What’s the most undervalued stock in the market? (2-1-24)

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LUFAX HOLDING LTD is a holding company mainly engaged in providing financial services for small and micro enterprises. The Company’s core retail credit enablement business includes bank-funded loans, trust-funded loans and consumer finance loans. The Company is also engaged in wealth management and providing access to financial products and services. The Company conducts the business through its subsidiaries.

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What good is price to book if that book value is potentially wildly inaccurate?

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Dividend ratio is now 15.5%. They paid out more in dividends in 2022 than the company’s entire market cap is valued at today. They have around 5.3 Bil in cash. Market Cap is 1.3 Bil. They IPO in 2020 around $50. Today it’s $2.35

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They’ve paid our 4 dividends in their lifetime as a company:

4/22 - $1.36
10/22 - $.68
4/23 - $.20
10/23 - $.156

Not exactly the most promising trend, so I would throw the trailing yield in the garbage. Their cash on hand is also going the wrong direction to the tune of a 24% drop over the last two quarters.

BofA also had this to say:

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BofA downgraded Lufax () to Neutral from Buy with a price target of $2.80, down from $5.80. Given the firm sees “no business turnaround in sight and low business visibility,” the firm cut Lufax’s 2023 attributed net profit estimate by 35% and 2024-25 profit estimates by 66%-90%. The analyst continues to prefer Qifu Technology () over Lufax for higher visibility, a better track record and high capital return.

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I say all of that to say I’ll watch LU but to call it a contrarian play would be the understatement of the year.

BMY

BABA

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How much Lufax do you own? It's down 80% Something here stinks.

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I own a lot of it. Started buying it last August.

Only thing that stinks is China sentiment.

They could literally liquidate the company and investors will be paid back 8-10x. Most likely they go back private as their majority stockholder is Ping An at BV. Which again is 10x from here. Still would be a 50% haircut from IPO value but recent investors would make a killing.

Trading at 10% of BV, when your book is full of liquid assets like cash and loans, is completely insane. Even in the midst of financial crisis no bank was trading at 20% of their cash

And this isn’t some micro cap stock that could have strange valuations. Lufax is a whale in Chinese e-lending. Other competitors like QFIN and JFIN don’t trade for anywhere close to it.

Only time I’ve ever seen p/b ratios this out of whack with inherent asset value are Greek shipping companies which are just a dilution scam. Lufax will never dilute and has had buybacks in the past.

They are priced like the Yuan will collapse. I think when Chinese start to print and stimulate, this will 20x off the bottom. Their price action reminds me of UAN. Another good company, that paid dividends, and got throttled down to a microscopic valuation during Covid only to 25x off their bottom

NIO

You’re shorting lithium at these prices? Seems like that trade may be getting a little long in the tooth.

Don’t know why BABA is down. Was part of my retirement plan, but now thinking of selling if it doesn’t improve over the next year.