Citi maintains Sell rating on Lakara Payment and raises target price to RMB23.6

Overview

This report is Citi's model update on Lakara Payment (300773.SZ), mainly incorporating 2025 and 1Q26 results. The report acknowledges that the company's domestic GPV resumed growth in 1Q26, especially with improvement in core bankcard GPV, but believes the macro environment remains weak and that the growth trajectory and sustainability require more time to verify, therefore maintaining a Sell rating.

Core views

The core view is that Lakara remains a leading third-party payment acquirer in China, and the exit of smaller participants after industry consolidation may bring market share gains; however, there has not yet been a clear turnaround in fundamentals. Core adjusted net profit fell sharply in 2025, and the strong headline profit growth in 1Q26 was mainly driven by gains from disposal of financial assets, while profit growth excluding one-off items was very weak.

Analysis framework

The report adopts a combination of earnings review, earnings forecast revision, and relative valuation: it first breaks down revenue, GPV, net profit, and cash flow performance for 2025 and 1Q26, then distinguishes one-off gains from core adjusted profit, and finally derives the target price based on 22x 2027E P/E applied to 2027E EPS.

Methodology notes

• Valuation methodTarget P/E valuation

  22x 2027E P/E

  The target price of RMB23.6 is based on 2027E EPS multiplied by 22x P/E; this multiple represents a 10% premium to the average forward P/E of about 20x since 2020, reflecting potential share gains from the exit of smaller players after regulatory consolidation.

• Rating frameworkCiti Research ETR rating

  Expected total return

  Citi adds the share price return implied by the 12-month target price to the dividend yield; this report gives an expected share price return of -2.1%, dividend yield of 1.7%, and total return of -0.5%, corresponding to a Sell rating.

• Earnings quality analysisExclusion of one-off items

  Adjusted net profit attributable to parent

  The report distinguishes net profit attributable to parent from adjusted net profit excluding one-off items in order to remove the impact of gains from disposal of financial assets on profits in 2025 and 1Q26.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 300773.SZ Lakara Payment A-share

  Covered target in the report

  Strengths

  The company is a leading third-party payment acquirer in China with a strong position in bankcard payments; domestic GPV resumed growth in 1Q26, while QR code payment and cross-border TPV also maintained relatively fast growth.

  Weaknesses

  Macro weakness is suppressing payment growth, adjusted net profit fell sharply in 2025, core adjusted profit in 1Q26 grew only slightly, and operating cash flow turned negative.

  Comparison

  Valuation is based on 22x 2027E P/E, a 10% premium to the average forward P/E of about 20x since 2020.

  Risks

  If consumption recovery, competitive improvement, or fee rate increases are better than expected, the share price may exceed the target price, creating upside risk to the Sell rating.

Key data

• Report date2026-06-16The time disclosed at the top of the report is 16 Jun 2026 01:35:04 ET.
• Current priceRMB24.110As of 2026-06-15 15:00.
• Target priceRMB23.6Raised from RMB22, based on 22x 2027E P/E.
• RatingSellCiti maintains a Sell rating.
• Expected returnShare price return -2.1%; dividend yield 1.7%; total return -0.5%The target price is below the current price, and the dividend yield is insufficient to offset the expected share price decline.
• Market capitalizationRMB18,725mnAs disclosed in the report.
• FY25 revenueRMB5.5bn, YoY -3.7%0.5% below Citi's expectation.
• FY25 net profit attributable to parentRMB1.17bn, YoY +233%Mainly driven by non-operating gains from listed equity investments.
• FY25 adjusted net profitRMB300.9mn, YoY -45.6%Below Citi's expectation of RMB472mn, indicating pressure on core profitability.
• FY25 domestic GPVRMB3.94tn, YoY -6.8%Bankcard GPV was weak; QR code payment GPV was RMB1.47tn, YoY +7.9%; cross-border TPV was RMB88.9bn, YoY +80.7%.
• FY25 operating cash flowRMB606.9mn, YoY -32.5%Operating cash flow declined YoY.
• 1Q26 revenueRMB1.61bn, YoY +24%Revenue returned to growth.
• 1Q26 net profit attributable to parentRMB594.8mn, YoY +491%Mainly driven by gains from disposal of financial assets.
• 1Q26 adjusted net profit attributable to parentRMB85.9mn, YoY +1%Profit growth was limited after excluding one-off items.
• 1Q26 domestic GPVRMB1.12tn, YoY +14%Bankcard GPV was RMB706.1bn, YoY +6%; QR code GPV was RMB414.7bn, YoY +31%.
• 1Q26 operating cash flow-RMB84.4mn1Q25 was +RMB16.7mn, mainly due to increased salary, tax, and expense payments.
• FY26E/FY27E revenue forecastRMB6.2bn/RMB6.5bnRaised by 4%/6% versus previous forecasts, respectively.
• FY26E/FY27E net profit forecastRMB737mn/RMB832mnRaised by 12%/16% versus previous forecasts, respectively, including the impact of 1Q26 gains from disposal of financial assets.
• FY26E/FY27E adjusted net profit forecastRMB399mn/RMB466mnBelow the previous RMB594mn/RMB655mn.

Impact & implications

The report is cautious on the investment implications: although payment transaction volume has improved and the competitive landscape may benefit from the exit of smaller players, core profit and cash flow have yet to confirm this improvement, and the target price is below the current price, implying that the near-term risk-reward remains unattractive.

Risks

• Consumption recovery is better than expected, driving GPV growth above Citi's expectations.
• Competition among third-party payment service providers, bank-affiliated service providers, and e-wallet providers is more stable than expected.
• Improvement in the competitive landscape leads to fee-rate increases that are better than expected.
• Gains from disposal of financial assets cause a divergence between headline profit and core operating profit, which may interfere with assessment of earnings quality.
• A persistently weak macro environment may continue to suppress payment transaction growth and operating cash flow.

What to watch

• The sustainability of domestic GPV growth in 2026, especially bankcard GPV as a core business indicator.
• Whether QR code payment and cross-border TPV can continue to maintain high growth.
• Whether adjusted net profit excluding one-off items can return to faster growth.
• Whether operating cash flow can recover from the negative level in 1Q26.
• Changes in the consumer macro environment and operating conditions for offline merchants.
• The competitive landscape in the payment industry, share changes after regulatory consolidation, and fee-rate trends.