Core Viewpoint - The company is facing significant delays in financial reporting and stock resumption due to ongoing audits and governance restructuring following issues with related party transactions and previous auditors [1][9][10]. Group 1: Financial Reporting and Auditing - The company has appointed Ernst & Young as the new auditor, but the approval from the shareholders' special meeting is required before the audit of financial statements for 2022 to 2025 can commence [9][10]. - The financial report disclosures will continue to be delayed, making the possibility of stock resumption in the short term extremely unlikely [1][10]. - The company has acknowledged accounting violations related to related party transactions, leading to distorted financial data for 2022 and 2023 [5]. Group 2: Governance and Management Changes - The company has decided to optimize its governance structure by clearly delineating the roles of the CEO and Chairman, appointing Ye Dichi as the new independent non-executive Chairman [6][8]. - The previous CEO and CFO have been held responsible for the related party transaction issues, leading to their departure from the company [5][6]. - A temporary special committee has been established to enhance internal controls, consisting of four independent non-executive directors [8]. Group 3: Business Performance and Growth Potential - The company has reported a decline in total outstanding loans, with a 31.2% year-on-year decrease to 216.9 billion yuan by the end of 2024 [11]. - Despite the overall decline in loans, the consumer finance segment has shown growth potential, with a 34.9% year-on-year increase in loan balance to 50.1 billion yuan in 2024 [11]. - New loan origination has improved, with a 47.6% year-on-year increase in the fourth quarter of 2024, driven significantly by the consumer finance sector [12]. Group 4: Asset Quality - The company has seen improvements in overdue rates for total loans and unsecured loans, with a 30-day overdue rate of 4.5% as of the first quarter of 2025 [14]. - However, the overdue rate for secured loans has continued to rise, indicating ongoing challenges in asset quality [14].

Core Viewpoint - Lufax Holding (NYSE: LU) is positioned as a BUY due to its strategic alignment with China's anticipated business dominance, the rise of international yuan trade, and its alternative to the SWIFT system [1] Group 1 - The company is well positioned for China's move into a new era of business dominance [1] - Increased international yuan trade is expected to benefit Lufax Holding [1] - Lufax offers an alternative to the SWIFT system, which may enhance its competitive edge [1]

Group 1 - The company announced the appointment of Ernst & Young as its auditor to replace PwC and RSM, pending approval at a special shareholders' meeting on June 25 [1] - The board appointed Mr. Yediqi as the independent non-executive director and chairman, and Mr. Xitongzhu as the CFO and executive director, while Mr. Zhao Yongshi continues as CEO [1] - The company is undergoing an independent investigation regarding concerns raised by PwC about certain transactions, with findings indicating that the company’s investments were not for compensating related entities but for retail investors' losses [2] Group 2 - The company plans to implement several improvement measures, including optimizing the board and management structure, appointing independent internal control consultants, and establishing a special committee to enhance internal controls [3] - The company reported a significant increase in new loans facilitated, with RMB 69.4 billion in Q4 2024, up 47.6% from RMB 47 billion in Q4 2023, and RMB 57.3 billion in Q1 2025, up 19.1% from RMB 48.1 billion in Q1 2024 [3] - Consumer finance loans also saw substantial growth, with RMB 26.7 billion in Q4 2024, a 42.5% increase from RMB 18.8 billion in Q4 2023, and RMB 30.4 billion in Q1 2025, a 50% increase from RMB 20.3 billion in Q1 2024 [3]

Core Viewpoint - Lufax Holding Ltd announced that Yong Suk Cho will continue as CEO, while Alston Zhu has resigned as CFO, with Tongzhuan Xi appointed as the new CFO. The company's ADR rose by 0.38% in after-hours trading [1]. Group 1: Company Overview - Lufax Holding Ltd is listed on the NYSE under the ticker LU [2]. - The company's stock closed at 2.62 USD, reflecting an increase of 0.15 USD (6.07%) on the day [4]. - The after-hours price was 2.63 USD, up by 0.010 USD (0.38%) [4]. Group 2: Financial Information - The market capitalization of Lufax Holding Ltd is approximately 22.71 billion USD [4]. - The stock has a 52-week high of 2.70 USD and a low of 2.00 USD [4]. - The price-to-earnings (P/E) ratio is reported at 54.35% [6].

Analyst Background - The analyst has close to 14 years of experience in the financial industry, having worked for an equity research firm in NY, an investment fund in Mexico, and an investment bank in Ireland [1] - Currently a private investor focusing on mature industries such as mining, oil and gas, real estate, and others [1] - The analyst does not invest in business models that are not understood and appreciates M&A deals, deep value investments, and dividend investing [1] - Investments typically target an internal rate of return of close to 5%-7% [1] Investment Approach - The analyst researches small and medium-cap companies in Europe, the United States, and South America [1] - The purpose of writing on Seeking Alpha is to receive feedback from readers about stocks owned [1] - The analyst provides expectations about future EPS, net revenue, FCF, and other financial figures, acknowledging that these could be wrong [1] Lufax Holding (LU) Analysis - Lufax Holding (NYSE: LU) is well positioned to benefit from recent stimulus policies announced in China [3] - The company has been offering business loans in China for many decades, leveraging its business connections and expertise [3] Disclosure - The analyst has a beneficial long position in Lufax Holding (LU) through stock ownership, options, or other derivatives [3] - The article expresses the analyst's own opinions and is not receiving compensation for it (other than from Seeking Alpha) [3] - The analyst has no business relationship with any company whose stock is mentioned in the article [3]

Financial Data and Key Metrics Changes - Total income decreased by 31.1% to RMB 5.5 billion from RMB 8.1 billion, primarily due to a 41.8% decrease in outstanding loan balance, partially offset by an increased take rate [10][11] - Total expenses decreased by 19.2% to RMB 6.3 billion from RMB 7.7 billion, with operating expenses declining by 35.9% to RMB 3 billion [10][11] - A net loss of RMB 725 million was recorded for the third quarter [11] Business Line Data and Key Metrics Changes - Total new loan sales in Q3 were RMB 50.5 billion, flat year-over-year but up 11.7% from the previous quarter, driven by growth in the consumer finance business [6] - New consumer finance loans increased by 27.8% year-over-year, accounting for 52% of total new loan sales [6] - The balance of consumer finance loans represented 22% of the total loan balance of RMB 213.1 billion at the end of Q3 [6] Market Data and Key Metrics Changes - The SME development index declined by 0.3 points quarter-over-quarter to 88.7 in September, indicating ongoing challenges for small business owners [4] - The Business Conditions Index fell from 49.3 in June to 46 in September, reflecting persistent difficulties in the small business sector [4] Company Strategy and Development Direction - The company plans to focus on non-SBO customers and continue growing its consumer finance business to leverage gradual consumption recovery [5] - The acquisition of a nationwide small lending license is expected to reduce funding costs and improve capital management efficiency [8] - The company aims to deepen synergies with Ping An Group to strengthen its market position [9] Management Comments on Operating Environment and Future Outlook - Management expressed hope that recent policy stimulus measures from the Chinese government will positively impact business performance in the long run [3] - The company remains prudent in its strategies due to increased risk exposure associated with the 100% guarantee business model [3] - Volume guidance remains unchanged at RMB 190 billion to RMB 220 billion for loan sales [19] Other Important Information - The C-M3 flow rate of Puhui loans remained stable at 0.9%, while the NPL ratio for consumer finance loans improved to 1.2% from 1.4% [7][21] - The company has no specific plans for additional special dividends following a recent payout but is committed to providing long-term shareholder returns [22] Q&A Session Summary Question: Impact of new policy stimulus on business - Management believes the stimulus will have a positive impact, but it will take time for small business owners to benefit from these measures [18] Question: Business outlook for this year and beyond - Volume guidance remains unchanged, with expectations of improved lifetime profitability despite short-term pressures [19] Question: Latest asset quality performance - Asset quality indicators remained stable, with confidence in future improvements as the loan balance reduction ends [21] Question: Plans for special dividends or shareholder returns - No specific plans for additional special dividends, but management is committed to long-term shareholder returns [22] Question: Increase in credit impairment losses - The increase is attributed to provisions related to loans under the 100% guarantee model and a conservative approach reflecting macroeconomic conditions [25] Question: Trend of funding costs going forward - Funding costs are expected to decrease further due to favorable monetary policy and a diversified license strategy [26]

Financial Performance - Total income for Q3 2024 was RMB 5,543 million (US$ 790 million), a decrease of 31.1% compared to RMB 8,050 million in Q3 2023[24] - Net loss for Q3 2024 was RMB 725 million (US$ 103 million), compared to a net profit of RMB 131 million in the same period of 2023, representing a decline of 653.7%[24] - Total income for the nine months ended September 2024 was RMB 18,483,377, representing a decrease of 32% from RMB 27,398,546 for the same period in 2023[48] - Basic earnings per share for the nine months ended September 2024 was (1.98), compared to 1.51 for the same period in 2023[48] - Net loss attributable to owners of the Group for the three months ended September 2024 was RMB 874,806, compared to a profit of RMB 93,778 in the same period of 2023[48] Loan and Borrower Metrics - Cumulative number of borrowers increased by 24.1% to approximately 24.8 million as of September 30, 2024, up from approximately 20.0 million a year earlier[26] - Total outstanding balance of loans decreased by 41.8% to RMB 213.1 billion as of September 30, 2024, from RMB 366.3 billion a year earlier[26] - Total new loans enabled remained flat at RMB 50.5 billion in Q3 2024, with new consumer finance loans increasing by 27.8% to RMB 26.4 billion[26] - New loan sales in the consumer finance business increased by 27.8% year-over-year, accounting for 52% of total new loan sales in the quarter[29] Expenses and Losses - Total expenses for Q3 2024 were RMB 6,262 million, a decrease of 19.2% from RMB 7,747 million in Q3 2023[25] - Credit impairment losses, finance costs, and other losses increased by 5.9% to RMB 3,279 million in Q3 2024[25] - Total expenses decreased by 19% to RMB 6,262 million (US$ 892 million) from RMB 7,747 million in Q3 2023, primarily due to a 50% reduction in sales and marketing expenses[33] - The company reported credit impairment losses of RMB 3,270,214 for the three months ended September 2024, an increase of 9% from RMB 3,001,108 in the same period of 2023[48] - The company’s total expenses for the nine months ended September 2024 were RMB 19,118,958, a decrease of 22% from RMB 24,667,293 for the same period in 2023[48] Cash and Assets - Cash at bank decreased to RMB 27,039 million (US$ 3,853 million) as of September 30, 2024, down from RMB 39,599 million as of December 31, 2023[38] - Cash at bank decreased to RMB 27,038,935 as of September 2024, down 32% from RMB 39,598,785 as of December 31, 2023[50] - Cash and cash equivalents at the end of the period on September 30, 2024, were RMB 9,964,987,000, down from RMB 18,828,729,000 at the end of the same period in 2023[55] - The net decrease in cash and cash equivalents for the three months ended September 30, 2024, was RMB (10,433,558,000), compared to RMB (6,630,828,000) in the same period of 2023[55] - Total assets as of September 2024 were RMB 206,449,110, down from RMB 237,023,009 as of December 31, 2023, a decrease of approximately 13%[50] - Total liabilities as of September 2024 were RMB 120,108,859, a decrease of 16% from RMB 143,339,227 as of December 31, 2023[50] Business Strategy and Outlook - The company maintains a cautious approach to business strategies while focusing on non-SBO customers and enhancing consumer finance offerings[29] - The estimate for the consolidated loss attributable to owners of the company for the three months ended September 30, 2024, was prepared based on unaudited management accounts[58] - The estimate is required to be reported in accordance with Rule 10 of the Hong Kong Code on Takeovers and Mergers[71] - The estimate has been properly compiled in accordance with the bases adopted by the directors and is consistent with the accounting policies normally adopted by the group[67] - The company reported a net loss attributable to owners for the three months ended September 30, 2024, as part of its profit forecast[71]

Core Viewpoint - Lufax Holding Ltd is expected to recover from its recent net loss and dividend omission, with a positive outlook for FY 2025 and beyond, supported by its strategic pivot towards a 100% guarantee business model and consumer finance loans [2][3][4]. Financial Performance - Lufax's share price fell by 19% following the announcement of a net loss of RMB 730 million for Q2 2024, a significant decline from a net income of RMB 1,003.6 million in Q2 2023 [3]. - The company did not declare an interim dividend due to a net loss of RMB 1,560 million in the first half of 2024 [4]. - Projections indicate positive earnings of RMB 2,276.3 million for FY 2025 and RMB 3,578.2 million for FY 2026, with expectations that the negative impact of accounting provisions will diminish over time [4]. Strategic Pivot - Lufax is transitioning to a 100% guarantee business model, which has already shown initial positive results, with a take rate increase of 2.3 percentage points year-over-year to 9.3% in Q2 2024 [5][6]. - The proportion of consumer finance loans in new loans rose from 34% in Q2 2023 to 49% in Q2 2024, while new loan sales for consumer finance grew by 24% year-over-year [6]. - The shift from SBO loans to consumer finance loans is seen as a strategic response to challenges in the small business sector in China, which has been negatively impacted by the economic environment [6]. Dividend Policy - Lufax has committed to distributing between 20% and 40% of its earnings as dividends twice a year, with expectations to resume dividend payments in FY 2025 when profitability is restored [4][8]. - Consensus estimates suggest forward dividend yields of 5.3% for FY 2025 and 11.2% for FY 2026 [4]. Valuation - Lufax is currently trading at 5.4 times the consensus FY 2025 normalized P/E ratio, indicating attractive valuations despite recent negative performance [8]. - The potential turnaround in earnings and continued progress in the strategic pivot are seen as key catalysts for re-rating the company's stock [8].

Financial Data and Key Metrics Changes - In Q2 2024, total income decreased by 35.5% to CNY 6 billion from CNY 9.3 billion in Q2 2023, primarily due to a 44.8% decrease in outstanding loan balance [14] - Total expenses decreased by 20.3% from CNY 8 billion to CNY 6.3 billion, with operating expenses declining by 29.7% [15] - A net loss of CNY 730 million was recorded for the second quarter [15] Business Line Data and Key Metrics Changes - Total new loan sales in Q2 2024 were CNY 45.2 billion, a 15.5% year-over-year decline, with Puhui loans down 35% year-over-year [6] - Consumer finance loans increased by 23.6% year-over-year, representing 49% of new loan sales [6] - The C-M3 flow rate for Puhui loans improved to 0.9% from 1.0% in the previous quarter, while the NPL ratio for consumer finance loans decreased to 1.4% from 1.6% [7] Market Data and Key Metrics Changes - The SME development index trended down by 0.3 points quarter-over-quarter to 89 in June, indicating persistent challenges in the small business sector [5] - The Business Conditions Index fell from 50.1 in March to 49.3 in June, reaching its lowest level for the first half of 2024 [5] Company Strategy and Development Direction - The company is focusing on improving asset quality and implementing prudent business strategies to provide a solid foundation for future growth [5] - The acquisition of a nationwide small lending license is expected to reduce funding costs and diversify product offerings [9] - The relationship with Ping An Group is expected to enhance branding, technology, and distribution channels, improving overall operational efficiency [10][11] Management Comments on Operating Environment and Future Outlook - Management noted that loan demand remains weak, particularly in the small business sector, and recovery largely depends on macroeconomic improvements [23] - There is confidence in sustaining improvements in asset quality due to ongoing enhancements in risk management and underwriting processes [24] - The company remains committed to a strategic approach aimed at achieving sustainable quality growth despite the complex macro environment [12] Other Important Information - The distribution of special dividends was completed at the end of July, increasing Ping An Group's ownership to 56.8% [10] - The company plans to leverage Ping An Group's technological resources to enhance risk management and fraud prevention [11] Q&A Session Summary Question: What is the current loan demand and outlook for loan growth recovery? - Loan demand is still weak, and recovery depends on macroeconomic improvements, with a focus on consumer finance to cope with declining SBO loan demand [23] Question: Can the improvement in asset quality continue? - Continuous portfolio mix improvement and efforts in risk management and collection processes are expected to sustain asset quality improvements [24] Question: What areas will see more collaboration with Ping An Group? - Collaboration will focus on customer sourcing, technology development, and brand enhancement, which are expected to reduce funding costs [26] Question: Are there plans to increase shareholder returns? - While no semiannual dividend will be paid due to a net loss, management is dedicated to returning value to shareholders and maintaining an annual dividend policy of 20% to 40% of net profit [28] Question: What is the outlook for future funding costs? - Funding costs are expected to continue decreasing due to favorable monetary policies and synergies with Ping An Group [27][29] Question: Why did the OpEx to income ratio increase in Q2? - The increase was mainly due to loan scale contraction leading to a decline in economies of scale, but efforts will be made to improve operational efficiency [30]

Financial Performance - Total income for Q2 2024 was RMB 5,976 million (US$ 822 million), a decrease of 35.5% compared to RMB 9,270 million in Q2 2023[2] - Net loss for Q2 2024 was RMB 730 million (US$ 100 million), compared to a net profit of RMB 1,004 million in the same period of 2023, representing a decline of 172.7%[3] - Net interest income for Q2 2024 was RMB 2,716 million, a decrease of 19.3% from RMB 3,367 million in Q2 2023[10] - Technology platform-based income decreased by 51.0% to RMB 1,999 million in Q2 2024, primarily due to reduced retail credit service fees[10] - Total income for the three months ended June 2024 was RMB 5,976,217, representing a decline of 35.0% from RMB 9,270,322 in the prior year[31] - Net profit for the three months ended June 2024 was a loss of RMB 729,991, compared to a profit of RMB 1,003,618 in the same period of 2023[31] - Basic earnings per share for the three months ended June 2024 was a loss of RMB 0.69, compared to earnings of RMB 0.84 in the same period of 2023[31] Loan and Borrower Statistics - Total outstanding balance of loans decreased by 44.8% to RMB 235.2 billion as of June 30, 2024, from RMB 426.4 billion a year earlier[5] - New loans enabled in Q2 2024 were RMB 45.2 billion, down 15.5% from RMB 53.5 billion in Q2 2023, while new consumer finance loans increased by 23.6% to RMB 22.1 billion[5] - The cumulative number of borrowers increased by 17.4% to approximately 23.2 million as of June 30, 2024, from approximately 19.7 million a year earlier[5] - The company reported a decrease in customer loans to RMB 112,708,888 as of June 30, 2024, down from RMB 129,693,954 as of December 31, 2023[33] Expenses and Costs - Total expenses decreased by 20% to RMB 6,341 million (US$ 873 million) in Q2 2024 from RMB 7,957 million in Q2 2023[14] - Sales and marketing expenses decreased by 46% to RMB 1,372 million (US$ 189 million) in Q2 2024 from RMB 2,540 million in Q2 2023[15] - General and administrative expenses increased by 3.5% to RMB 511 million (US$ 70 million) in Q2 2024 from RMB 493 million in Q2 2023[15] - Credit impairment losses decreased by 14.6% to RMB 2,560 million (US$ 352 million) in Q2 2024 from RMB 2,998 million in Q2 2023[17] - Finance costs decreased by 90.2% to RMB 13 million (US$ 2 million) in Q2 2024 from RMB 136 million in Q2 2023[17] - Total expenses excluding credit impairment losses, finance costs, and other (gains)/losses decreased by 30% to RMB 3,485 million (US$ 480 million) in Q2 2024 from RMB 4,954 million in Q2 2023[14] Cash and Assets - The Company had RMB 37,114 million (US$ 5,107 million) in cash at bank as of June 30, 2024, down from RMB 39,599 million as of December 31, 2023[20] - Cash and cash equivalents at the end of the period as of June 30, 2024, were RMB 20,398,545, down from RMB 25,459,557 at the beginning of the period[35] - Net cash generated from operating activities for the three months ended June 2024 was RMB 2,997,614, an increase of 50.4% from RMB 1,994,730 in the same period of 2023[35] - The company’s total assets as of June 30, 2024, were RMB 216,930,102, a decrease from RMB 237,023,009 as of December 31, 2023[33] Strategic Initiatives - The company aims to deepen synergies with Ping An Group to enhance market position and operational efficiency[8] - No semi-annual dividend will be paid due to the net loss recorded for the six months ended June 30, 2024[21] Loan Quality - The non-performing loan (NPL) ratio for consumer finance loans was 1.4% as of June 30, 2024, down from 1.6% as of March 31, 2024[7]