On August 28th, Lexin released its Q2 2024 results. In the current industry and macro environment, LeXin's Q2 revenue and profit have grown in double digits compared to the previous quarter, and its overseas and other ecological businesses have blossomed, delivering a stable quarterly performance.
Q2 LeXin's transaction volume was 51.1 billion yuan (RMB, the same below), with a managed loan balance of 115.2 billion yuan; Revenue of 3.64 billion yuan, a month on month increase of 12.3%; Net income was 230 million yuan, a month on month increase of 12.4%; The cost of funds decreased by 58 basis points month on month, reaching a new historical low; Overseas business is growing rapidly, with Q2 loan scale in the Mexican market increasing by 61% month on month and revenue increasing by 113% month on month. Behind the steady performance, there are three noteworthy points to pay attention to in Lexin's Q2 financial report:
Balancing risk control and scale growth:
The overall asset risk is gradually improving, with double-digit growth in revenue and profit
Against the backdrop of small industry risk cycles, Lexin actively controlled its scale and raised its audit standards, resulting in a Q2 transaction volume of 51.1 billion yuan, slightly lower than Q1; Q2 revenue was 3.64 billion yuan and net income was 230 million yuan, with double-digit growth in revenue and profit compared to the previous quarter.
The continuous growth of performance is attributed to effective risk measures and continuous risk underlying capacity building: for newly added assets, Q2 Lexin deeply landed in Low& Grow strategy, strictly control the quality of newly added assets, and increase the proportion of high-quality users; For tail stock assets, continuous pressure reduction and clearance measures such as transaction control, reduction, and negative handling robot clearance will be implemented; In terms of underlying capabilities, Q2 Lexin further deepens the upgrade of its risk system from dimensions such as data, models, analysis monitoring, and strategies.
Through these effective measures, the risk of new assets added by Lexin in Q2 gradually improved, and the early risk indicator fpd7 of new customer new assets decreased by 23% compared to Q1; The overall asset risk has gradually decreased from its peak, with a decrease of about 7% in the collection rate at the end of the second quarter compared to the beginning of the quarter, and an increase of about 1.5% in the 30 day recovery rate compared to the beginning of the quarter. During the conference call, Xiao Wenjie, CEO of Lexin, stated that since the comprehensive upgrade of the risk team and risk system in the fourth quarter of last year, "we have seen a very significant improvement in overall risk resistance capabilities, and the company's ability to systematically resist risk cycles continues to strengthen
The gradual improvement of risks also gives Lexin more confidence to expand its asset scale. During the conference call, Xiao Wenjie looked forward to the company's second half of the year and said, "On the basis of the risk returning to the normal range, the company will appropriately increase customer acquisition efforts, leverage the advantages of scenario operations, and gradually promote steady growth in scale
Continuous dividends demonstrate long-term development confidence, with an annual dividend yield of nearly 10%
The consolidation of the underlying risk capability drives the continuous improvement of the company's overall profitability, and the biannual dividend policy will also continue to be implemented to repay investors' support. It is reported that the dividends of Lexin for the first half of 2024 will be officially distributed on October 18th, applicable to shareholders registered on September 16th.
This is the third consecutive dividend payout from Lexin. The dividends distributed this time will be distributed in cash at a rate of approximately $0.072 per ADS, which is approximately 20% of the net profit for the first half of 2024. Based on the closing price of $1.77 on the day of the release of this financial report (August 28th, Beijing time), even assuming that the dividends in the second half of the year are the same as those in the previous half, the annual dividend yield of investing in Lexin stocks is nearly 10%, far exceeding the yield of mainstream wealth management in the market.
I believe that with the continuous improvement of LeXin's profits in the second half of the year, the dividend yield will continue to increase.
Ecological business blooms in multiple locations, with overseas becoming an important strategic direction
Overseas, e-commerce, inclusive and other LeXin ecological businesses have made good progress in Q2 and are showing a trend of multiple blooming points.
In terms of overseas business, the South American Mexico business achieved rapid growth again on the basis of a breakthrough in Q1: the loan scale in Mexico increased by 61% month on month in Q2, and the revenue increased by 113% month on month.
Overseas business is becoming an important strategic direction for Lexin. Although internationalization started relatively late, Xiao Wenjie revealed during a phone conference that he will actively promote the accelerated development of overseas business in the second half of the year. "While maintaining high-speed growth in Mexico, Lexin will also closely monitor and explore more opportunities in emerging markets
In terms of scene e-commerce, the transaction volume of Q2 installment Le Mall's products increased by over 10% year-on-year. Scenarios are one of the differentiation advantages of LeXin. During the quarter, the installment LeMall continued to improve its product supply chain. At the same time, in response to the differentiated needs of different risk performance groups, it launched "factory stores" that focus on direct sales from source factories, flat substitution and cost-effectiveness, as well as "Zhenpinhui" that focuses on high-value and platform quality selection, to enhance user stickiness and stimulate the consumption potential of high-quality young consumer groups.
In terms of LeXin Puhui, the Q2 LeXin Puhui business provided loans totaling nearly 4.4 billion yuan to various customer groups. By delving into the industrial belts and professional markets of low tier cities, we will focus on strengthening the operation of high-quality small and micro customer groups. Within the quarter, high-quality assets accounted for over 60% of the newly added assets of new customers, helping to bridge the last mile of financial services in low tier industrial belts.
