Let’s be real, folks. The market has been throwing the baby out with the bathwater when it comes to internet finance platforms. Recent turbulence due to the ‘equalization of taxes’ has sent valuations plummeting, but I’m here to tell you – this is a major overreaction.
Hua Tai Securities just dropped a note highlighting a key truth: the fundamentals of these platforms are improving. We’re seeing healthy loan quality, steady loan growth, and – critically – rising profits. The fourth quarter of 2024 is continuing the positive trend.
They’ve largely digested the risk spikes from last year and are no longer slamming on the brakes with lending. It’s a balanced approach: growth and quality, and that’s a recipe for improved earnings.
And here’s a kicker: the new regulations regarding commercial bank internet lending (the ‘Assisting Loan New Rules’ released April 3rd) are actually good for the big players. Expect to see the smaller, weaker platforms struggle, and frankly, good riddance. This will consolidate the market.
Let’s break down why this matters (a little finance 101 for you):
Internet finance platforms operate by connecting borrowers with lenders, often leveraging technology to streamline the process and reach wider audiences. This differs from traditional banking with lower overhead costs.
Loan quality, measured by metrics like non-performing loan ratios, directly impacts profitability. Improvement here signals a healthier overall financial system.
Regulatory changes, like the recent ‘Assisting Loan New Rules,’ aim to standardize and manage risks within the industry. Smart regulation isn’t suppression; it’s stabilization.
Valuation, in simple terms, is what the market thinks a company is worth relative to its earnings. A low valuation suggests an undervalued opportunity, and that’s precisely what we’re seeing now.
Combine the solid fundamentals, a supportive (and clarifying!) regulatory landscape, and the ridiculously low valuations, and you have a compelling investment case. Don’t let fear dictate your decisions – look at the data! The value is there, waiting to be unlocked.
