Investment Rating - The investment rating for the company is "Buy" for both US and Hong Kong stocks [7]. Core Views - The company's 1Q25 performance met expectations with revenue of 46.9 billion RMB, reflecting a quarter-on-quarter increase of 4.7% and a year-on-year increase of 12.9%. The net profit attributable to shareholders was 18.0 billion RMB, which was slightly below the previous quarter but showed a significant year-on-year increase of 54.6% [1][4]. - The company is expected to maintain a cautious lending strategy, with a projected moderate growth in loan volume for 2025, supported by high-quality earnings and substantial shareholder returns [1][2]. Summary by Sections Financial Performance - 1Q25 loan volume was 889 billion RMB, showing a slight quarter-on-quarter decrease of 1.1% but a year-on-year increase of 15.8%. The loan balance reached 1,403 billion RMB, with a quarter-on-quarter increase of 2.4% and a year-on-year increase of 5.5% [2]. - The net profit take rate for 1Q25 was 5.2%, down from 5.9% in the previous quarter, indicating a potential impact on short-term profitability [3]. Risk Indicators - The C-M2 ratio increased to 0.60% in 1Q25 from 0.57% in 4Q24, while the first-day overdue rate rose to 5.0%. However, these levels remain healthy compared to historical averages [3]. - The provision coverage ratio improved to 666% from 617% in the previous quarter, indicating strong earnings quality [3]. Earnings Forecast - The company’s net profit forecasts for 2025, 2026, and 2027 have been slightly adjusted to 71 billion RMB, 77 billion RMB, and 82 billion RMB respectively, with target prices maintained at 55.6 USD for US stocks and 220.9 HKD for Hong Kong stocks [4][8].

Investment Rating - The investment rating for the company is "Buy" for both US and Hong Kong stocks [7]. Core Views - The company's 1Q25 performance met expectations with revenue of 46.9 billion RMB, reflecting a quarter-over-quarter increase of 4.7% and a year-over-year increase of 12.9%. The net profit attributable to shareholders was 18.0 billion RMB, which was slightly below the previous quarter but showed a year-over-year increase of 54.6% [1][4]. - The company is expected to maintain a cautious lending strategy, with a projected moderate growth in loan volume for 2025, supported by high-quality earnings and significant shareholder returns [1][2]. Summary by Sections Financial Performance - 1Q25 loan volume was 889 billion RMB, showing a slight quarter-over-quarter decrease of 1.1% but a year-over-year increase of 15.8%. The loan balance reached 1,403 billion RMB, with a quarter-over-quarter increase of 2.4% and a year-over-year increase of 5.5% [2]. - The net profit take rate for 1Q25 was 5.2%, down from 5.9% in the previous quarter, indicating a potential impact on short-term profitability [3]. Risk Indicators - The C-M2 ratio increased to 0.60% in 1Q25 from 0.57% in 4Q24, while the first-day overdue rate rose to 5.0% from 4.8%. Despite these increases, the risk indicators remain at healthy levels, below the average of 0.62% from 1Q21 to 4Q24 [3]. - The provision coverage ratio improved to 666% from 617% in the previous quarter, indicating strong earnings quality [3]. Earnings Forecast - The company’s net profit forecasts for 2025, 2026, and 2027 have been slightly adjusted to 71 billion RMB, 77 billion RMB, and 82 billion RMB respectively, with target prices maintained at 55.6 USD for US stocks and 220.9 HKD for Hong Kong stocks [4][8].

| 阿里巴巴 | 2986.04 | | --- | --- | | 11 小米焦团_W | 1805 85 | | | No. 1.0 | | | | --- | --- | --- | --- | | 5 | | 拼多多 | 1666.38 | | 6 | 美材 | 美团-W | 1069.68 | | 7 | 網易 | 网易 | 766.11 | 金十图示：2025年05月21日（周三）中国科技互联网公司市值排名TOP 50一览 | 8 | | 京东 | 489.39 | | | --- | --- | --- | --- | --- | | 9 | | 东方财富 | 470.85 | | | 10 | | 中芯国际 | 440.55 | | | II | Bal Char | 百度 | 307.12 | | | 12 | P | 理想汽车 | 302.4 | | | 13 | 85 | 快手-W O | 276.74 | | | 14 | | 腾讯音乐 | 263.47 | -1 + | | 15 | | 贝壳 | 223.45 | -1 3 | | 16 | 80 | 同花顺 | 191.78 | ...

Core Viewpoint - CICC has raised the profit forecast for Qifu Technology-S (03660) for 2025 and 2026 by 2% and 4% respectively, due to optimized funding/credit costs and higher-than-expected loan disbursement in Q1 2025 [1] Financial Performance - Qifu Technology's Q1 2025 revenue increased by 13% year-on-year and 5% quarter-on-quarter to 4.69 billion yuan, while non-GAAP net profit rose by 60% year-on-year but decreased by 2% quarter-on-quarter to 1.93 billion yuan, exceeding previous expectations [2] - The company’s net service fee rate was approximately 5.6%, slightly down from 5.96% in Q4 2024, attributed to a decrease in average funding costs and stable asset quality [4] Loan Disbursement and Customer Acquisition - In Q1 2025, the company optimized customer acquisition channels, adding 7 embedded finance partners, with loan disbursement increasing by 16% year-on-year to 88.9 billion yuan, although the quarter-on-quarter growth rate slightly declined due to seasonal factors [3] - The company expects loan disbursement to grow by 5%-10% year-on-year in 2025, maintaining previous forecasts [3] Shareholder Returns - The company maintains a semi-annual dividend policy, planning to distribute cash dividends of $0.6 and $0.7 per ADS for the first and second halves of 2024 respectively [5] - As of May 19, 2025, the company has repurchased 9.1 million ADS for approximately $404.5 million, with an expected total repurchase amount of no less than $680 million for 2025 [5] Industry Development - The introduction of the "Loan Assistance New Regulations" on April 1 aims to enhance the regulatory framework of the industry, potentially eliminating unreasonable pricing and charging behaviors, which may benefit compliant and well-operating institutions like Qifu Technology [6]

Group 1: Ctrip Group (携程集团) - The first quarter revenue met expectations, while profit exceeded market expectations by 9%. The second quarter revenue is expected to grow by 14%, with adjusted operating profit remaining flat year-on-year. The demand for leisure travel continues to grow rapidly. Due to the impact of tariff disturbances on business travel outbound demand in the second quarter, revenue and profit forecasts have been slightly adjusted, with the target price lowered from HKD 605 to HKD 591, maintaining a buy rating [1] Group 2: QFIN Technology (奇富科技) - The first quarter Non-GAAP net profit was CNY 1.926 billion, a year-on-year increase of 59.9%, slightly exceeding the upper limit of the company's previous guidance. The company expects a second quarter Non-GAAP net profit of CNY 1.75-1.85 billion. The significant year-on-year profit growth is mainly attributed to the increase in platform service revenue and a decrease in provisioning expenses [2][3] - The company anticipates a slight decrease in funding costs and expects the net take rate to increase year-on-year for the full year of 2025. The forecast for 2025 Non-GAAP net profit is expected to grow by 15%. As an industry-leading credit technology platform, the company balances risk and growth with diversified business models, providing attractive shareholder returns [3] Group 3: Global Indices and Market Overview - The Hang Seng Index closed at 23,681, reflecting a 1.52% increase, with a year-to-date increase of 15.89%. The Hang Seng China Enterprises Index also rose by 1.52%, with a year-to-date increase of 17.82% [4] - Major commodities showed varied performance, with Brent crude oil at USD 65.52, down 14.32% over three months, while gold futures rose by 9.83% [5] Group 4: Economic Data Releases - Upcoming economic data releases include the US Markit Manufacturing PMI expected at 50.2 and the US initial jobless claims expected at 229K. For China, the industrial value-added year-on-year growth is expected to be 7.7% [6]

Core Viewpoint - Qifu Technology (NASDAQ: QFIN; HKEX: 3660) reported a stable financial performance in Q1 2025, with total net revenue reaching RMB 4.69 billion (approximately USD 646 million), reflecting a 4.5% quarter-on-quarter growth, and a non-GAAP net profit of RMB 1.93 billion (approximately USD 265 million), despite a slight decline in net profit compared to the previous quarter, aligning with market expectations [1][2] Financial Performance - In Q1 2025, Qifu Technology achieved total revenue of RMB 46.9 billion and a non-GAAP net profit of RMB 19.3 billion [2] - The company successfully issued USD 690 million in convertible notes, providing ample financial support for strategic initiatives and enhancing shareholder returns [2] AI Strategy Implementation - Qifu Technology actively advanced its "AI + Finance" strategy, launching an AI-driven credit decision engine and asset distribution platform that connected with 163 financial institutions, serving over 58 million credit users [1] - The AI credit agent was officially implemented in Q1 2025, integrating various intelligent modules across the business chain, marking a significant step in AI application within the financial technology sector [2] AI Decision-Making Capabilities - The AI decision-making module utilizes classic analytical models to diagnose issues like profit stagnation, significantly improving decision-making efficiency by reducing analysis time from weeks to real-time responses [3] - The AI marketing module enhanced customer acquisition, achieving a 33% year-on-year increase in the conversion rate from new credit users to new loan users [3] Compliance and Risk Management - The AI compliance module improved efficiency by reducing the time required for regulatory document interpretation from 40 hours to 2 hours, with accuracy rising from 68% to 99.2% [4] - Qifu Technology's risk control innovations enhanced precision and efficiency, achieving over 95% accuracy in user characteristic consistency checks [5] Strategic Partnerships and Market Position - In Q1 2025, Qifu Technology's subsidiary signed contracts with three mid-to-large city commercial banks, with a 144% year-on-year increase in business scale driven by financial technology [6] - The company established strategic partnerships with multiple banks to implement AI-driven solutions in key areas such as marketing, risk control, and decision analysis, reinforcing its leading position in the financial technology sector [6]

Financial Data and Key Metrics Changes - In Q1 2025, non-GAAP net income increased by 59.9% year over year to RMB 1.93 billion, while non-GAAP EPS on a fully diluted basis rose by 78.5% to RMB 13.5 [7][28] - Total revenue for Q1 was RMB 4.69 billion, compared to RMB 4.48 billion in Q4 and RMB 4.15 billion a year ago [22] - The take rate for the quarter reached 5.7%, up 2.2 percentage points year over year [7] Business Line Data and Key Metrics Changes - Revenue from credit-driven services was RMB 3.11 billion in Q1, up from RMB 2.89 billion in Q4 and RMB 3.02 billion a year ago [22] - Revenue from platform services was RMB 1.58 billion in Q1, slightly down from RMB 1.59 billion in Q4 but up from RMB 1.14 billion a year ago [23] - Loan facilitation and origination volume increased by 15.8% year over year [7] Market Data and Key Metrics Changes - The company added 1,540,000 new credit line users in Q1, up 6% year over year, with new borrowers increasing approximately 41% year over year to 1,130,000 [12] - The delinquency rate after thirty-day collections (C:M2) remained stable at 0.6% [11][26] - The average internal rate of return (IRR) of loans originated was 21.4%, compared to 21.3% in the prior quarter [23] Company Strategy and Development Direction - The company is focusing on an AI plus credit strategy, aiming to build the industry's first AI agent platform to enhance core credit processes [8] - Plans to recruit an additional 100 algorithm engineers by the end of the year to accelerate transformation into an AI-native organization [8] - The company expects to maintain high-quality growth in its core loan facilitation business while empowering financial institutions through technology solutions [19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, noting early signs of recovery in China's economy [6][18] - The company plans to enhance operational efficiency and optimize capital allocation while maintaining a prudent approach to risk management [18][66] - The outlook for Q2 2025 includes expected non-GAAP net income between RMB 1.75 billion and RMB 1.85 billion, representing year-on-year growth of 24-31% [32] Other Important Information - The company issued RMB 6.6 billion in asset-backed securities (ABS) in Q1, a year-over-year increase of approximately 25% [12] - The effective tax rate for Q1 was 18%, higher than the typical rate of approximately 15% due to withholding tax provisions [28] - The company has initiated a share repurchase program, expecting total repurchases this year to be no less than USD 680 million [20] Q&A Session Summary Question: Impact of new loan facilitation rules and credit quality trends - Management indicated that new regulations are a positive signal for the industry, promoting orderly development and recognizing the value of leading loan facilitation platforms [36] - Asset quality remains stable, with the C2M2 ratio at 0.6%, significantly better than previous periods [39] Question: Asset quality indicators and credit demand trends - The increase in day one delinquency was attributed to changes in loan mix, with a higher percentage from embedded finance channels [44] - Credit demand has shown early signs of recovery, but macro uncertainties persist [47] Question: Impact of US-China trade tensions and potential delisting risk - The direct impact of tariffs on the business is limited, with only a small percentage of loan volume related to exports [50] - The company has a clear plan to address potential ADR delisting risks, including a secondary listing in Hong Kong [54] Question: Customer acquisition costs and strategies - The increase in customer acquisition costs was driven by a change in business mix, with a focus on efficiency rather than just cost [60] - The company plans to adjust acquisition strategies based on macro conditions and customer demand [62] Question: Loan demand trends and funding liquidity - Recent policy measures to boost consumption have positively impacted credit demand, and funding costs are expected to decrease slightly [66] - The company will maintain a prudent lending strategy while pursuing sustainable growth [67]

Financial Data and Key Metrics Changes - Non-GAAP net income increased by 59.9% year over year to RMB 1.93 billion, while non-GAAP EPADS on a fully diluted basis rose by 78.5% to RMB 13.5 [6] - Total revenue for Q1 was RMB 4.69 billion, compared to RMB 4.48 billion in Q4 and RMB 4.15 billion a year ago [20] - Non-GAAP net profit was RMB 1.93 billion in Q1 compared to RMB 1.97 billion in Q4 [26] Business Line Data and Key Metrics Changes - Revenue from credit-driven services was RMB 3.11 billion in Q1, up from RMB 2.89 billion in Q4 [20] - Revenue from platform services was RMB 1.58 billion in Q1, slightly down from RMB 1.59 billion in Q4 [21] - Loan volume from embedded finance channels grew by 36% year over year, while loan volume surged by roughly 106% [13] Market Data and Key Metrics Changes - The company added 1,540,000 new credit line users in Q1, up 6% year over year [11] - Ninety-day delinquency rate was 2.02% in Q1, down from 2.09% in Q4 [23] - The overall ROA of embedded finance channels improved by 20% on a sequential basis [13] Company Strategy and Development Direction - The company is rolling out an AI plus credit strategy aimed at building the industry's first AI agent platform [7] - Plans to recruit an additional 100 algorithm engineers by the end of the year to accelerate transformation into an AI-native organization [7] - The company expects to maintain a low funding cost in the long run while adopting a prudent lending strategy [66] Management Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the economy, supported by technological innovation and government measures to boost domestic demand [16] - The macroeconomic and policy landscape is showing signs of stabilization, which will provide a favorable environment for the consumer credit industry [16] - The company expects non-GAAP net income for Q2 to be between RMB 1.75 billion and RMB 1.85 billion, representing a year-on-year growth of 24-31% [30] Other Important Information - The company issued RMB 6.6 billion in ABS, a year-over-year increase of approximately 25% [11] - The effective tax rate for Q1 was 18%, higher than the typical rate of approximately 15% due to withholding tax provisions [26] - The company has executed a share repurchase program with a total repurchase expected to be no less than USD 680 million this year [18] Q&A Session Summary Question: Impact of new loan facilitation rules and credit quality trends - Management views the new rules as a positive signal for the industry, promoting orderly development and recognizing the value of leading loan facilitation platforms [34] - Asset quality remains stable, with the C2M2 ratio at 0.6%, significantly better than previous periods [35][36] Question: Asset quality indicators and credit demand trends - The increase in day one delinquency was driven by a change in loan mix, with a higher percentage from embedded finance channels [42] - Credit demand has shown early signs of recovery, but macro uncertainties persist [37][45] Question: Assessment of tariff tensions and ADR delisting risk - The direct impact of tariffs on the business is limited, with only a small percentage of loan volume affected [48] - The company has a clear plan to respond to potential ADR delisting risks, including a secondary listing in Hong Kong [52][54] Question: Customer acquisition costs and strategy adjustments - The increase in customer acquisition cost was driven by a change in business mix, with a higher contribution from API channels [58] - The company will continue to monitor macro changes and adjust acquisition strategies accordingly [62] Question: Loan demand trends and funding liquidity - Recent government policies aimed at boosting consumption have positively impacted credit demand [65] - The company expects funding costs to decrease slightly from Q1 levels and plans to optimize its funding structure [66]

Core Insights - QFIN Technology reported its Q1 2025 financial results, demonstrating a strong performance driven by AI innovations and a commitment to prudent management strategies in a complex market environment [1] - The company is advancing its "AI + Finance" strategy, aiming to create the first intelligent system that empowers core lending operations, which has already begun to enhance business processes and efficiency [1][2] Financial Performance - As of the end of Q1, QFIN Technology connected with 163 financial institutions, providing digital credit services to over 58 million credit users, with a 6% year-on-year increase in new credit users and a 15.8% increase in loan facilitation volume [1] AI-Driven Innovations - The launch of the lending intelligent system integrates various smart modules covering data analysis, operations, compliance, risk strategies, and financial reconciliation, significantly transforming the company's business model [2] - The AI marketing module improved the conversion rate from new credit users to new loan users by 33% year-on-year [2] - The AI compliance module reduced the time required for regulatory document interpretation from 40 hours to 2 hours, with accuracy improving from 68% to 99.2% [2] Risk Control Enhancements - QFIN Technology has developed end-to-end risk control capabilities, achieving an AUC improvement to 0.64 through reinforcement learning on historical decision logs [3] - The user feature verification accuracy reached over 95% through advanced data mining capabilities [3] Strategic Partnerships and Growth - QFIN Technology's subsidiary, QFIN Digital Technology, signed contracts with three mid-to-large city commercial banks, with a 144% year-on-year increase in business scale [4] - The launch of the FocusPRO2.0 platform for digital inclusive credit solutions has led to rapid loan disbursement and exceeded risk control expectations [4] Social Responsibility Initiatives - The company launched the "QFIN Support Program" to assist rural revitalization through interest-free loans for small businesses and farmers, contributing to local economic development [6] - QFIN Technology has been recognized for its efforts in promoting financial technology development and social responsibility, with its CEO participating in high-level forums to discuss opportunities in AI and industry upgrades [6] Future Outlook - The CEO emphasized that AI technology is a core support for the generational leap in fintech, positioning the lending intelligent system as a new growth engine for long-term high-quality development [7] - The intelligent system is expected to facilitate the transition of traditional banks to smart banks, enhancing user experience and commercial efficiency [7]

Company Overview - Qifu Technology is a leading AI-empowered credit-tech platform in China with 584 million cumulative users with approved credit lines[13, 27] - The company has established partnerships with 163 financial institutions[13, 20] - Loan facilitation volume in 1Q25 reached RMB 889 billion, representing a 158% year-over-year increase[13] - Non-GAAP net income in 1Q25 was RMB 1926 million, a 599% year-over-year increase[13] - The company has repurchased US$905 million worth of ADSs cumulatively, leading to a 210% share count reduction[15] Financial Performance - Total net revenue for 1Q25 was RMB 4691 million[62] - Non-GAAP net income for 1Q25 was RMB 1926 million[64] - Platform services contributed 531% to the loan facilitation volume in 1Q25[57] - Platform services contributed 581% to the outstanding loan balance in 1Q25[59] Risk Management - The company maintains robust risk performance, as indicated by delinquency and collection rates[67, 68, 69]