On Thursday, Jefferies reinstated coverage on Lufax Holding Ltd (6623:HK) (NYSE: NYSE:LU), a leading technology-empowered personal financial services platform in China, assigning a Hold rating to the company's stock. The financial services firm also set a price target of HK$3.20 for Lufax shares.
The reinstatement of coverage comes after Lufax reported third-quarter results that fell short of market expectations in terms of revenue and earnings. The company is currently navigating a strategic shift towards consumer finance, adopting a cautious approach to its Small Business Owners (SBO) segment. This transition involves upfront accounting for credit losses under a 100% guarantee model, which has resulted in increased costs and net losses in the initial stages.
Jefferies anticipates that Lufax will return to positive loan volume growth by 2025 following the completion of its transition. However, the firm noted that further details are required regarding Lufax's path to profitability. The analyst's statement highlighted the need for more clarity on how the company plans to achieve profitability in the future.
The coverage update reflects Jefferies' view on the company's current financial performance and its strategic initiatives to address the evolving market conditions. Lufax's transition to consumer finance is a response to the broader macroeconomic headwinds and regulatory changes affecting the industry.
Investors and stakeholders of Lufax Holding Ltd can now reference the updated insights from Jefferies as they monitor the company's progress and financial health in the context of its ongoing strategic adjustments.
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