7 Cheap Chinese Penny Stocks to Buy According to Hedge Funds

05. LexinFintech Holdings Ltd. (NASDAQ:LX)

Number of Hedge Fund Holders: 10

LexinFintech Holdings Ltd. (NASDAQ:LX) operates a technology-driven platform that connects consumers with credit needs to financial institutions, primarily in China. Despite missing earnings expectations in Q1 2024, with an EPS of $0.17 compared to the expected $0.43, LexinFintech Holdings Ltd. (NASDAQ:LX) underlying fundamentals demonstrate potential for long-term growth. The company has implemented a cautious strategy in response to the challenging macroeconomic environment. This approach focuses on maintaining asset quality, reducing risk, and enhancing profitability. Notably, LexinFintech Holdings Ltd. (NASDAQ:LX) reported a 13.5% year-over-year increase in loan balances, reaching RMB 121.5 billion, alongside an 8.7% rise in revenue to RMB 3.2 billion. The firm’s net profit stood at RMB 202 million, supported by a stable net profit margin of 6.2%.

The company’s emphasis on risk management is evident in its efforts to improve the quality of newly issued loans while disposing of delinquent assets. This strategy is expected to yield better risk performance in the second half of the year. Additionally, LexinFintech Holdings Ltd. (NASDAQ:LX) has achieved a record-low funding cost, reducing it by 34 basis points to under 6%, further enhancing profitability. Analysts note that while LexinFintech Holdings Ltd. (NASDAQ:LX) asset quality improved in Q1 2024, its financial outlook is weak, with a projected -14.7% YoY drop in Q2 loan origination. Despite an attractive dividend yield of 10.2% for FY 2024, the company’s sluggish earnings growth justifies its low valuation. Consequently, according to analystst, a Hold rating is warranted. LexinFintech Holdings Ltd. (NASDAQ:LX) proactive measures, including a targeted customer acquisition strategy and an increased focus on high-quality assets, position the company for improved financial performance as market conditions stabilize. Despite near-term challenges, the company’s strong fundamentals and strategic initiatives provide a solid foundation for future growth, making it an attractive investment opportunity.

In the second quarter of 2024, there were 10 hedge funds holding positions in LexinFintech Holdings Ltd. (NASDAQ:LX), as compared to 12 in the previous quarter according to Insider Monkey’s database. The total value of these holdings is approximately $10.16 million. John Overdeck And David Siegel’s Two Sigma Advisors held the largest stake among these hedge funds during this period.