Citi Downgrades LexinFintech Holdings (ADR) (LX) to Neutral, '1Q22 miss on sluggish loan vol. growth and higher provisions'
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Citi analyst Judy Zhang downgraded LexinFintech Holdings (ADR) (NASDAQ: LX) from Buy to Neutral with a price target of $2.44 (from $4.29).
The analyst comments "LX reported 1Q22 non-GAAP NPAT of RMB120mn (-62.1% q/q; -84.3% y/y), accounting for 5.8% of the FY22 consensus estimate. Net revenue (net of provision) plunged 11.5% q/q and 35.6% y/y to Rmb1.2bn on higher provisions for new loans, which was directly recognized as a deduction to revenue, and weaker loan volume growth of -0.9% q/q -19.7% y/y to RMB43.2bn (c.18% of FY22 guidance). Operating profit dived 64.2% q/q (or -88.9% y/y) to RMB94mn, with operating margin falling 11.6ppt q/q and 37.9ppt y/y to 7.9%, mainly on higher S&M and processing and servicing expenses as a % of net revenue. Despite soft loan volume growth in 1Q22, mgmt. maintains loan origination volume growth guidance at 10% y/y for 2022 (i.e. loan volume of c. RMB235bn in 2022). We downgrade our rating to Neural on dimmer near-term earnings outlook."
Shares of LexinFintech Holdings (ADR) closed at $2.37 yesterday.
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