion from RMB 4.7 billion.

Decreased Sales and Marketing Expenses

Sales and marketing expenses decreased by 49.9% to RMB 1.1 billion.

New Nationwide Small Lending License

Lufax acquired a nationwide small lending license in July and provided more than RMB 1 billion in loans under this new license.

Lowlights

Significant Decrease in Total Income

Total income decreased by 31.1% to RMB 5.5 billion from RMB 8.1 billion.

Net Loss for the Quarter

Recorded a net loss of RMB 725 million for the third quarter.

Increased Credit Impairment Losses

Credit impairment losses increased by 9% to RMB 3.3 billion.

Decrease in Technology Platform-Based Income

Technology platform-based income decreased by 49.9% to RMB 1.6 billion.

Challenges in Small Business Loan Demand

Puhui loan demand remained weak due to the complex macro environment faced by small business owners.

Company Guidance

During the third quarter of 2024, Lufax Holding reported a total loan volume of RMB 50.5 billion, marking a 11.7% increase from the previous quarter, despite challenging macroeconomic conditions. The company saw a notable 27.8% year-over-year rise in new consumer finance loans, which represented 52% of total renewal sales. Asset quality remained stable, with the C-M3 flow rate of Puhui loans at 0.9% and a decrease in the NPL ratio of consumer finance loans to 1.2%. Total income declined by 31.1% to RMB 5.5 billion, largely due to a 41.8% reduction in outstanding loan balance, while expenses fell by 19.2% to RMB 6.3 billion. The take rate increased by 1.9 percentage points to 9.7%, driven by an increased proportion of loans under the 100% guarantee model. Despite a net loss of RMB 725 million, Lufax remains optimistic about leveraging its consumer finance and small lending licenses to reduce funding costs and improve its capital management efficiency.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.