Lexin(US:LX) HTSC·2025-03-20 11:03Investment Rating - The report maintains a "Buy" rating for the company [7] Core Insights - The company's net profit for Q4 2024 reached 360 million RMB, showing a year-on-year increase of 2899% and a quarter-on-quarter increase of 17%, slightly exceeding previous expectations [1] - The improvement in loan quality has led to a reduction in credit costs, with the first-day overdue rate decreasing by 4% quarter-on-quarter and credit costs dropping by 4.5% [2][3] - The company is focusing on enhancing profitability rather than expanding its loan issuance, with a loan volume of 52 billion RMB in Q4 2024, reflecting a 2% quarter-on-quarter increase [3] Summary by Sections Financial Performance - The annualized net profit take rate increased by 22 basis points to 1.3% in Q4 2024, driven primarily by lower credit costs [2] - The company expects further profit growth in 2025 as high-risk loans are gradually cleared [1][4] Loan Quality and Credit Costs - The overall first-day overdue rate decreased to 3.6% in Q4 2024, down from 3.7% in Q3 2024, indicating improved loan quality [2] - Credit costs as a percentage of loan balance fell by 14 basis points to 5.56% [2] Loan Issuance and Market Position - The company’s loan issuance growth is slower compared to peers, with a focus on loan quality over volume [3] - The ICP model's development contributed to a 57% quarter-on-quarter increase in technology-enabled service revenue [3] Profit Forecast and Valuation - The report raises the net profit forecasts for 2025, 2026, and 2027 to 2.171 billion, 3.159 billion, and 3.531 billion RMB respectively, with adjustments of +7.5% and +18.0% for 2025 and 2026 [4] - The target price is adjusted to $12, based on a projected 2025 PB of 1.15x [4][8]