Share Repurchase Plan Expanded To $30 Million

Share Repurchase Expanded.  CNF announced this week that its Board approved an expansion of its stock repurchase program, increasing the amount from $20 million to $30 million, and extending it through March 16, 2026.  The Company noted in the announcement that $18.5 million has been repurchased through May 27, 2024, which equates to roughly $2.0 million repurchased thus far in 2024.  We expect the Company will continue to buyback shares in the open market, especially at these levels.

Q1:24 Results.  CNF did not report first quarter results and may be switching to half year reporting going forward.  The Company has not publicly stated its intent to permanently move to half year reporting, but is under no obligation to report quarterly due to its foreign issuer status.

Model Update.  We did not make any changes to our model based on the expanded share repurchase plan.  We also left our quarterly estimates for 2024 and will adjust to half year reporting if it makes that disclosure when it announces results for the period ending June 30, at which point we will also release our 2025 estimates.  

Maintaining Rating & Target.  The increased buyback shows the Company’s commitment to take advantage of the reduced stock price, which we do not believe accurately represents the value of CNF.  While the absence of Q1 results brings some level of uncertainty, we remain confident management will drive value to shareholders over time.  We are reiterating our Buy rating and $5.00 target price on CNFinance.  Our target price is based on a Price-to-Earnings multiple of 10 times our 2024 currency-adjusted Diluted EPS estimate of RMB 0.18 per ordinary share, converted to ADS.