Investors should buy Lufax as the China-based lending company pivots, according to Sanford C. Bernstein.
Small- and medium-sized business lending has outpaced the GDP growth in China by three to four times, the analyst wrote.
And despite the recent economic slowdown, Yu said new loans should resume at a compound annual growth rate of about 15% between 2024 and 2027.
That would represent a "U"-shaped recovery, with earnings per share bottoming out before growing at a compound annual rate of 20% between 2024 and 2027, Bernstein said.
After taking more risk exposure, the company's impairment losses are expected to grow at a compound annual rate of 15%.
Persons:
Sanford C, Bernstein, Tianjiao Yu, Yu, Lufax, Michael Bloom
Organizations:
U.S, LU
Locations:
China, 2023E