Lufax Holding Ltd (LU)

Price$1.22Cached quoteAs of 2026-09-24 11:06 UTC

AI: Undervalued

Price checkThe market is valuing Lufax at an unusually deep discount to its reported net assets.

Lufax Holding Ltd is confirmed as NYSE ticker LU; each U.S.-traded ADS represents two ordinary shares. The roughly $1.07 billion market capitalization is only about 0.09 times book value and 0.10 times tangible book value. Book value means accounting net assets after liabilities; tangible book also removes goodwill and intangibles. Those are unusually deep discounts, but negative earnings and unresolved governance and credit risks mean the discount is not automatically a bargain.

Big pictureProfitability improved sharply in the quarter, but first-half cash generation and credit costs remain weak.

Second-quarter income fell 15.5% year over year, while net loss narrowed to $12 million; however, the first-half loss widened to $102 million. Operating cash flow was positive $537 million in the quarter but negative $85 million for the first half, so cash generation is not yet consistently durable. Credit impairment charges—expenses set aside for expected borrower losses—were $610 million in the quarter. That keeps earnings highly exposed to China's small-business credit cycle.

Business strengthConsumer finance growth and lower operating costs help, but Lufax is assuming substantially more credit risk.

New consumer-finance loans grew 27.6% year over year, and operating expenses excluding credit costs and finance costs fell 27.5%. Early delinquencies improved, but 90-day-plus delinquency rose to 3.7%, while Lufax bore risk on 93.2% of outstanding loans. Cash at bank was $2.83 billion, against $9.63 billion of borrowings. For a lender, gross debt partly funds earning assets, so liquidity depends on cash, funding access, credit performance, and near-term obligations rather than a simple industrial-company debt ratio.

What could change the storyA credit recovery could unlock the discount; persistent losses, refinancing pressure, or dilution could destroy it.

The bull case assumes credit losses normalize, delinquency stops worsening, profitability approaches breakeven, and Lufax preserves most book equity; even a move toward 0.2-0.3 times book could materially re-rate the shares. The bear case is continued losses, weaker funding access, and unresolved governance. Capital is currently being conserved: no semiannual dividend was declared. Lufax must redeem $468.9 million of notes and pay a $29.4 million extension fee; the extended $508.0 million note could dilute ownership by about 11.2% if fully converted. Dilution means existing investors own a smaller percentage.

AI: News

Second-quarter loss narrowsAugust results showed sharply smaller quarterly losses, but revenue and first-half profitability remained under pressure.

On August 18, Lufax released second-quarter 2026 results. Total income fell 15.5% year over year, while quarterly net loss narrowed 86.2% to RMB82 million. Consumer-finance loan originations rose 27.6%, helping total new loans grow 4.6%. Credit costs remained elevated, and first-half net loss was RMB694 million, so the quarter marked progress toward stabilization rather than a completed turnaround.

Convertible notes reworkedAn August agreement reduces the October maturity wall, but still requires cash redemption and preserves meaningful dilution risk.

On August 20, Lufax agreed to extend $508.0 million of Ping An Overseas Holdings convertible notes from October 2026 to October 2027, subject to shareholder approval, while redeeming $468.9 million of An Ke Technology notes in installments. The extension costs $29.4 million. If the extended notes are fully converted, 218.96 million new ordinary shares would be issued, increasing the enlarged share count by about 11.2% and diluting existing owners.

Leadership and listing updateJuly brought a CFO resignation and board changes while Hong Kong trading remained suspended.

On July 24, Lufax disclosed that CFO Tongzhuan Xi and three non-executive directors would resign effective July 25, with the company citing personal work arrangements and no board disagreements. Lufax also said it had returned to compliance with NYSE periodic-filing requirements, while its Hong Kong ordinary shares remained suspended. The company was still answering HKEX questions about investigation findings and internal-control work, leaving governance and listing normalization as an unresolved valuation overhang.

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	2025	2024	2023	2022	2021	2020	2019	2018
Revenue	¥23.11B	¥8.16B	¥15.32B	¥29.21B	¥38.29B	¥41.22B	¥41.93B	¥32.22B
Net income	−¥2.10B	−¥3.60B	¥953.1M	¥7.86B	¥16.71B	¥12.28B	¥13.32B	¥13.58B
Net profit margin	−9.08%	−44.16%	6.22%	26.90%	43.63%	29.78%	31.76%	42.13%
Basic EPSper basic share	-CN¥2.42	-CN¥5.54	CN¥0.71	CN¥6.79	—	CN¥11.19	CN¥12.27	CN¥12.65
Diluted EPSper diluted share	-CN¥2.42	-CN¥5.54	CN¥0.71	CN¥6.78	—	CN¥11.10	CN¥12.27	CN¥12.65

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Sells (SEC code S)0$0.00 disclosed value

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