LU Stock Price Increases Over 10% Pre-Market: Why It Happened

By Amit Chowdhry ● Aug 10, 2021
  • The stock price of Lufax Holding Ltd (NYSE: LU) increased by over 10% pre-market. This is why it happened.

The stock price of Lufax Holding Ltd (NYSE: LU) increased by over 10% pre-market. Investors are responding positively to the company’s second-quarter 2021 unaudited financial results.

Q2 2021 Financial Highlights:

— Total income increased by 17.3% to RMB14,828 million (US$2,297 million) in the second quarter of 2021 from RMB12,637 million in the same period of 2020.

— Net profit increased by 53.2% to RMB4,729 million (US$732 million) in the second quarter of 2021 from RMB3,086 million in the same period of 2020.

Business Outlook

— For the second half of 2021, the company expects its new loans facilitated to grow by 16% to 21% year over year to the range of RMB324 billion to RMB340 billion, and client assets to grow by 5% to 8% year over year to the range of RMB450 billion to RMB460 billion. At the same time, as the company strives to maintain its growth momentum and improve its operating efficiency, it expects its total income to grow by 18% to 19% year over year to the range of RMB31.0 billion to RMB31.3 billion, and net profit to grow by 32% to 36% year over year to the range of RMB6.6 billion to RMB6.8 billion.

— For the full year of 2021, the company expects its new loans facilitated to grow by 15% to 18% year over year to the range of RMB649 billion to RMB665 billion, client assets to grow by 5% to 8% year over year to the range of RMB450 billion to RMB460 billion, total income to grow by 17% to 18% year over year to the range of RMB61.1 billion to RMB61.4 billion, and net profit to grow by 33% to 34% year over year to the range of RMB16.3 billion to RMB16.5 billion.

KEY QUOTES:

“Although market sentiment towards Chinese ADRs has fluctuated substantially due to recent changes in macro policies and market conditions, Lufax has greatly improved its operating performance while maintaining strong regulatory compliance and corporate governance. In the first half of 2021, our total income grew by 17.1% and our net profit grew by 33.4%. Since Lufax’s inception, we have always been in close and constant dialogs with the regulatory authorities to fully grasp the latest regulatory trends, intentions, and requirements. By establishing and maintaining constructive relationships with a multitude of regulatory authorities in all relevant aspects, we have been able to synchronize our own operations with policy changes. Based on our own analysis of regulatory intentions and industry competition, we have decided to gradually shift our business focus from volume growth to quality enhancement and uphold three principles: to keep our operations fully compliant with regulations, to provide increasing value to small and micro business owners as well as the middle class, and to empower our business development with technology advancement. While we are cognizant of the challenges ahead, we are also confident in our own ability to deftly navigate through changing market dynamics and lay a unique path to long-term and sustainable success.”

— Ji Guangheng, Chairman of Lufax

“On the back of our solid financial performance, abundant cash reserves, and strong net cash flow, we are able to meet any new capital requirements that may come from regulatory changes, reward our shareholders by adding another US$700 million to our existing share buyback program, and continue to allocate more capital towards enhancing our unique business model. What sets Lufax apart from our peers is our unparalleled O2O direct sales force, our distinctive way of deploying business licenses, and our full range of financial services beyond lending. We are confident that our combination of capital strength, differentiated business model, in-depth financial credit experience, and commitment to regulatory compliance will enable us to remain resilient in a rapidly changing operating environment.”

— Gregory Gibb, Co-Chief Executive Officer of Lufax

“Our second quarter 2021 results are characterized by strong business growth, continued operations improvement, and expanded profit margins. Our total income grew by 17.3% year over year to RMB14.8 billion, and our net profit increased by 53.2% year over year to RMB4.7 billion. We maintained our momentum by continuously optimizing our unit economics, growing our loan volume, improving our business mix, executing a more sustainable risk-sharing model, enhancing our asset quality, and substantially completing the run-off of legacy P2P products. While we ramped up our total income excluding investment income by 19.1% year over year, we also managed to reduce our total expenses excluding credit impairment losses, financial costs, and other losses by 1.7% year over year, showcasing our efficiency in most areas. As of June 30, 2021, our total equity had reached RMB91.1 billion, and we had approximately RMB42 billion liquid assets9 maturing in 90 days or less. Looking ahead, we will continue to balance prudent cost controls with healthy business expansion to deliver lasting shareholder value.”

— James Zheng, Chief Financial Officer of Lufax

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.