Recently, lexinfintech (LX.O) announced its financial report for the third quarter of 2024, showing revenue of 3.66 billion yuan and profit (Non-GAAP EBIT) of 0.409 billion yuan, a quarter-on-quarter growth of 33.2%. The operation indicators improved overall, demonstrating a sustained improvement in profitability and a return to a growth trajectory.

The capital markets have directly affirmed the performance of LexinFintech for the current quarter and the whole year. After the financial report was released, LexinFintech's stock price rose 5% post-market, and the next day it surged over 25%, with a cumulative increase of over 150% this year. Several investment banks have raised the target price, giving a buy rating that surpasses the industry. Regardless of good or bad performance, the capital markets have already voted with real money.

At the same time, LexinFintech also increased the dividend payout ratio to reward investors for their long-term support and trust. According to LexinFintech's financial report, starting from 2025, the dividend payout ratio will increase from the current 20% of net income to 25%, returning cash dividends to shareholders.

Continuous improvement in profits, revenue and profit back on growth track.

Firstly, it can be seen that LexinFintech's performance has returned to a growth track.

Regarding revenue, from the first quarter to the third quarter of this year, the company achieved 0.324 billion yuan, 0.364 billion yuan, and 0.366 billion yuan respectively, showing consecutive growth. In terms of profit, from the first quarter to the third quarter of this year, the company achieved 0.282 billion yuan, 0.307 billion yuan, and 0.409 billion yuan respectively, demonstrating accelerated growth. Profit margin has also increased, with a net margin of 8.45% in the third quarter, up 223 basis points from the previous quarter.

After research, it is found that this is inseparable from LexinFintech's continuous strengthening of underlying risk control capabilities, and the continuous focus on stable and high-quality potential customer groups.

First, look at the related data: in the third quarter, high-quality assets in LexinFintech's new assets accounted for over 75%, FPD7 decreased by about 13% quarter-on-quarter, risk indicators reached a turning point, and the overall asset entry rate decreased by about 9% compared to the second quarter. At the same time, the number of active users has significantly increased, with a 10.5% increase in new active users quarter-on-quarter, and a 3.8% increase in total active users quarter-on-quarter.

Since the fourth quarter of last year, lexinfintech has introduced Ant Financial's Vice President of Risk Control, Qiao Zhanwen, as the new CRO. In terms of underlying capabilities, lexinfintech continues to deepen the risk system upgrade from multiple aspects such as data, models, strategies, and analysis monitoring. In terms of new assets, lexinfintech continued to improve external investment inflows and potential customer exploration in the third quarter, and by creating exclusive risk models for small and micro customer groups, upgrading intelligent anti-fraud models, etc., they aim to increase the proportion of high-quality users and manage the quality of new assets. As a result, lexinfintech has achieved high-quality development.

In addition, we can also see its strong technical strength and accumulation. It is worth noting that the improvement of the risk control system in each stage may only increase the delinquency rate by 1%-2%, and a fundamental upgrade may have a higher impact. Therefore, the enhancement of risk control capabilities depends on long-term accumulation rather than immediate actions. Lexinfintech's technological advantage lies in its ability to adapt and adjust to market changes, ultimately surpassing them. In the third quarter, lexinfintech's R&D investment reached 0.149 billion yuan, achieving growth year-on-year and quarter-on-quarter.

Building on the above foundation, lexinfintech also has a positive change. In terms of the money supply, the company's funding cost hit a new low in the third quarter, dropping by 98 basis points compared to the previous quarter, showing a trend of continuous decline for several quarters. By establishing good relationships with more financial institutions, the funding cost is optimized.

Now, with the marginal improvement in the industry and the frequent release of heavy information and measures to stimulate consumption and drive consumer finance since September, the industry's recovery is accelerating.

Therefore, it can be foreseen that lexinfintech will improve loan quality, lower funding costs, increase revenue take rate, optimize customer acquisition models and efficiency, and is expected to better meet user needs, achieve continuous improvement in profitability under controllable risks.

High dividends and low valuations, reevaluating lexinfintech from a value investment perspective

Looking back from an investor's perspective, how should the future value of lexinfintech as an investment target be evaluated?

Generally, the three elements of value investing are: choosing the right track, the right company, and the right price. Currently, as the industry enters a phase of normalized regulation, policies are comprehensively promoting the development of consumer finance to further unleash consumer potential and boost domestic demand. Against this backdrop, the industry is experiencing marginal improvement, so good development expectations will bring about favorable investment opportunities in the industry.

Focusing on LexinFintech, the company's profitability has continued to improve this year. Building on the basis of two dividends in a year, the company has increased the dividend payout to boost confidence and meet market expectations. With the current stock price level, the annual dividend yield is at least 5% or more. It is evident that whether it is the dividend ratio or the level of dividend yield, LexinFintech is sincere and full of goodwill.

This further demonstrates the company's internal optimistic performance expectations for business development. The management team also expressed strong confidence in the company's 2025 earnings performance and profitability at the earnings conference. From this perspective, LexinFintech's growth has become more certain and sustainable, fitting the characteristics of a 'good company,' and deserving higher expectations.

So, does the 'good price' also match? Objectively, despite the clear improvement in performance and stock price this year, LexinFintech's PE/PB ratios are relatively low. The company's latest closing price is $4.270, with corresponding TTM and PB ratios of 6.64 and 0.49 respectively. While both valuation indicators have improved, there is still considerable room for improvement compared to the industry average level.

From a third-party perspective, several brokerages have recently released 2025 macroeconomic and strategic outlook reports, mentioning the frequent favorable policies and the emphasis on dividend asset allocation value. Institutions have reiterated that the underlying logic of high dividend-driven dividend investments remains unchanged, and dividend assets are still one of the core choices for long-term allocation. It can be inferred that LexinFintech's value proposition will garner more attention from the market.

Shortly after LexinFintech released its financial report, brokerages have also issued research reports praising the company. Bocom Intl raised LexinFintech's target price to $4.2 and maintained a 'buy' rating, stating 'expected improvements in risk control will improve LexinFintech's asset quality, driving profit growth recovery.' In addition, a Citi analyst upgraded LexinFintech to a 'buy' rating and raised the target price to $4.4, reflecting the positive outlook from professional institutions.

Therefore, LexinFintech fundamentally meets the three elements of value investing, with relatively high asset quality and strong attractiveness in the capital markets. If LexinFintech continues to receive financial data verification on its performance and demonstrates continuous growth, the company is poised for long-term value appreciation.

Closing Words:

Finally, it is worth noting that in the third quarter, LexinFintech's ecological business has been steadily developing, with synergistic growth between the company's business segments, which is expected to further drive the overall growth of the company in the long term.

In addition, the overseas business has also achieved considerable success. In the third quarter, the Indonesian market grew rapidly, with a 31% increase in trading users compared to the previous period, and an 18% increase in trading volume. The Southeast Asian market has become a "treasure trove" where Lexinfintech has opened its second growth curve. Based on the huge growth potential in overseas markets and the characteristic of high pricing, the overseas business will drive Lexinfintech to achieve faster growth.

Overall, Lexinfintech operates steadily and well, forming a corporate culture that values investor returns. Evaluating from multiple dimensions of "good track, good company, and good price," it is worth taking a closer look at Lexinfintech.