UPDATE: China Renaissance Starts FinVolution (FINV) at Buy
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China Renaissance analyst Eric Lu initiates coverage on FinVolution (NYSE: FINV) with a Buy rating and a price target of $9.20.
The analyst comments "Leveraging its improved funding cost structure and robust risk management system, the company is actively moving to boost the share of prime borrowers in its mix and, thus, improve asset quality; ~60% of new loans originated in Aug were reported with IRR below 24%, reflective of its transition. Unlike other capital-light players serving the same cohort, FinVolution sticks to is highmargin capital-heavy model given its solid cash balance and ample capital, which we estimate could absorb up to 172% credit risk based on the loan balance as of 2Q21Meanwhile, we highlight FinVolution currently stands out as the only dividend distributor among listed Chinese online lenders."
Shares of FinVolution closed at $5.54 yesterday.
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