Quam Securities Research

Quam Securities

Equity Bottom-Up

<h2>LexinFintech (LX US)</h2>
<h3>New consumption as future driving force; Positive FY21 guidance</h3>
<p>Event takeaways</p>
<p><strong>LexinFintech (Lexin) held the New Consumption Strategy Conference in Shenzhen on 26 Jan 2021, with highlights including: 1) FY21 loan origination target of RMB220-230bn (+40% y/y); 2) launch of three new consumption products – consumption account, Maiya and Yuehui; 3) shift towards “To Bank” services provider from an online lending platform. We maintain our Buy rating for Lexin as we are positive</strong>…</p>

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<h2>LexinFintech</h2>
<h3>3Q20 results missed; Rolling forward to 2022E valuation</h3>
<p>Results commentary</p>
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<p><strong>LexinFintech (Lexin) reported 3Q20 adjusted net profit which missed consensus estimates by 2% and declined -38% y/y due to lackluster performance of online direct sales segment. 3Q operating revenue was broadly in line, -1% y/y and +7% q/q to RMB3.2bn. With this note, we roll forward our valuation to 2022E which will reflect a more normalized earnings profile for Lexin post regulatory changes. We</strong>…</p>
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<h2>Lexin Fintech (Buy; PT: US$7.60; +12%)</h2>
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<h3>Investing on the right side of regulatory change</h3>
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<p>We initiate coverage on Lexin FinTech (Lexin) with a Buy rating and 12-month target price of US$7.60. We believe Lexin’s shares offer investors exposure to the consumption growth of China’s class of young professionals. We expect the company’s New Consumption Ecosystem strategy will lead to monetization improvement and market share gain, and translate into strong revenue growth (2019- 22E CAGR in…</p>
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China

LexinFintech Holdings Ltd. operates as a holding company. The Company, through its subsidiaries, provides online consumer finance services. LexinFintech Holdings offers installments, money loans, wealth management, and other financial services. LexinFintech Holdings serves customers in China.

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