Investors Unimpressed By Massive Dividend From Shrinking Lufax
Portfolio Pulse from The Bamboo Works
Lufax Holding Ltd. (NYSE:LU) announced a special dividend of $2.42 per ADS, which is about half of its closing price of $4.48, following a significant reduction in its loan portfolio as part of a de-risking strategy. Despite this, investor enthusiasm remains low due to skepticism towards Chinese online lenders and concerns over China's economic slowdown. Lufax's shift towards higher quality borrowers and consumer lending, along with a reduction in geographical reach and operational costs, has not yet convinced investors of its long-term prospects.
March 25, 2024 | 1:54 pm
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NEUTRAL IMPACT
FinVolution, like Qifu and LexinFintech, offers regular dividends, a practice Lufax has now adopted. FinVolution's annual dividend is about 5% of its current share price.
Lufax's significant dividend announcement may spotlight the practice of dividend payouts among Chinese fintech lenders, including FinVolution, but its direct impact on FinVolution's stock price remains uncertain.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 50
NEUTRAL IMPACT
LexinFintech, along with Qifu and FinVolution, offers regular dividends, now joined by Lufax. LexinFintech's annual dividend is notably higher, at about 10% of its current share price.
While Lufax's announcement of a large dividend may increase interest in the sector, it's uncertain how this will directly affect LexinFintech's stock price in the short term.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 50
NEUTRAL IMPACT
Qifu, alongside other Chinese fintech lenders like FinVolution and LexinFintech, offers regular dividends, with Lufax joining this trend. Qifu's annual dividend amounts to about 5% of its current share price.
While Lufax's dividend announcement could draw attention to Chinese fintech lenders, including Qifu, it's unclear if this will have a direct impact on Qifu's stock price in the short term.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 50
POSITIVE IMPACT
Lufax announced a significant dividend of $2.42 per ADS, representing about half of its recent closing price, amidst a strategic portfolio reduction and focus on high-quality borrowers.
The announcement of a substantial dividend could attract short-term investor interest, potentially boosting the stock price. However, ongoing concerns about the Chinese online lending market and economic conditions may temper long-term enthusiasm.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100