QFIN(US:QFIN)2024-08-15 05:10Investment Rating - The report maintains a "Buy" rating for the company, QFIN US, with a target price raised from $25.8 to $27.5, indicating a potential upside of 30.3% from the current price of $21.11 [1][2][10]. Core Insights - The company reported strong earnings growth, with a 6.3% year-over-year increase in net revenue for Q2 2024, driven primarily by on-balance sheet loans and advisory services. Non-GAAP net profit increased by 23.3% year-over-year, exceeding market expectations by 25% due to a decrease in provisioning costs and lower marketing and management expenses [2][6]. - The company expects Q3 Non-GAAP net profit to be between 1.55 billion and 1.65 billion RMB, reflecting a growth rate of 30-40% [2]. - The company has seen a significant improvement in its net take rate, which rose to 4.4% in Q2, with expectations for further increases in Q3 due to declining funding and risk costs [2][6]. Summary by Sections Financial Performance - Q2 2024 net income was 4.281 billion RMB, with a year-over-year growth of 3.3% [6]. - The company achieved a net profit of 1.138 billion RMB in Q2 2024, marking a 15.1% increase year-over-year [6]. - The average internal rate of return (IRR) on facilitated loans remained stable at 21.6% [2]. Loan Facilitation and Asset Quality - The facilitated loan volume decreased by 23% year-over-year in Q2 2024, with a light asset model accounting for 64.9% of the total [2][6]. - The 90-day overdue rate slightly increased to 3.4%, while the collection rate improved, indicating a stabilization in credit demand and ongoing risk management improvements [2][6]. Future Projections - The company anticipates a rebound in facilitated loan growth in the second half of the year, supported by improved credit demand and risk indicators [2]. - Revenue projections for 2024 are set at 17.191 billion RMB, with a year-over-year growth of 5.5% [5][7]. - The forecasted net profit for 2024 is 5.246 billion RMB, reflecting a growth rate of 22.4% [5][7].