Core Viewpoint - Lufax Holding Ltd. is facing significant challenges due to a scandal involving related-party transactions with its parent company, Ping An Group, which has led to the suspension of its Hong Kong-listed shares. The company is deepening its financial ties with Ping An as it seeks to resume trading and stimulate growth [2][3][14]. Group 1: Company Developments - Lufax has been embroiled in a scandal since late last year when a senior executive alerted its auditor, PricewaterhouseCoopers (PwC), about potentially problematic related-party transactions, resulting in PwC being dismissed and the inability to publish its annual report for 2024 on time [3][5]. - The company has hired Ernst & Young (E&Y) as its new auditor and is also working with Deloitte for independent evaluations of its internal controls, particularly regarding corporate governance and related-party transactions [5][6][9]. - Lufax's total outstanding loans decreased by approximately 18% year-on-year to 193.4 billion yuan ($27 billion) by the end of June, despite a nearly 20% increase in the number of users of its services [7]. Group 2: Strategic Shifts - Lufax is shifting its focus towards consumer lending, establishing a consumer finance subsidiary in 2020, which allows it to make direct loans using its own capital, marking a departure from its original model of connecting borrowers with lenders [8][10]. - The company has increased the maximum annual fees it can earn from its consumer finance unit by over 50% to 1.1 billion yuan, anticipating growth driven by government efforts to boost private consumption [12]. - Recent agreements with Ping An include transferring nonperforming loans to an entity owned by Ping An's life insurance unit and extending the sale of Ping An's health insurance products through Lufax's insurance agency subsidiary [13][14]. Group 3: Market Performance and Valuation - Lufax's New York-listed shares have gained over 7% in the past five trading days but remain down more than 90% since their IPO in 2020, trading at a trailing price-to-earnings (P/E) ratio of about 3, which is less than half that of its competitor FinVolution [16][17]. - The valuation gap indicates that Lufax needs to resume trading of its Hong Kong shares and reassure investors of its profitability and independence from Ping An to regain investor confidence [17].