Shares of Lufax Holding (LU) gained nearly 11% in extended trading hours on Monday after it reported higher-than-expected earnings for the second quarter of 2021. The China-based company offers a technology-empowered personal financial services platform to provide personal lending services to salaried workers and small business owners. It also provides personalized wealth management services.
Lufax reported earnings per share (EPS) of $0.29, beating the Street’s estimate of $0.23. Total revenue increased 17.3% year-over-year to $2.3 billion but fell slightly short of analysts’ expectations of $2.34 billion.
Technology platform-based income decreased 7.5% year-over-year to $1.5 billion; net interest income almost doubled to $500 million; guarantee income increased 868.5% to $138 million; other income surged 205.1% to $166 million; and investment income fell 83.2% to $6 million.
The Chief Financial Officer of Lufax, James Zheng, said, “Our second-quarter 2021 results are characterized by strong business growth, continued operations improvement, and expanded profit margins.” (See Lufax stock chart on TipRanks)
For the second half of 2021, the company expects year-over-year revenue growth of 18% to 19%. Furthermore, it expects revenue to rise by 17% to 18% for full-year 2021.
Last week, Goldman Sachs analyst Thomas Wang downgraded the rating on the stock to Hold from Buy and lowered the price target from $20.30 to $9.80 (31% upside potential).
The analyst said, “Recent comments by a Chinese official on the need to strengthen regulation on market participants other than banks suggests that regulatory scrutiny on Lufax and other loan facilitation platforms is likely to increase.”
Overall, the stock has a Strong Buy consensus based on 3 Buys and 1 Hold. The average Lufax Holding price target of $13.20 implies 76.5% upside potential. Shares of the company have lost 57.1% over the past six months.
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