$Lufax (LU.US)$ has lit shareholder's money on fire. -94.55%...
$Lufax(LU.US$ has lit shareholder's money on fire. -94.55% in a measly 3 years. earnings down to 1/10th, dividend cut to 1/10th, and now they stick shareholders with a more than 5% fee for an adr ratio change instead of doing anything to keep the share price from plummeting below $ 1.
instead they'll spend $ 100m buying overpriced assets from ping ans other fintech, assets that no one can actually tell if they will do anything positive for the company.
all the positive catalysts people keep using to defend this flaming pile of #@*& are vague fluff.
the big promise of a 'U shaped recovery' is based on their new guarantee model where they take over 100% of the risk and get 100% of the fees for the loan, doubling their take rate.
Wow! sounds amazing! except getting double the profits and generating half as many loans leads to identical numbers, and they have been generating less than half as many new loans as they did yoy compared to 2022, which was a year where china was in LOCKDOWN. their earnings are horrible even after a 30% cut in expenses, firing thousands of employees, and comparing to a brutal year for SMEs.
and the lower delinquency rate from higher quality loans is offset by taking over 100% of the risk instead of a fraction of it like they were before, so no one can actually tell if there will be any benefit there either.
q3 outstanding loan balance -42% yoy
q2 outstanding loan balance -35.5% yoy
q1 outstanding loan balance -26.8% yoy
q3 new loans generated -60% yoy
q2 new loans generated -58.7%
q1 new loans generated -65.3%
they blamed covid, the lockdowns and the 'macroeconomic environment' the entire time, except lockdowns have been over for a year and all their competitors are doing better than them.
I've held this since 2021 and I am sick of people defending it and regurgitating lufaxs vague promises of some big change on the horizon without any numbers to back it up.
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71875619 : firing thousands of employees?? are you sure about this? I hope this is a just typo instead of attitude
hgarOP 71875619: in a past er they've mentioned letting go of salespeople in areas of the country that underperformed as part of their shift to higher quality loans in more economically resilient regions and to cut costs. they had upwards of 90,000 employees in 2021 and 71,000 now
hgarOP 71875619: the point isn't that reducing employee count is a bad thing, but rather that their earnings have gone down significantly even with aggressive cost-cutting measures by firing thousands of employees, reducing salaries and reducing interest payments by paying off debt early