Will Lujin transform itself into a consumer finance unicorn? Not too!

Editor’s note: This article comes from the WeChat public account “Mantis Finance” (ID: TanglangFin), author Gu Haiguiren.

Yesterday I suddenly received the marketing text message sent by Lu Jin. Looking closely, the one-month dividend payout rate was 4.3%, and I was shocked. Could it have a 4.3% rate of return every month? Although as a financial person, it will soon be reflected that this must be the annualized rate of return, but this vague description may attract the attention of some people who do not understand finance. Even in the product interface of the Lufax App, there is still no description of 4.3% annualized income. Only the third point in the “view detailed rules” at the bottom of the interface has a calculation rule: interest per period = principal * Monthly dividend payout rate * Number of actual deposit days / 360 days in the interest calculation period.

Before the P2P industry began to be regulated, the industry was in chaos, and a lot of platforms with an annualized income of more than 20% grabbed a lot, and now they are all thundering or have withdrawn in other ways. “Mantis Finance” believes that the current marketing of Lufax is misleading, and the word annualization should be added. For example, it should be changed to “annualized monthly dividend yield of 4.3%” to be more realistic.

In light of the current industry situation, it may be that Lu Jin has done so. At present, the overall annualized income of Lujin’s wealth management products has basically dropped to less than 6%, most of which are around 4%. Whether such a rate of return can be provided by banks or brokerages, Lufax ’s nearly 10% profit level advantage has basically ceased to exist. The road to transformation has begun since the second half of last year.

Half of “Triple Jump”: “Single Foot Jump” is coming to an end, and “Stride Jump” runs smoothly

As we all know, Lufax is a P2P platform and has always been the leader in the industry. On July 18 last year, Lufax officially announced the “quit group”, ending the P2P business for nearly 9 years.

Now I ca n’t see the online loan business in the main interface of the Lufax APP. Only when I open all the services can I find the access point of the online loan.The last two products with higher yields have also been sold out. According to time estimates, the current product will be settled in 2022. Since the insurance company or guarantee company provides repayment guarantee measures, the first jump of Lufa should be able to end smoothly.

End the Lujin Institute of “Single Foot Jump” and turn to the second step of “Stride Jump”. At present, the main business of Lufax is replaced by traditional investment and wealth management products such as bank wealth management products, collective asset planning, change management and fund investment. Although there are also Louis Vuitton and agency insurance, they are not counted as main businesses.

Although it is a transitional stage of transformation, Lufax ’s current business seems to be relatively smooth.

On the one hand, in the first quarterly report disclosed by China Ping An, Lufax ’s online wealth management field, Lufax ’s holding client assets increased by 2.3% in the first quarter to 354.848 billion yuan. “Dad” Lufax Holding optimized the product structure, which enabled the rapid growth of standard products and B-end cooperative assets. At the same time, it relied on technological capabilities to build an intelligent management system and used AI technology to achieve intelligent matching of customers and products. Lufax Holding’s management loan balance in 2019 is 462.2 billion, and the total of more than 24 licensed consumer finance companies as of September 2019. At the same time, in terms of product structure adjustment, the focus is on the wealth management business, and there are more than 300 asset-end cooperative institutions.

On the other hand, even though the P2P business was announced to have ceased in July last year, Lufax ’s platform registered users still had a 9.1% growth rate, and the number of active investment clients remained at double-digit levels. This is due to the frequent chaos in the entire P2P industry, so that a large proportion of investors who are used to investing in fixed-term financial products are forced to accept traditional financial products with lower interest but higher security.

However, the characteristics of traditional wealth management products determine that their competitiveness cannot continue to lead. The profit rate of about 4 points, wealth management products, securities companies, banks and other companies grab a lot. Securities companies and banks have fixed and extensive business outlets, and people have higher trust. After the overall P2P industry is cleared and investors have completely overflowed, Lufax ’s customer growth will also likely face a period of fatigue. If you want to go public in the future, There must be a more competitive business model.

On October 24, 2019, the board of directors of Ping An Group decided to establish a nationwide technology-based consumer finance company. On November 27 of the same year, the China Banking and Insurance Regulatory Commission agreed that Ping An planned to build Ping An Consumer Finance Co., Ltd. in Shanghai.

The third step of “jumping” naturally surfaced. On April 9, 2020, the official website of the Shanghai Banking and Insurance Regulatory Bureau showed that Ping An Consumer Finance Co., Ltd. was approved to open on March 30, and the company ’s registered capital was approved to be 5 billion yuan. From the perspective of equity relations, China Ping An invested 30%, and the three affiliated companies of Lufax Holdings accounted for 70%.

Since Ping An Group ’s shareholding structure is very large and complex, there are many cross-shareholdings among various companies, so “Mantis Finance” can only clarify part of the equity relationship. The following relationship charts were sorted out through Tianyancha and other channels, and Lu Jinsuo’s vein became clearer. It can be seen that the current transformation of Lufax is centered around Lufax Holdings, including the previous operation in which Ping An transferred the equity of Ping An Inclusive Finance to Lufax Holdings and the reorganization of Ping An Inclusive Finance.

Relationship diagram of part of the equity held by Lufax Holdings

Lufax’s transformation of consumer finance unicorns goes public? Feiya also

Since Lufax stopped its new P2P business last year, there has been a lot of voice in the market about Lufax ’s transformation of consumer finance. Some people even directly linked Lufax to consumer finance unicorns. But we can find through the sorting out that this time the safe integration is the holding of Lufax’s “dad” Lufax. “Mantis Finance” believes that the reason why Ping An of China did this is most likely to package the listing of Lufax Holdings as soon as possible and form a listed subsidiary alongside Auto House and Ping An Good Doctor.

1. In the China Ping An Financial Report, Lufaxuo Holdings is the same level as the Financial One Account, Auto House, etc.

It can be seen from Ping An ’s 2019 annual report and the first quarter report of 2020 that the reports on the operation of Lufax are all in Lufax Holdings, and the words of Lufax alone are very few According to the text description of the financial report, Lufax Holding and Auto House and Ping An Good Doctor are in the same dimension. If Ping An intends to list Lufax separately, it should be publicized and mentioned in the financial report, but this has not happened.

2. Lufax is not a direct carrier of consumer finance

As can be seen from the current development of Ping An, Ping An Consumer Finance Co., Ltd. is not directly established under Lufax, but is jointly opened with the parent company Ping An through the investment of three other holding companies under Lufax. There are also several layers of relationships with Lu Jin. At present, the traditional wealth management business of Lufax is relatively simple, and its competitiveness is relatively limited. It may not be able to sell a good price when listed alone.

—— From the Ping An Annual Report of China

3. Lufax holding both toB and toC businesses is not a consumer financial unicorn

Lufax Holdings has absorbed the original system of Ping An Inclusive Finance, and has conducted business such as financing guarantee, financing consulting, and small loans for small and micro business owners, individual industrial and commercial households, and ordinary working class. Now with the participation of Ping An Consumer Finance Company and the integration of personal consumer finance business, the overall credit business line of Lufax Holdings is complete. If Ping An listed the Lufax Holdings as a package, it should not be classified as an online “consumer finance” unicorn, but as a giant in the credit system.

4. The P2P industry is bound to be cleared, and even if it is transformed, Lufax may not be optimistic about capital

Recently, Xu Nuojin, the representative of the National People’s Congress, said that mutual gold supervision should adhere to the “classified disposal, retreat-based” remediation strategy, thoroughly and thoroughly clean up the risk of P2P online loans, and firmly promote the clearing of market risks. The overall tone of the industry is irreversible, so the capital market is not optimistic about P2P assets, even if it is a successful transformation, it is difficult to be recognized. Judging from the stock market situation of P2P companies that went to the United States before the regulatory storm, they basically fell sharply all the way. For example, after the same industry giant’s Paida loan was converted to Xinye Technology, the stock price continued to fall. The same applies to Xinerfu, Weidai, and credit. Therefore, even if Lufax can be listed in the United States, the capital market will not be optimistic about the market outlook, and Ping An Group will not touch this “nail”.

The landing of consumer finance may have nothing to do with Lufax ’s business

Through the above analysis, we can speculate from the Ping An executives ’preference for listing and the equity arrangement of Ping An Consumer Finance Company that Lufax is not the ultimate carrier of the entire transformation, which also means the completion of the previous standards After “two consecutive jumps”, a certain turning point appeared in the middle. This time, the business of consumer finance companies may be far away from the Lufax platform.

On April 23, 2020, Ping An Consumer Finance Co., Ltd. officially opened in Shanghai and became the first consumer finance company in the country to be positioned as “technology + finance”. According to reports, Ping An Consumer Finance is independently developing a complete set of core technology systems covering the entire business process and full life cycle of consumer finance. By creating three core capabilities of online consumer credit product experience, intelligent risk control, and intelligent customer acquisition, it will eventually Form a fully intelligent online contactless consumer credit service.

Before this, Lufax could have expected to use its huge user base and credit data to allow Ping An Consumer Finance to directly upgrade or divert APP pages through Lufax. However, as can be seen from the above report, Ping An Consumer Finance Company’s decision is to go through it again and develop its business processes and technical systems completely independently. As a result, the landing of consumer finance has little to do with Lufax.

The expansion of consumer finance business requires the support of consumer scenarios. According to Chairman Chen Dongqi, this time Ping An Consumer Finance Company will rely on the five entry points of financial services, medical health, car services, real estate services, and smart cities, and Lufax is only a small part of the Ping An Financial Services ecosystem. section.

Lost the life-saving straw of transformational consumer finance, Lu Jinsuo’s tomorrow can be seen at a glance. After two years of expiration of the platform’s investor product, the number of investors who can continue to focus on Lufax’s business is still unknown. It is only hoped that it will not become a “chicken rib” in the safe business in the future.

Conclusion

From the perspective of Mantis Finance, Lufax used to be the darling of Ping An Group, the industry leader, and has a good view of the scenery. Now, in fact, Lufax has gradually been marginalized by Ping An Group. A microcosm of the P2P industry’s withdrawal from the stage of history.

Lu Jinsuo has reached the point where he is today. However, whether it is P2P or consumer finance, only products that meet the needs of society can survive better. my country’s current consumer marketThe volume is large, and the entire consumer finance market still has a lot of room for development. Although Ping An Group is fancy with the trend of “consumer finance”, it may not necessarily succeed. You should know that when they were just starting out, consumer finance companies such as Gitzo, China Merchants Group, and Immediately had already taken root in this field, and they had grown lush foliage. In the future, how Ping An Consumer Finance will survive in the “cracks” and where Luke’s tomorrow will go. These are worthy of consideration by the management of Lujin’s holding and even the parent company of Ping An.