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On Tuesday, Citi analyst Daphne Poon upgraded shares of FinVolution (NYSE:FINV), a leading fintech platform, from Neutral to Buy, while also doubling the price target from $6.00 to $11.00. The stock, currently trading at $10.23, has shown remarkable momentum with a 91% return over the past year according to InvestingPro data. The upgrade follows the company’s fourth-quarter financial performance for the year 2024, which showcased significant growth in operating profit and net profit after tax (NPAT).
FinVolution reported a non-GAAP NPAT of RMB715 million for the fourth quarter of 2024, marking a 7.8% increase quarter-over-quarter and a 27.9% increase year-over-year. These figures were in line with Citi’s estimates. The operating profit for the same period rose sharply by 40.6% quarter-over-quarter and 53.7% year-over-year, reaching a six-year high of RMB788 million. With an impressive gross profit margin of 79.5% and trading at a modest P/E ratio of 6.7x, the company’s financial health score is rated as "GREAT" by InvestingPro. This notable improvement was primarily attributed to three factors: an acceleration in loan volume growth, an improved net revenue take rate, and an increased contribution from overseas revenue.
Despite these positive trends, the company’s NPAT growth for the fourth quarter was slower than the previous quarter, rising by 7.8%. This was mainly due to the normalization of other income, such as government subsidies, which decreased to RMB26 million in the fourth quarter from a higher base of RMB186 million in the third quarter of 2024.
Throughout 2024, FinVolution repurchased approximately $90.2 million worth of American Depositary Receipts (ADRs). Additionally, the company increased its dividend per ADS to $0.277, up 17% from the previous year, continuing its 4-year streak of dividend raises. This resulted in a total payout ratio of approximately 49% of the fiscal year 2024 NPAT, a slight increase of 1 percentage point year-over-year. InvestingPro analysis reveals 12 additional key insights about FinVolution’s financial strength and market position, available to subscribers.
Citi’s new Buy rating and the increased price target reflect a positive outlook for FinVolution’s revenue and NPAT acceleration expected in 2025. The firm acknowledges the high-risk nature of the investment but sees the potential for significant growth in the upcoming year. For detailed analysis of FinVolution’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, FinVolution Group reported strong financial results for the fourth quarter of 2024, with a notable 29% year-over-year increase in net income, reaching RMB 681 million. The company’s annual revenue rose by 4% to RMB 30.1 billion, driven by a 19% growth in international operations, which now contribute 20% to the total revenue. FinVolution has set a revenue guidance of RMB 14.4-15.0 billion for 2025, anticipating a growth rate of 10-15%. The company aims to increase its international revenue contribution to 25% by 2025 and targets 50% by 2030. Analysts have taken note of these developments, with some, like UBS, inquiring about the company’s strategy for international market expansion and shareholder returns. FinVolution also highlighted its investment in AI and technology, which has improved operational efficiency and reduced costs. The company plans to continue its aggressive expansion into international markets, including Indonesia and the Philippines, while exploring new opportunities in regions like Pakistan.
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