Lufax Holding (NYSE:LU) TTM Loss Of C¥3.9b Reinforces Bearish Profitability Concerns
Lufax Holding (NYSE:LU) has just posted its FY 2024 numbers, with third quarter revenue of C¥5,543.4 million and a basic EPS loss of C¥1.12 as the group continues to work through a period of negative earnings. The company has seen revenue move from C¥9,270.3 million and EPS of C¥1.68 in the second quarter of 2023 to C¥5,543.4 million and EPS of C¥1.12 loss in the third quarter of 2024, while trailing twelve month EPS has swung from a profit of C¥1.55 to a loss of C¥5.54. For investors, the headline story is about pressure on margins and the path back toward more sustainable profitability.
See our full analysis for Lufax Holding.With the latest figures on the table, the next step is to see how these results line up with the widely held narratives about Lufax, and where the numbers start to push back against those views.
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Net income swings from C¥965.3 million profit to C¥874.8 million loss
- In Q2 2023 Lufax reported net income of C¥965.3 million, while by Q3 2024 it was recording a net loss of C¥874.8 million, with trailing twelve month net income moving from a C¥886.9 million profit in 2023 Q4 to a C¥3,870.6 million loss in 2024 Q4.
- Bears often focus on credit and regulatory risk for lenders, and this shift from profit to TTM losses of C¥3,870.6 million gives them data to point to. It also concentrates attention on whether a return to profitability within three years, as forecast, can coexist with revenue growth that is expected to run at 7.9% a year and remain below the cited 10.3% market pace.
- Critics highlight that quarterly net income stayed negative across 2024, with losses of C¥870.5 million, C¥792.1 million and C¥874.8 million in Q1, Q2 and Q3.
- At the same time, the forecast 58.77% yearly earnings growth sets a high bar, so any continued TTM loss similar to the C¥3,381.6 million to C¥3,870.6 million range seen through 2024 could keep that cautious view intact.
Revenue steps down from C¥14.3b to C¥5.5b
- Total revenue in the single quarter view moved from C¥14,283.2 million in 2023 Q4 to C¥5,543.4 million in 2024 Q3, while on a trailing twelve month basis it went from C¥50,628.8 million in 2023 Q3 to C¥24,513.4 million in 2024 Q4.
- What stands out against the more optimistic storyline is that, even though revenue is forecast to grow at 7.9% a year from here, the recent TTM revenue step down from C¥41,681.7 million in 2023 Q4 to C¥24,513.4 million in 2024 Q4 means any bullish view that focuses on earnings improvement has to square that with a smaller revenue base.
- Supporters looking at the 58.77% forecast earnings growth have to factor in that the latest quarterly revenue across 2024 has been between C¥5,543.4 million and C¥6,963.8 million, below the C¥8,050.5 million to C¥14,283.2 million range seen in late 2023.
- That tension between slower revenue and faster projected earnings growth puts more weight on how margins and costs evolve, because the top line alone, based on the data given, is not doing the heavy lifting in the story.
Low 0.7x P/S against loss of C¥5.54 TTM EPS
- Lufax trades on a P/S of 0.7x versus a peer average of 2.4x and a consumer finance industry average of 1.3x, while trailing twelve month EPS has moved from a profit of C¥1.55 in 2023 Q4 to a loss of C¥5.54 in 2024 Q4.
- Supporters of a bullish angle point to that low 0.7x P/S as room for a re-rating if earnings turn around as forecast. Yet the fact that TTM EPS went from C¥1.55 to a C¥5.54 loss and TTM net income from a C¥886.9 million profit to a C¥3,870.6 million loss means this valuation argument rests heavily on belief that the projected 58.77% yearly earnings growth and a return to profit within three years will be met.
- On the positive side for that view, the current share price of US$2.69 is being compared to revenue that still totals C¥24,513.4 million on a TTM basis, which Next Steps
Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Lufax Holding's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.
The mix of pressure on earnings and cautious forecasts might leave you undecided, so act while the numbers are fresh and check the underlying data yourself. You can then weigh the risks against what optimistic investors are focusing on by reviewing 2 key rewards.
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Lufax is working through a tough patch, with revenue compressing from C¥50.6b to C¥24.5b on a trailing basis and earnings turning from profit to sizeable losses.
If this combination of shrinking revenue and sustained losses feels too risky for your comfort, you may want to shift your focus toward 81 resilient stocks with low risk scores to quickly compare companies that score better on stability and downside protection.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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