Yada Li • CICC

Answer

CFO Mr. James Zheng explained that the revenue structure variance was primarily due to a strategic shift in GMV towards the capital-light model, which uses net-based revenue accounting. Other factors included lower pricing to attract prime customers and an accounting mix shift in the e-commerce business. Chairman and CEO Mr. Jay Wenjie Xiao added that the company is highly focused on shareholder returns, citing two dividend payout ratio increases within six months as evidence of their profitability and confidence, and will continue to align its policy with shareholder expectations.

Ask Fintool Equity Research AI

Answer

CFO Xigui Zheng explained that the net profit margin is expected to rise significantly over the next two years, driven primarily by improved asset quality leading to lower provisions, and secondarily by reduced funding costs. He noted that while absolute operating expenses will increase in 2025 to support growth, their pace will be slower than profitability improvement. CEO Jay Xiao added that the dividend payout ratio will increase to 25% of net income starting in 2025 and that the company is open to increasing it further as profitability grows.

Ask Fintool Equity Research AI

Answer

CEO Jay Xiao, via translator Mandy Dong, noted that while there were positive short-term demand changes, the company maintains a prudent operational strategy, resulting in flat loan volume but an improved asset structure. CFO Xigui Zheng attributed the 36.7% sequential net profit growth to improved asset quality, evidenced by a 13% decrease in FPD7 for new assets, and a record-low funding cost, which dropped nearly 100 basis points from Q2. Zheng expects a considerable year-over-year growth in net profit for the upcoming year.

Ask Fintool Equity Research AI

Answer

CFO Jiayuan Xu highlighted a strong Q1 for international markets, with transaction volume surpassing RMB 3 billion. He reiterated the full-year revenue growth target of 10-15% and stated the international market's contribution is expected to increase to 25%. Mr. Xu projected a minimum net profit of $10 million from Indonesia and the Philippines in 2025. Regarding new markets, he mentioned that operations in Pakistan are in an early stage and the company is actively exploring other countries to meet its long-term strategic goals.

Ask Fintool Equity Research AI

Answer

CFO Jiayuan Xu addressed the first question, stating that the consumer demand recovery observed in H2 2024 is expected to persist, supported by resilient application volumes in Q1 2025 and government stimulus measures. CEO Tiezheng Li answered the AI question, detailing the integration of their proprietary 'Rice-Seed' large language model across operations. He highlighted its use in automating marketing content creation, customer service, and identifying Deepfake fraud, leading to significant cost reductions and a 9% increase in borrower conversion rates.

Ask Fintool Equity Research AI

Answer

CFO Jiayuan Xu, translated by Jimmy Tan, affirmed that shareholder return is a priority, pursued through both sustainable business growth and a robust capital return program of dividends and share repurchases. He highlighted that the company has returned a cumulative $686.1 million to shareholders since 2018. He noted that $81 million was deployed for buybacks in the first nine months of 2024 and that 75% of the current repurchase program was utilized by October's end. Mr. Xu concluded by stating the company is confident in maintaining high-quality growth while distributing dividends at a stable growth rate.

Ask Fintool Equity Research AI

Answer

An executive noted that supportive policies have positively impacted credit demand and that the funding environment is expected to remain favorable, with costs for 2025 likely to decrease slightly from Q1 levels. However, due to macro uncertainty, the company will maintain a prudent lending strategy focused on high-quality growth. CFO Zuoli Xu added that the company still expects the net take rate to improve year-over-year in 2025, assuming no dramatic macro changes.

Ask Fintool Equity Research AI

Answer

CFO Zuoli Xu reiterated Qifu's commitment to returning value to shareholders, targeting a payout ratio of over 70% in the coming years. He stated that the immediate priority is the active $450 million share buyback program for 2025. Concurrently, the company plans to continue increasing its dividend per ADS on a semiannual basis, as evidenced by the recent raise to $0.70 per ADS. The mix between buybacks and dividends may be re-evaluated in approximately two years.

Ask Fintool Equity Research AI

Answer

CFO Zuoli Xu identified three main drivers for the higher take rate: continued improvement in risk quality which lowered credit costs, a reduction in funding costs, and the deferred positive impact from prior business mix changes. He expects a similar take rate in Q4. For the longer term, Mr. Xu anticipates the full-year 2025 take rate to be slightly above the estimated 5% for 2024, as benefits from risk and funding costs persist, though the impact from mix changes will likely fade.

Ask Fintool Equity Research AI

Answer

CFO Peiqing Zhu attributed the higher credit impairment loss to upfront provisions for loans under the 100% guarantee model and a more prudent ECL model approach due to macro uncertainty. On funding costs, Mr. Zhu confirmed they decreased in Q3 and are expected to fall further as the company optimizes its funding structure by leveraging its consumer finance and new small lending licenses.

Ask Fintool Equity Research AI

Answer

Chairman and CEO Yong Suk Cho stated that increased ownership by Ping An Group is expected to reduce funding costs and that the company's annual dividend policy remains unchanged despite no semiannual dividend being paid. CFO Peiqing Zhu added that he is optimistic about funding costs continuing to decrease due to favorable monetary policy and Ping An synergies. Mr. Zhu explained the higher OpEx to income ratio was due to loan scale contraction, and the company will continue to focus on improving operational efficiency.

Ask Fintool Equity Research AI

Answer

CEO Yong Suk Cho explained that increased ownership by Ping An Group is expected to deepen collaboration, particularly in reducing funding costs. He confirmed the annual dividend policy of 20-40% of net profit remains unchanged, though no semiannual dividend was declared due to a net loss. CFO Peiqing Zhu added that funding costs are expected to continue decreasing due to favorable monetary policy and Ping An synergies. Mr. Zhu attributed the higher OpEx to income ratio to loan scale contraction and fixed expenses, but noted the company remains focused on improving operational efficiency.

Ask Fintool Equity Research AI

Answer

Chairman and CEO Y.S. Cho stated that as of Q1 2024, the risk-bearing balance had increased to 48.3% of the total loan balance and confirmed this percentage will continue to grow as all new loans are now under the 100% guarantee model. CFO Siu Kam Choy addressed the bottom line, explaining that the Q1 net loss of CNY 830 million was driven by a CNY 1.3 billion income tax expense related to upstreaming cash for the special dividend, and the company was profitable on a pretax basis (CNY 447 million).

Ask Fintool Equity Research AI

Answer

Chairman and CEO Y.S. Cho stated that the risk-bearing portion of the total loan balance reached 48.3% in Q1 and will continue to grow as all new loans are now under the 100% guarantee model. CFO Siu Kam Choy addressed the bottom line, explaining that the Q1 net loss was due to a CNY 1.3 billion one-off withholding tax for the special dividend, and the company was profitable on a pretax basis. He did not provide a specific future profit margin for SME loans.

Ask Fintool Equity Research AI