12 Best Performing Cheap Stocks in 2024

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03. Lufax Holding Ltd (NYSE:LU)

Number of Hedge Fund Holders: 11

Year to date Share Price Gain: 193.35%

Forward Price to Earnings (P/E) Ratio: 9.77

Lufax Holding Ltd (NYSE:LU) is a financial services provider in China, primarily focused on empowering small and micro businesses. Founded in 2005 and headquartered in Shanghai, Lufax offers a variety of loan products, including both unsecured and secured loans, along with consumer finance options. The company also specializes in wealth management services, providing asset management, mutual funds, private investment funds, and trust products.

In the second quarter of 2024, Lufax Holding Ltd (NYSE:LU) demonstrated resilience despite a challenging macroeconomic environment. The total loan volume decreased to 45.2 billion RMB, a year-over-year decline of 15.5%. This was primarily due to a significant 35% drop in Puhui loans, which still accounted for 51% of total loan sales. However, Lufax Holding Ltd (NYSE:LU) consumer finance segment thrived, showcasing a robust 23.6% year-over-year increase in new loan sales. This shift indicates the company’s commitment to prioritizing quality over quantity while adapting to market demands.

The company has been implementing stricter credit standards, resulting in a notable enhancement in asset quality. The C-M3 flow rate improved to 0.9%, and the non-performing loan (NPL) ratio decreased to 1.4% from 1.6%. These developments reflect Lufax’s successful transition to a more sustainable lending model, emphasizing the 100% guarantee model for Puhui loans. This strategic pivot is expected to further increase the company’s take rate, which rose to 9.3% in the latest quarter.

From a financial standpoint, Lufax Holding Ltd (NYSE:LU) reported a total income of 6 billion RMB for the quarter, down from 9.3 billion RMB in the previous year, primarily due to a 44.8% decrease in outstanding loan balances. However, the company’s operating expenses fell by 20.3% to 6.3 billion RMB. This demonstrates Lufax Holding Ltd (NYSE:LU) ability to maintain operational efficiency even in a declining revenue environment. Overall, with improving asset quality, a focus on consumer finance growth, and a strategic alliance with Ping An Group, Lufax Holding Ltd (NYSE:LU) stands out as a compelling investment opportunity in the financial services sector.

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