The Top Fintech in a $100 TRILLION Market

This might come as a surprise…

One of the best opportunities I’ve found to make America rich again has to do with China. Even with the fallout from the COVID-19 pandemic, China will likely remain a growing economy for many years to come.

And it’s a young Chinese financial technology (fintech) firm with millions of customers that will help to fulfill both the Chinese dream and the American Dream as the world recovers from this pandemic.

China has one of the fastest-growing middle classes in the world, with more than 400 million people currently. That alone is larger than the entire population of the United States.

What’s more, McKinsey & Company expects it could grow to 550 million by 2022.

By the middle of the decade, that number is expected to grow to 780 million. That’s larger than the entire population of not just the United States but all of North America – by a margin of nearly 300 million.

These increasingly affluent consumers want all the things we take for granted in the West: TVs, computers, smartphones, cameras, major appliances, beauty products, upscale clothing, etc.

And they have adopted another Western idea: Buy now, pay later.

The pandemic has put a stall on Chinese middle-class consumption, but I have no doubt that as the world reopens, things will return to normal both in China and in the rest of the world.

And that will play right into the hands of LexinFintech (Nasdaq: LX). Further, the coronavirus has created a fantastic opportunity for investors as LexinFintech’s price has been knocked down to below $10.

Based in Shenzhen, LexinFintech is China’s premier online consumer finance firm. With or without the coronavirus, China’s middle class is young and urban. It’s tech-savvy and credit starved.

LexinFintech is the leader of a new online loan industry that has emerged around its needs, as well as the needs of small business owners and rural communities.

Finance for the Far East

Fintech firms are disrupting the financial industry the world over, but as you’ll see, LexinFintech is cooperating with old financial institutions while fueling the growth of new decentralized online finance.

The company owns and operates Fenqile, a popular online shopping mall that also offers installment loans.

In addition, it matches borrowers with other lenders, including commercial banks and consumer finance companies.

One of LexinFintech’s main services is Juzi Licai. It’s an online loan platform that allows access to credit without going through a bank. It matches customer loans with diversified funding sources, including individual investors, third-party commercial banks, consumer finance companies and other licensed financial institutions.

LexinFintech has partnered with more than 100 financial institutions. They include the likes of the Industrial and Commercial Bank of China, People’s Insurance Company of China Group, and China Minsheng Bank.

Peer-to-peer lending comes with a lot of associated risk. But the market for it is huge. LexinFintech can profit from its enormous potential while enjoying the stability of institutional financial entities.

There are huge numbers of small- and medium-sized businesses hungry for credit that LexinFintech is now well-positioned to provide.

PayPal CEO Daniel Schulman thinks the fintech industry that LexinFintech exemplifies could become a $100 trillion market.

And LexinFintech is carving out a sizable piece of that market for itself…

Bear in mind, China isn’t just the world’s most populous country. It is also the world’s fastest-growing consumer market. Tens of millions join its middle class each year.

Most of LexinFintech’s customers are young, educated, and between the ages of 18 and 36. This is a demographic group that has been underserved by China’s traditional banking system.

As a result, the company is experiencing heady growth.

At the end of 2016, the company had just 12 million registered users. By the end of 2019, it reported more than 73.3 million users. That’s a 510% increase in three years! And it’s positioned to keep growing for years to come.

A Financial Powerhouse in the Making

The company has been publicly traded only since late 2017. Since then, it has seen a meteoric rise.

In 2017, its revenue climbed by almost $200 million to $827 million. Its profits soared to $36.9 million from a loss in 2016.

In 2018, it broke the $1 billion barrier. It brought in $1.1 billion in revenue, and its profits jumped 47% to $287.6 million.

In 2019 revenue increased to nearly $1.5 billion and net income exceeded $320 million, up 16% over 2018.

By the end of 2020, LexinFintech is projected to bring in nearly $2 billion in revenue and a net income of nearly $440 million.

The company got off to a great start in 2020. Loan originations were up 69% over the first quarter of 2019, and the number of active users went up by 99.1% over the same time period. Revenue was also up 33.6% over the first quarter of 2019.

Profits dipped to a loss of $95.2 million in the first quarter of 2020, but CEO Jay Wenjie Xiao chalked that up to a combination of the coronavirus pandemic and a change in LexinFintech’s accounting methods with the adoption of ASC 326.

In short, ASC 326 has no threshold for impairment loss recognition. Under it, impairment should reflect an estimate of all expected credit losses. LexinFintech likely factored losses anticipated due to the pandemic into its reporting. Bloomberg projections remain optimistic about this company, and you should too.

To summarize, here’s why I like LexinFintech:

1. The company is still small and almost completely unknown on Wall Street. Its market cap is less than $1.8 billion.
2. It is a tremendous innovator, offering online shopping – with installment financing – to China’s young and increasingly affluent consumers.
3. Revenue is up more than 15%.
4. The company enjoys a 22.72% profit margin protected by a wide array of brand names and patents.

An Investment in the East to Secure the American Dream

I want to see hardworking folks achieve the American Dream – so does Bill. You can achieve that by investing in the company allowing Chinese people to live their dreams.

Here’s the big picture. The Chinese population is enormous and growing. The national economy is expanding more than twice as fast as our own.

Millions of young Chinese consumers are joining the middle class each year.

And the company’s customer base is expanding from large cities to smaller ones and from low-income earners to higher-income earners.

As China’s middle class grows, expect it to look more Western in terms of consumption, if not in politics or culture. That means credit, loans and debt.

LexinFintech is set to take off as China becomes wealthier. By investing in it, you can make yourself wealthier too. It will give you a stake in what is potentially a $100 trillion industry.

This stock has a long runway of growth ahead of it.

Action to Take: Buy LexinFintech (Nasdaq: LX). We will notify you with a Safety Switch Alert if we change our recommendation.