Supernova Finance Original
In the past 3 years, Lufax Holdings (lu.nyse；06623.HK, hereinafter referred to as "Lufax") share price plummeted, as of the most recent **, the company only reported 2$70 shares, less than the peak of 78$36 fraction of the share. So, is the long-term development of Lufax worth looking forward to?
Lufax is gradually transforming from a P2P platform to a retail credit service provider, trying to tap the development potential of small and micro loans and consumer finance business, but the current business of Lufax is not mature, which may be the main reason for the lack of confidence in the market.
Lufax placed the first performance growth point on the small and micro loan business, which is its trade-off based on the current development status of the enterprise.
P2P is the business of Lufax, which has been cultivated for many years, and the scale of online loan stock assets has exceeded 300 billion yuan. However, in the thunderous environment of the industry, Lufax's P2P main business was hit, and the company chose to clear all of it and carry out transformation.
As a P2P leader, Lufax has a number of transformation options, one of which is to become a comprehensive Internet financial service platform like JD Finance, but the promulgation of regulatory provisions such as the Notice on Regulating Commercial Banks' Personal Deposit Business through the Internet has stopped commercial banks from carrying out fixed deposits through non-proprietary online platforms, which has caused Lufax to face the loss of users, coupled with the challenges of loan business, after many attempts, Lufax has been forced to carry out inclusive financial business based on small and micro enterprises.
As the capillary of China's economy, small and micro enterprises occupy a pivotal position in the development of the country and have been strongly supported by regulators, and recently issued the "Notice on Improving the Quality of Financial Services for Small and Micro Enterprises in 2023" to encourage the formation of a financial service system for small and micro enterprises that is compatible with the development of the real economy, improve the quality of financial services for small and micro enterprises, and enhance the sense of access to financial services for small and micro enterprises.
However, small and micro enterprises have been facing the problem of difficult loans, the main reasons are as follows: first, the risk is high, small and micro enterprises are generally small in scale, lack of experience, unstable operation, and relatively high risk, so financial institutions have a low risk appetite for small and micro enterprises;Second, small and micro enterprises often do not have stable assets, high turnover and excellent financial status, which makes it difficult for banks and other financial institutions to assess their loan qualificationsThird, information asymmetry, the scale of small and micro enterprises is relatively small, information disclosure, auditing and other aspects are relatively lacking, and financial institutions have limited understanding of their financial situation and development prospects, so it is difficult to assess their credit and repayment abilityFourth, the lack of guarantees, small and micro enterprises have small assets, and financial institutions such as banks may not be able to provide sufficient collateral guarantees, which makes it more difficult to obtain loans.
According to CIC Information, 95Three per cent of small and micro enterprises say that only half of their needs are met by the funds they currently receive.
It can be seen that the blue ocean of small and micro loans is vast, but few financial companies choose to enter the game, which is a road full of thorns. If the layout is successful, it may be crowned with glory.
In terms of the layout of the small and micro loan business, Lufax has made the following efforts, one is to provide loan credit enhancement through a third-party credit enhancement provider or a licensed financing guarantee subsidiary, and the other is to acquire Ping An OneConnect at the original investment cost.
First of all, Lufax chose 100% guarantee to help small and micro enterprises obtain funds, which means that Lufax has increased its own assets, which puts greater risks on itself.
In such a strict credit market, the asset quality of financial institutions continues to deteriorate, but Lufax has gone the opposite way, and a closer look at its operating system can actually be regarded as a kind of "brave breakthrough" based on the real industrial pattern After years of intensive cultivation of the P2P track, Lufax has extremely rich experience in risk control, and there are many exchanges between the previous business model and offline, and the credit enhancement model of loans is more dependent on third parties, so it can be said that Lufax has the ability to help loan guarantee and reduce bad debts, so in the current situation, it is understandable that Lufax chooses self-guarantee in order to reduce costs and improve efficiency and increase income.
In addition, Lufax's choice to acquire Ping An OneConnect can be described as a risky move, according to public information, from 2019 to 2022, OneConnect has not made a profit, with a total loss of 53 in four years600 million yuan, and during the four-year period, OneConnect's revenue was still more dependent on Ping An Group and Lufax, and the business income obtained from the above two companies accounted for the proportion of the total business respectively. 4% and 669%。
It can be seen that Ping An OneConnect originally relied on Lufax for its development, and its self-development was not stable, and this time it was directly under the command of Lufax, although according to Lufax, it can carry out the layout of Hong Kong in business collaboration and has long-term development potential, but from a rational point of view, it is still necessary to gnaw on the short-term hard bones and get rid of this loss situation in order to look good at the later development.
From this point of view, the current layout of Lufax is based on the existing advantages of things with long-term returns, but the long-term returns, the focus is on returns, and in the long run, whether it can survive until there are returns, which requires extremely high technical content.
In 2020, Ping An Consumer Finance, a subsidiary of Lufax, was approved, and Lufax also obtained the qualification to legally operate personal lending business, and its consumer finance business entered the fast lane.
Lufax's choice to transition to consumer finance is also a way to follow the trend, which refers to the financial services provided to help people spend to meet their personal or family needs. At present, with the improvement of the national consumption level, the consumer finance track has also shown a high prosperity development situation, and the application scenarios have been continuously enriched, involving personal consumption loans, credit card consumption installments, social e-commerce consumption installments, mobile payment, personal consumption insurance, etc., and the track has long slopes and thick snow.
For example, consumers can obtain consumer installment services through the ** platform, choose to pay in installments when shopping, and repay them month by month, or credit card installment business, consumers also need to pay the minimum repayment amount or full repayment on time every month, and they can quickly repay the consumer arrears.
The characteristics of the consumer finance business are complementary and synergistic with the high-risk characteristics of Lufax's small and micro loans, and are also suitable for Lufax, which has a strong customer base and capital base.
According to public information, as of the third quarter, the cumulative balance of consumer financial loans of Lufax reached 36.1 billion, an increase of 29 from the end of the previous year4%。
However, at present, the structure of the consumer finance market has been formed, the competition has entered the white-hot, and has reached the era of stock, and the improvement of the value of a single customer has become the main competitive anchor point of the track.
In this way, Lufax is currently in the critical period of transformation, the short-term strength is the historical precipitation and the support of consumer finance, the long-term strength is the release of the potential of the microfinance business, is a risky move, but also looks at the face of the times, if the policy and market risk changes, it will face certain long-term business risks, but if the later stage of successful transformation, it will be very profitable.