Lexin, A Fintech To Benefit From China's Crackdown On Ant Group

  • Lexin has transformed from a peer-to-peer lending provider to an independent loan facilitator.
  • In a few years, Lexin's profit-sharing mode will pivot to riskless and long-term growth as part of its pioneering role in the industry.  
  • As Lexin targets highly-educated young users, the company has increased incorporations with various banks and eased customer acquisition.
  • Lexin will benefit from the antitrust regulations that provide extensive market opportunities for niche fintech players. 

Lexin (LX) is a New York-listed Chinese fintech company, which in recent years has expanded its initial business from consumption installment loan services to a 'to-bank'-driven platform. The company has been rapidly growing over the past few years and is expected to maintain the high growth rate as huge market space has opened up – despite the presence of the giants – under new antitrust regulations.

 The company's stock is currently undervalued if compared to its industry peers. The equity market disregards Lexin's growth potential by deeming it as a traditional financial stock. Lexin's P/E ratio is under 20x, which is rather low for a rapidly growing company, and significantly below the levels of its US counterparts in the fintech space.

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Encouraging performance – nonstop transforming

Lexin was founded in 2013. At the very beginning, it leveraged investment platform Juzi Licai to generate large profits from its peer-to-peer (P2P) business. By the end of 2020, the company had removed all the P2P business in response to the regulation changes, with 100% payback to the investors. At present, Lexin is no longer a loan issuer but a loan facilitator with a to-Business (2B) transformation in progress. At the current stage, Lexin still offers guarantee services and takes credit risks for banks, accounting for over 60% of its total revenue.

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Disclaimer: Please consult your own advisor before making any investment decision. 

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