China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

LexinFintech IPO: Rushing Ahead of Double Regulatory Whammy?

LexinFintech IPO Review - Imagination Needed to Justify Cheap Valuation Relative to Peers

LexinFintech IPO Valuation: Whatever You're Smoking, I Want Some

MD, Blue Lotus Research Institute

Gu Jun, CFA

Equity Capital Markets

Lexinfintech Holdings / Equity Capital Markets

The Impact of Regulation on Dec. 1, 2017The regulation mostly will affect Lexin in two aspects. The cash loan and the funding source.First, the regulation requires that all companies should no lend cash loan to people without scenarios support. Scenarios support means that companies know how their customers will spend the loan. Such as installment purchase counts as a scenario. For Lexin, every cash loan requires customers to answer what they will do with this money. Now it depends on the regulation authorities to decide whether this kind of approach is enough or still needs to be modified. Even in the worst situation, Lexin’s major business still is installment purchase, which is legal under both old and new regulation. In the worst situation, we predict Lexin will suffer 20% lost of its revenue. But this situation is very unlikely to happen given that company still have time to react to the regulation.Second, the funding source. Previously, there was news saying that regulation will ban P2P to fund micro loan business. But on the latest regulation, the P2P is banned to lend to loan product with higher than 36% APR, which instead proves that Lexin’s P2P funding is legal. This is good news for Lexin.For the incoming IPO of LeXin, we discuss about the following:<ul><li>Opinion on Lexin</li><li>LX vs. QD</li><li>IPO Basic Information</li><li>Lexin’s Business</li><li>Lexin’s Partner</li><li>Lexin’s Income</li><li>Lexin’s Shareholders</li><li>Financial Statement</li></ul>

The Impact of Regulation on Dec. 1, 2017The regulation mostly will affect Lexin in two aspects. The cash loan and the funding source.First, the regulation requires that all companies should no lend cash loan to people without scenarios support. Scenarios support means that companies know how their customers will spend the loan. Such as installment purchase counts as a scenario. For Lexin, every cash loan requires customers to answer what they will do with this money. Now it depends on the regulation authorities to decide whether this kind of approach is enough or still needs to be modified. Even in the worst situation, Lexin’s major business still is installment purchase, which is legal under both old and new regulation. In the worst situation, we predict Lexin will suffer 20% lost of its revenue. But this situation is very unlikely to happen given that company still have time to react to the regulation.Second, the funding source. Previously, there was news saying that regulation will ban P2P to fund micro loan business. But on the latest regulation, the P2P is banned to lend to loan product with higher than 36% APR, which instead proves that Lexin’s P2P funding is legal. This is good news for Lexin.For the incoming IPO of LeXin, we discuss about the following:Opinion on LexinLX vs. QDIPO Basic InformationLexin’s BusinessLexin’s PartnerLexin’s IncomeLexin’s ShareholdersFinancial Statement

Lexinfintech Holdings

IPO Preview: Lexin Fintech Holdings Ltd.