Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 14 Apr, 25 | LX | Speculative Buy | USD 6.96 | USD 7.5 | USD 7.9 | 1 day | 13.5% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
LexinFintech Holdings Ltd., together with its subsidiaries, provides online consumer finance services in the People's Republic of China. The company offers Fenqile.com, an online consumer finance platform that offers installment purchase and personal installment loans, as well as online direct sales of electronic, home appliance, and general merchandise products with installment payment terms; and Lehua Card for scenario-based lending. It also provides technology-driven platform services for financial institution customers and partners to increase revenues, manage financial risks, improve operating efficiency and service quality, enhance collections, and reduce overall costs; Maiya, a buy-now and pay-later service; and Juzi Licai, an online investment platform. In addition, the company offers technical support and consulting, software development, financing guarantee, and financial technology services. The company was formerly known as Staging Finance Holding Ltd. and changed its name to LexinFintech Holdings Ltd. in March 2017. LexinFintech Holdings Ltd. was founded in 2013 and is headquartered in Shenzhen, the People's Republic of China.
The company's cumulative loan origination grew by 19.1% year-over-year, reaching RMB1,325.1 billion by December 31, 2024
Net income for the fourth quarter of 2024 increased by 17% quarter-over-quarter, marking the fourth consecutive quarter of profitability improvement
Total loan originations for 2024 decreased by 15.0% compared to 2023, a substantial decline in the volume of loans facilitated by the company
The total GMV for the installment e-commerce platform service decreased by 31.3% year-over-year, which significantly impacted the company’s revenue in this segment
The key investment risk for Lexin lies in its exposure to macroeconomic fluctuations, which could impact loan origination volumes and overall revenue generation
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 6.96 | 6.25 | 7.5 | 7.9 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
In the fourth quarter of 2024, Lexin reported a net income of RMB363 million, reflecting a 17% quarter-over-quarter increase, marking the fourth consecutive quarter of profitability improvement. Total loan origination for the quarter reached RMB52 billion, a modest 2% growth compared to the previous quarter, while the total outstanding loan balance stood at RMB110 billion. The company's continued focus on upgrading its risk management practices has resulted in consistent asset quality improvements, supported by a reduction in risk indicators across both newly originated and overall assets.
The company’s ongoing efforts to optimize its operational efficiency have had a positive impact on its financial performance. In line with its prudent strategy, Lexin has managed to achieve a steady revenue take rate and an improved net income, driven by reduced funding costs and better customer acquisition efficiency. As a result, Lexin has demonstrated a strong growth trajectory with a 54% increase in net income year-over-year when adjusted for investment losses.
For the full year of 2024, Lexin’s total operating revenue increased by 8.8% year-over-year, reaching RMB14,204 million. However, its installment e-commerce platform service experienced a 31.3% decline in GMV (Gross Merchandise Value) compared to 2023, which was one of the few challenges faced by the company. The company’s credit facilitation service income, however, showed robust growth, reflecting the continued demand for loan facilitation services, which grew by 13.8% in 2024.
Looking ahead to 2025, Lexin anticipates flat to single-digit growth in total loan origination, dependent on macroeconomic conditions. Despite this, the company expects a significant year-over-year increase in net income, driven primarily by margin expansion. The company remains committed to maintaining a prudent operating strategy while prioritizing asset quality and profitability enhancement.
In terms of user growth, Lexin’s registered user base increased by 8.6% from 210 million to 228 million by the end of 2024. Additionally, the number of active users who used the loan products in the fourth quarter of 2024 decreased slightly by 0.7% from the same period last year, reflecting a marginal dip in engagement. However, the cumulative number of borrowers with successful drawdowns grew by 7.1%, showing an overall increase in the customer base.
Lexin has shown a strong ability to retain its business customers, with a retention rate of over 80% in its tech-empowerment services for the fourth quarter of 2024. Despite challenges in certain areas like installment e-commerce, Lexin has continued to enhance its operational focus, improving its product offering through tech-driven services and stronger loan facilitation processes. The company’s future outlook for 2025 includes improving margins, indicating a continued positive trend in profitability.
Technical Commentary:
LX's stock price has established strong support levels and is steadily climbing, suggesting a continued upward trend in the near term. The 14-period RSI is below the midpoint, which may signal an impending rebound. Furthermore, the stock is currently trading below its 50-day Simple Moving Average, indicating it could soon reach those levels again. This scenario adds to the optimistic outlook.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Lexinfintech Holdings Ltd. (NASDAQ: LX) at its current market price of USD 6.96 as of April 14, 2025 (6:45 am PDT).
Data Powered by EOD Historical Data (“EODHD”).
Sector: Financial Services Industry: Credit Services
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| LX Lexinfintech Holdings Ltd |
0.34 4.19% | 8.32 | 4.73 | 2.35 | 0.08 | 0.79 | 0.73 | 10.95 |
| V Visa Inc. Class A |
1.94 0.58% | 336.31 | 31.25 | 25.97 | 16.18 | 13.64 | 16.19 | 23.37 |
| MA Mastercard Inc |
3.77 0.71% | 533.77 | 37.04 | 29.50 | 16.14 | 62.35 | 16.47 | 27.24 |
| AXP American Express Company |
7.10 2.73% | 267.24 | 21.83 | 20.04 | 3.53 | 7.21 | 4.18 | |
| PYPL PayPal Holdings Inc |
1.87 2.99% | 64.33 | 21.96 | 18.69 | 2.93 | 4.56 | 2.86 | 12.64 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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