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On Thursday, Citi adjusted its outlook on Nasdaq-listed Lexin FinTech Holdings, lowering its price target to $2.03 from $2.12, while maintaining its „neutral“ rating on the stock. This downward revision follows LexinFintech's announcement of a significant decline in GAAP net income after tax (NPAT) for the fourth quarter ending December 2023.
LexinFintech reported GAAP NPAT of RMB12 million, down 97% from the previous quarter and 96% year over year, reaching a three-year low.
This decrease was mainly due to an impairment loss of RMB302 million from a long-term investment in a domestic bank. However, excluding impairments, non-GAAP NPAT for the fourth quarter was RMB284 million, a decrease of 33% sequentially and 27% year-on-year.
Net revenue after provisions for the fourth quarter was RMB 1.53 billion, a slight decrease of 2.1% quarter-on-quarter and 1.2% year-on-year. The decrease in revenue was driven by higher provisions, which increased 7% sequentially and 122% year-over-year.
LexinFintech's operating profit also declined, falling 31% quarter-on-quarter and 20% year-on-year to RMB 337 million in the fourth quarter. Operating income margin decreased significantly to 22.1%, down 9.3 points from the previous quarter and 5.2 points from the same period last year.
This was due to an increase in processing and service costs as a percentage of net revenue, which rose 5.1 percentage points sequentially and 3.5 percentage points year-over-year to 33.7% in the fourth quarter due to heightened risk. Management initiatives and projects.
Despite the decline in profitability, LexinFintech announced a semi-annual dividend of $0.066 per American Depositary Share (ADS) for the second half of 2023. This represents approximately 20% of GAAP NPAT for the second half. Management has indicated plans to maintain or increase the dividend payout ratio of 20% for 2024.
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