Investment Rating and Target Price - The report initiates coverage on Qifu Technology-S (3660 HK) with a "Buy" rating and a target price of HKD 114.30 [1] - The target price is derived from the average of PE (6.5x 2024E PE) and DCF (50-year forecast period, cost of equity 22.6%) valuation methods [2] Core Business Overview - Qifu Technology is a leading consumer credit platform in China, with a loan balance of RMB 157.8 billion and 250 million registered users as of 2Q24 [2] - The company primarily offers small-ticket (average loan size of RMB 7,500) and short-term (average contract duration of 10 months) internet consumer credit products [2] - The proportion of capital-light loans (where the company does not bear credit risk) has been increasing, reaching 65% of total loan issuance in 2Q24 [3] Loan Quality and Profitability - Loan quality has improved, with the first-day delinquency rate slightly decreasing to 4.8% in 2Q24 (from 4.9% in 1Q24) and the 30-day collection rate rising to 86.3% (from 85.1% in 1Q24) [4] - The improvement in loan quality led to a provision reversal of RMB 480 million in 2Q24, contributing to a higher net profit take rate of 3.4% (up from 2.6% in 1Q24) [4] - The company expects 3Q24 net profit to be between RMB 1.5-1.6 billion, representing a 9-16% sequential increase [4] Financial Projections - The report forecasts net profit attributable to shareholders of RMB 5.41 billion, RMB 6.58 billion, and RMB 7.18 billion for 2024, 2025, and 2026, respectively [2] - Loan issuance volume is expected to decline by 15% in 2024, followed by 5% growth in both 2025 and 2026 [9] - The provision-to-income ratio is projected to decrease to 25.1%, 22.2%, and 21.9% in 2024, 2025, and 2026, respectively [9] Capital Structure and Shareholder Returns - Qifu Technology has utilized USD 211 million of its USD 350 million share repurchase program as of 2Q24 [2] - The company expects a dividend payout ratio of 29% and a dividend yield of 5.4% for 2H24, consistent with 2023 levels [2] Industry and Regulatory Environment - The internet finance industry has entered a phase of normalized regulation, with most major issues in platform companies' financial businesses having been rectified [37] - Regulatory uncertainty has decreased, and the focus has shifted to improving the level of normalized financial supervision [37] - The Small Loan Company Supervision and Management Interim Measures (Draft for Comment) issued in August 2024 further clarified regulatory requirements, including a minimum 30% co-lending ratio and the establishment of a risk classification system [38]

Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of HKD 115.43, corresponding to a P/E ratio of 6.2x for 2024 [3]. Core Views - Profit growth is driven by an increase in take rate, a decrease in financing costs, and improved risk metrics, with the take rate being the primary factor for the profit increase [3]. - The company reported a revenue of RMB 8.313 billion for H1 2024, a year-on-year increase of 10.64%, and an adjusted net profit of RMB 2.618 billion, up 23.33% year-on-year [3]. - The report highlights that the company's risk indicators have improved, and financing costs have decreased, leading to an upward adjustment of the adjusted net profit forecasts for 2024-2026 to RMB 5.6 billion, RMB 6.2 billion, and RMB 7.1 billion respectively, reflecting year-on-year growth rates of 26%, 11%, and 15% [3]. Summary by Sections Financial Performance - For Q2 2024, the company achieved a revenue growth of 6.29%, primarily due to a 42% increase in financing income to RMB 1.69 billion, driven by an increase in on-balance sheet loan balances [3]. - The adjusted net profit for Q2 2024 was RMB 1.413 billion, a 23% increase year-on-year, attributed to the expansion of the take rate, which reached 4.4% in Q2 2024 compared to 3.3% in Q2 2023 [3]. - The company’s on-balance sheet loan balance was RMB 157.8 billion, down 14.5% year-on-year [3]. Risk and Management - The report indicates that the company is focusing on risk management and operational efficiency optimization, which is expected to contribute to profit growth in the future [3]. - The company is also progressing with a USD 350 million share repurchase plan, which reflects management's confidence in the company's future [3]. Market Data - The current stock price is HKD 84.45, with a market capitalization of HKD 27.577 billion [5]. - The stock has traded within a range of HKD 53.40 to HKD 84.45 over the past 52 weeks [5].

Investment Rating - The report does not explicitly state the investment rating for Qifu Technology Inc (3660 HK) Core Insights - Qifu Technology reported a 6.3% year-on-year increase in revenue to RMB 4.16 billion and a 23.3% year-on-year increase in net profit to RMB 1.413 billion for Q2 2024 [2][6] - The return on equity (ROE) for Q2 2024 was 25.4%, up approximately 3 percentage points year-on-year [2][6] - The company has repurchased 10.7 million ADSs, achieving over 60% of its target repurchase amount of up to $350 million within 12 months, with an average repurchase price of $19.7 per ADS [2][6] Summary by Sections Financial Performance - Revenue for Q2 2024 was RMB 4.16 billion, a 6.3% increase year-on-year, while net profit reached RMB 1.413 billion, reflecting a 23.3% increase year-on-year [2][6] - The net take rate improved to 4.4%, up 0.9 percentage points quarter-on-quarter and 1.1 percentage points year-on-year [2][6] - The average internal rate of return (IRR) for Q2 2024 was 21.6%, a slight increase of 0.1 percentage points quarter-on-quarter [2][6] User and Loan Metrics - The cumulative number of users approved for credit lines increased by 1.3 million quarter-on-quarter to 53.6 million, marking a 13.1% year-on-year growth [3][6] - New loan originations in Q2 2024 totaled RMB 95.4 billion, down 23.2% year-on-year and 3.8% quarter-on-quarter, with platform services contributing 64.9% of the total [3][6] - The 90-day delinquency rate was 3.4%, while the 30-day recovery rate improved by 1.2 percentage points quarter-on-quarter to 86.3% [3][6] Outlook - The company expects net profit for Q3 2024 to be between RMB 15.5 billion and RMB 16.5 billion, representing a year-on-year increase of 31% to 40% [4][6] - Loan IRR is anticipated to fluctuate around 21.6% [4][6] - Asset quality indicators are expected to continue improving in Q3 2024, with potential for additional loan loss provisions [4][6]

Financial Data and Key Metrics - Revenue increased by 6.3% YoY to RMB4.16 billion in Q2 2024, with a net take rate rising by over 1 percentage point YoY to 4.4% [6] - Non-GAAP net income grew by 23% YoY to RMB1.41 billion, and non-GAAP net income per diluted ADS increased by 32% YoY to RMB9.16 [6] - ROE reached 25.4% in Q2, outperforming industry peers [6] - Funding costs decreased by 56 basis points sequentially, totaling a 132 basis point reduction in H1 2024 [8] - 90-day delinquency rate was 3.4% in Q2, while day one delinquency rate decreased by 10 basis points and 30-day collection rate increased by 1.2 percentage points sequentially [7][21] Business Line Performance - Revenue from credit-driven services (capital-heavy) was RMB2.91 billion in Q2, down from RMB3.02 billion in Q1 but up from RMB2.79 billion YoY [17] - Revenue from platform services (capital-light) increased to RMB1.25 billion in Q2, up from RMB1.14 billion in Q1 and RMB1.13 billion YoY [18] - Loan volume under the ICE model increased slightly to 24.6%, with the revenue take rate rising by 54 basis points YoY [12] - Technology solutions business facilitated nearly RMB2 billion in bank loans cumulatively, with outstanding balances exceeding RMB1 billion [12] Market and Strategic Developments - The company served 160 financial institutions and over 53 million users with approved credit lines by the end of Q2 [4] - The embedded finance business saw loan volume more than double YoY, with new credit line users from this channel increasing from 36.4% in Q1 to 37.7% in Q2 [9] - The company is exploring collaborations with financial institutions under the embedded finance model, aiming to enhance service efficiency and promote financial inclusion [10][11] - The technology solutions business achieved an 80% standardization rate, with partnerships established with 12 financial institutions [12][13] Management Commentary on Operating Environment and Outlook - Despite macroeconomic challenges, the company achieved its highest quarterly profit in the past 11 quarters, driven by improved asset quality and operational efficiency [4][6] - Management expects funding costs to remain stable with potential for slight decreases in H2 2024 [8] - The company plans to maintain prudent operations, iterate products and services, and expand strategic partnerships to build a sustainable growth engine [16] - For Q3 2024, the company expects non-GAAP net income between RMB1.55 billion and RMB1.65 billion, representing YoY growth of 31% to 40% [27] Other Key Information - The company issued RMB4.6 billion in ABS in Q2, with H1 2024 ABS issuance up 30% YoY [8] - Sales and marketing expenses decreased by 12% QoQ and 16% YoY, reflecting a more prudent customer acquisition approach [19] - The company upgraded its AI copilot system, achieving a speech recognition accuracy rate of over 93% and intent recognition accuracy of over 95% [14][15] - The Board approved a dividend of $0.30 per Class A ordinary share or $0.60 per ADS for H1 2024 [24] Q&A Session Summary Question: Loan volume growth and take rate expectations for H2 2024 - Loan volume is expected to grow in H2 2024 due to stable credit demand, improved risk metrics, and diversified acquisition channels [30][31] - Take rate growth in Q3 is driven by declining credit and funding costs, better monetization through platform strategy, and increased contribution from the capital-light model [33] Question: Impact of Mr. Zhou Hongyi's resignation - Mr. Zhou resigned due to personal reasons, and his departure will not impact daily operations as he was not involved in them [35][36] Question: Share buyback pace and rationale - The company accelerated share buybacks, purchasing $211 million worth of stock by August 13, 2024, due to undervaluation and to maximize shareholder value [38] Question: Funding cost reduction and asset quality improvement - Funding costs declined due to lower ABS costs and increased ABS proportion, with limited room for further reduction [41] - Asset quality improved due to cautious loan origination, optimized risk models, and enhanced post-loan operations [42][43] Question: Customer acquisition pace in H2 2024 - The company plans to accelerate customer acquisition in H2 2024, leveraging diversified channels and embedded finance models to achieve quality loan growth [47][48]

August 2024 2Q2024 Result Presentation Strictly Private and Confidential Disclaimer This presentation has been prepared by Qifu Technology, Inc. (the "Company") solely for information purpose. By viewing or accessing the information contained in this material, you hereby acknowledge and agree that no representations, warranties or undertakings, express or implied, are made by the Company or any of its directors, shareholders, employees, agents, affiliates, advisors or representatives as to, and no reliance ...

Exhibit 99.1 Qifu Technology Announces First Quarter 2024 Unaudited Financial Results Shanghai, China, May 19, 2024, Qifu Technology, Inc. (NASDAQ: QFIN; HKEx: 3660) ("Qifu Technology" or the "Company"), a leading Credit-Tech platform in China, today announced its unaudited financial results for the first quarter ended March 31, 2024. First Quarter 2024 Business Highlights • As of March 31, 2024, our platform has connected 159 financial institutional partners and 241.4 million consumers with potential credi ...

Financial Performance - Total revenue for Q2 2024 was RMB 4,160.1 million (USD 572.4 million), an increase from RMB 3,914.3 million in the same period of 2023[12]. - Non-GAAP net profit for Q2 2024 was RMB 1,413.4 million (USD 194.5 million), compared to RMB 1,146.6 million in Q2 2023, reflecting a year-over-year growth of approximately 23.3%[12]. - Operating income was RMB 1,985.0 million (USD 273.1 million), compared to RMB 1,181.5 million in the same period last year, showing significant growth[16]. - Net profit was RMB 1,376.5 million (USD 189.4 million), an increase from RMB 1,093.4 million year-over-year, reflecting strong financial performance[17]. - The net profit margin for Q2 2024 was 33.1%, indicating a healthy profitability level for the company[18]. - The company reported a significant reduction in customer acquisition costs due to diversified channels and prudent strategies[11]. - The company’s diluted earnings per American Depositary Share (ADS) were RMB 8.92 (USD 1.22) for the period[19]. - The company’s non-GAAP diluted earnings per ADS were RMB 9.16 (USD 1.26), reflecting strong operational performance[20]. - For Q3 2024, the company expects to generate a net profit of RMB 1.5 billion to RMB 1.6 billion, and a non-GAAP net profit of RMB 1.55 billion to RMB 1.65 billion, representing a year-on-year growth of 31% to 40%[28]. Loan and Borrower Statistics - As of June 30, 2024, the platform has connected with 160 financial institution partners and 247.6 million consumers with potential credit demand, an increase of 12.2% from 220.6 million last year[9]. - The cumulative number of users with approved credit limits reached 53.6 million, up 13.0% from 47.4 million as of June 30, 2023[9]. - The number of borrowers who successfully withdrew funds (including repeat borrowers) was 32.0 million, a 12.3% increase from 28.5 million as of June 30, 2023[9]. - In Q2 2024, financial institution partners initiated 19,112,187 loans through the platform, with a total loan volume of RMB 95,425 million, a decrease of 23.2% from RMB 124,225 million in the same period last year[9]. - The loan volume initiated under the light capital model, Intelligent Credit Engine (ICE), and other technology solutions amounted to RMB 61,905 million, representing 64.9% of the total initiated amount, down from RMB 71,860 million or a decrease of 13.9% year-on-year[9]. - The total outstanding loan balance was RMB 157,778 million, a decrease of 14.5% from RMB 184,459 million as of June 30, 2023[9]. - The outstanding loan balance under the light capital model, ICE, and other technology solutions was RMB 103,817 million, down 9.6% from RMB 114,835 million as of June 30, 2023[9]. - The 90-day+ delinquency rate for loans initiated by financial institutions on the platform was 3.40% as of June 30, 2024[9]. - The loan refinancing volume for Q2 2024 was 93.0%[9]. Cash Flow and Financial Position - The operating cash flow for the quarter was approximately RMB 19.6 billion, indicating strong cash generation capabilities[12]. - The total cash and cash equivalents at the end of the quarter amounted to approximately RMB 84.9 billion, providing a solid financial foundation for future opportunities[12]. - Cash and cash equivalents rose from RMB 4,177,890 thousand to RMB 6,337,134 thousand, an increase of 51.7%[41]. - The cash generated from operating activities for the three months ended June 30, 2024, was RMB 1,961,616, an increase of 11.3% compared to RMB 1,761,575 in the same period of 2023[45]. - The company’s cash flow from operating activities showed a significant increase, indicating improved liquidity and operational efficiency[44]. Expenses and Cost Management - Sales and marketing expenses were RMB 366.4 million (USD 50.4 million), a decrease from RMB 436.5 million in the same period last year, reflecting a more cautious customer acquisition approach[15]. - General and administrative expenses were RMB 95.1 million (USD 13.1 million), down from RMB 112.8 million year-over-year, indicating improved operational efficiency[15]. - Operating costs and expenses for the six months ended June 30, 2024, decreased to RMB 4,964,159 thousand from RMB 5,324,968 thousand, a reduction of 6.8%[43]. Shareholder Returns and Dividends - The company has approved a semi-annual dividend of $0.30 per Class A ordinary share and $0.60 per American Depositary Share for the first half of 2024, with payment dates expected on October 29, 2024, and around November 1, 2024, respectively[26]. - As of August 13, 2024, the company has repurchased approximately 10.7 million American Depositary Shares at a total cost of about $211 million, averaging $19.7 per share, under a buyback plan authorized for up to $350 million[27]. Leadership and Governance - The board appointed Zhao Fan as the new chairman and Liu Xiangge as an independent director, effective August 13, 2024, indicating a strategic leadership change[24]. Asset and Liability Management - Total assets increased from RMB 45,818,572 thousand to RMB 46,983,049 thousand, representing a growth of 2.54%[41]. - Total liabilities increased from RMB 23,808,715 thousand to RMB 24,350,070 thousand, a rise of 2.27%[41]. - The total equity attributable to shareholders rose from RMB 21,937,483 thousand to RMB 22,568,768 thousand, an increase of 2.87%[41]. Accounting and Financial Reporting - The company follows the CECL model for expected credit losses, adjusting provisions based on estimated values at the initiation or acquisition of financial assets[68]. - The actual interest rate on receivables is calculated using the effective interest method, considering all contractual terms and estimated cash flows over the loan's expected term[69]. - The company recognizes share-based compensation expenses using the straight-line method, with reported income of RMB 49,337 thousand and RMB 11,971 thousand for the six months ending June 30, 2023, and 2024, respectively[69]. - Financial guarantees are accounted for under ASC 326, with provisions recognized at the start of the guarantee and subsequently amortized over the guarantee period[69]. - The company adopts a policy to recognize income from guaranteed premiums monthly, as service fees are collected in installments rather than upfront[69].

Investment Rating - The report maintains an "Overweight" rating for Qifu Technology-S (3660) with a target price of HKD 115.43, corresponding to a 2024 P/E of 6.8x [4] Core Views - The expansion of on-balance sheet loans is the primary driver of profit growth, with financing income increasing by 44% YoY to RMB 1.535 billion in Q1 2024 [4] - Quality growth is identified as the core focus for the company's future development, with continued share buybacks demonstrating management confidence [4] - The company's net take rate (Non-GAAP net profit/average loan balance) expanded to 3.5% in Q1 2024, up from 2.9% in Q1 2023 and 3.2% in Q4 2023 [4] Financial Performance - Q1 2024 revenue reached RMB 4.153 billion, representing a YoY increase of 15.39% but a QoQ decrease of 7.61% [4] - Adjusted net profit for Q1 2024 was RMB 1.205 billion, showing a YoY growth of 23.40% and a QoQ increase of 4.70% [4] - The company's 90+ day delinquency rate rose to 3.35%, primarily due to increased overdue amounts and a decrease in loan balances [4] Future Projections - Revenue is projected to grow to RMB 16.591 billion in 2024, RMB 17.727 billion in 2025, and RMB 18.967 billion in 2026, with YoY growth rates of 1.8%, 6.8%, and 7.0% respectively [4] - Adjusted net profit is expected to reach RMB 4.738 billion in 2024, RMB 5.022 billion in 2025, and RMB 5.738 billion in 2026, with YoY growth rates of 6.4%, 6.0%, and 14.3% respectively [4] Operational Highlights - Q1 2024 credit disbursement amounted to RMB 99.2 billion, a YoY decrease of 9.3%, with approximately 61% of loans provided through the light capital model [4] - The company is actively implementing a USD 350 million share buyback program, with progress ahead of schedule [4]

Qifu Technology, Inc. (NASDAQ:QFIN) Q1 2024 Results Conference Call May 20, 2024 7:30 AM ET Company Participants Karen Ji - Senior Director of Capital Markets Wu Haisheng - Chief Executive Officer Alex Xu - Chief Financial Officer Zheng Yan - Chief Risk Officer Conference Call Participants Chiyao Huang - Morgan Stanley Emma Xu - Bank of America Alex Ye - UBS Yada Li - CICC Operator Thank you for standing by, and welcome to the Qifu Technology First Quarter 2024 Earnings Conference Call. At this time, all pa ...

Financial Performance - For Q1 2024, the total net revenue was RMB 4,153.2 million (USD 575.2 million), an increase from RMB 3,599.2 million in Q1 2023, representing a growth of 15.4%[11] - The operating income for Q1 2024 was RMB 1,364.1 million (USD 188.9 million), up from RMB 1,007.0 million in the same period last year, marking a growth of 35.4%[11] - The non-GAAP net profit for Q1 2024 was RMB 1,204.8 million (USD 166.9 million), compared to RMB 976.3 million in Q1 2023, indicating a growth of 23.3%[11] - Total net income for Q1 2024 reached RMB 1,160,144, an increase of 24.7% compared to RMB 929,822 in Q1 2023[59] - Non-GAAP net profit for Q1 2024 was RMB 1,204,789, a 23.2% increase from RMB 976,318 in Q1 2023[63] - The company reported a diluted earnings per share of RMB 3.65 for Q1 2024, compared to RMB 2.82 in Q1 2023, representing a growth of 29.5%[52] User and Loan Metrics - The number of cumulative users with approved credit limits reached 52.3 million, a 13.8% increase from 46.0 million as of March 31, 2023[9] - The cumulative number of successful borrowers (including repeat borrowers) was 31.2 million, reflecting a 12.6% increase from 27.7 million as of March 31, 2023[9] - The total loan facilitation and initiation amount for Q1 2024 was RMB 99,237 million, a decrease of 9.3% compared to RMB 109,456 million in Q1 2023[9] - The loan balance as of March 31, 2024, was RMB 169,920 million, down 0.8% from RMB 171,302 million a year earlier[9] - The weighted average contract term for loans initiated by financial institutions was approximately 10.10 months, compared to 11.21 months in the same period of 2023[9] - The 90-day+ delinquency rate for loans was 3.35% as of March 31, 2024[9] Revenue and Income Sources - Credit-driven service net income was RMB 3.02 billion, up from RMB 2.63 billion in Q1 2023[16] - Financing income increased to RMB 1.54 billion, compared to RMB 1.07 billion in the same quarter last year[16] - The gross profit margin for Q1 2024 improved to 32.8%, up from 28.0% in Q1 2023[63] Operating Expenses and Cash Flow - Operating expenses totaled RMB 2.79 billion, an increase from RMB 2.59 billion in Q1 2023[17] - Operating cash flow for the quarter was approximately RMB 1.96 billion, with total cash and cash equivalents amounting to RMB 8.32 billion at the end of the quarter[16] - Operating cash flow for Q1 2024 was RMB 1,958,267, up from RMB 1,761,091 in Q1 2023, indicating an 11.2% increase[55] - The company’s cash and cash equivalents at the end of Q1 2024 were RMB 8,156,593, down from RMB 8,745,344 at the end of Q1 2023[55] Strategic Plans and Market Position - The company plans to continue a cautious risk control strategy and optimize its business portfolio in response to macroeconomic uncertainties[13] - The company plans to expand its market presence and invest in new technology development to drive future growth[1] - The company has initiated a share repurchase plan starting April 1, 2024, with a faster pace than scheduled[13] - The company plans to repurchase up to USD 350 million of its American Depositary Shares or Class A ordinary shares under the new buyback plan approved on March 12, 2024[30] Assets and Liabilities - The company reported a total asset value of RMB 47,426,518 thousand as of March 31, 2024, an increase from RMB 45,818,572 thousand as of December 31, 2023, representing a growth of approximately 3.5%[45] - The company’s total liabilities amounted to RMB 25,285,306 thousand as of March 31, 2024, compared to RMB 23,808,715 thousand as of December 31, 2023, indicating an increase of approximately 6.2%[47] - The company reported a total equity of RMB 22,141,212 thousand as of March 31, 2024, a slight increase from RMB 22,009,857 thousand as of December 31, 2023, showing a growth of about 0.6%[47] Financial Metrics and Comparability - The company's net profit margin stands at 27.9%, while the non-GAAP net profit margin is 29.0%[23] - The company highlighted the importance of non-GAAP operating income and net profit metrics to identify potential business trends and avoid distortions from GAAP accounting[39] - Non-GAAP net income excludes stock-based compensation expenses, providing a clearer view of the company's operational performance[32] - The company noted that its financial data calculated under non-GAAP measures may differ from those used by other companies, limiting comparability[39]