Lufax Holding: Operating inflection at a trough valuation; upgrade to Overweight

Research evidence excerpt

Lufax Holding: Operating inflection at a trough valuation; upgrade to Overweight

Asia Pacific Equity Research

28 July 2026

▲Overweight

Lufax Holding Previous:LU, LU USNeutral

Price (24 Jul 26): $1.38

Operating inflection at a trough valuation; upgrade

▼ Price Target (Dec-27): $2.00

to Overweight Prior (Dec-26): $2.10

We upgrade Lufax to OW from N following its 2Q26 operational update, as China

improving loan growth and leading asset quality indicators provide a clearer Banks & Financial Services

path to recovery from a distressed valuation. Lufax also appears relatively AC Lincoln Yu

resilient to further loan pricing regulation, given its below-peer IRR. At a 0.1x (852) 2800 8523

forward P/B and with market capitalization equivalent to only 37% of end- lincoln.yu@jpmorgan.com

FY25 cash, the current valuation underappreciates the operating recovery and J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

balance sheet optionality, in our view. The interim results in August could be a Morgan Broking (Hong Kong) Limited

catalyst through improved earnings visibility, while any shareholder return Katherine Lei AC

initiative would represent additional upside from our base case. (852) 2800-8552

katherine.lei@jpmorgan.com

• Upgrade to OW as fundamentals turn at a trough valuation. New loan J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

growth recovered to 4.6% y/y in 2Q26 from a 14.8% decline in 1Q26, while Morgan Broking (Hong Kong) Limited

the contraction in outstanding loans moderated to 3% q/q. Leading asset Peter Zhang

quality indicators also improved, with C-M3 declining 20bps q/q, to 1.0%, (852) 2800-8557

D30 falling 30bps, to 5.8%, and the consumer finance NPL ratio edging peter.zhang@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited/ J.P.