On Tuesday, Citi updated its assessment of FinVolution (NYSE:FINV), a leading fintech platform, by reducing its price target to $5.30 for the sharesfrom the previous $5.43, while keeping a Neutral rating.
The revision follows FinVolution's latest financial report, which showed a non-GAAP net profit after tax (NPAT) of Rmb559 million for the fourth quarter of 2023. This figure represents a decrease of 6.3% quarter-over-quarter but an increase of 5.3% year-over-year.
The full-year earnings for 2023 were reported at Rmb2,457 million, marking a 4% rise from the previous year, aligning with consensus estimates from Bloomberg. However, the company experienced slower loan volume growth than anticipated, with a quarterly increase of 2.1% and a yearly increase of 7.8%, reaching Rmb52.4 billion in the fourth quarter. The total loan volume for 2023 was Rmb194.4 billion, which fell short of management's guidance range of Rmb196.7 billion to Rmb212.7 billion by 1.2%.
Net revenue after provision for the fourth quarter declined by 1.3% from the previous quarter and by 3.5% from the same period last year. The decrease was primarily attributed to a drag on the take rate and ongoing asset quality pressure during the quarter.
Despite these challenges, FinVolution announced a notable dividend per American Depositary Share (ADS) of $0.237 for the fiscal year 2023, which is a 10.2% increase from the prior year. This dividend suggests a payout ratio of 20%, up by 1.5 percentage points year-over-year.
In addition to the dividend, FinVolution executed a share buyback program, repurchasing shares worth $97.6 million during the fiscal year 2023. The combined effect of the dividend and the buyback program resulted in a total shareholder return that equated to 48.5% of the company's net profit for the year.
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