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Citi raises FinVolution stock target, keeps neutral stance on Q2 report

Published 21/08/2024, 15:28
Citi raises FinVolution stock target, keeps neutral stance on Q2 report
FINV
-4.05%

On Wednesday, Citi updated its outlook on shares of FinVolution (NYSE:FINV), a leading fintech platform, by increasing the stock price target to $5.75 from the previous $5.30, while keeping a Neutral rating on the stock. The adjustment follows FinVolution's second quarter earnings report for 2024, which showed performance in line with analyst expectations.

FinVolution reported a non-GAAP net profit after tax (NPAT) of RMB 591 million for the second quarter of 2024, marking a 6% increase from the previous quarter and a 1% rise year-over-year. This result accounts for 44% of the full year 2024 earnings estimate, as per Visible Alpha consensus estimates.

The company's loan volume experienced a modest recovery, increasing by 0.8% quarter-over-quarter and 3.0% year-over-year to RMB 48.7 billion in the second quarter. For the first half of the year, loan volume reached 45-47% of the company's full year guidance, which is set between RMB 205.1 billion and RMB 216.0 billion.

Net revenue for the company also saw an uptick, rising by 0.4% quarter-over-quarter and 3.0% year-over-year in the second quarter, while the revenue take rate remained stable at 3.8%.

Moreover, FinVolution has been active in share repurchases, buying back US$29.6 million worth of shares in the second quarter and a total of US$56.8 million in the first half of 2024. As of July, the company has used 63% of its US$150 million share repurchase quota, which was announced in August 2023.

FinVolution is on track to return more than 55% of its net profit for the full year 2024 to shareholders through dividends and share repurchases.

Despite these positive developments, Citi has slightly reduced its earnings estimates for 2024 to 2026 to account for slower domestic loan growth and limited potential for further increases in the take rate. The new stock price target of $5.75 is based on a forward price-to-earnings ratio of 4 times the estimated earnings for 2025.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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