Investment Rating - The report does not explicitly provide an investment rating for the company [1][2][3] Core Arguments - The report alleges that the company has been falsifying its SEC financials to portray the business as more profitable than it actually is [6] - The report claims that the company has been using related-party transactions to shift costs and manipulate profit statements [7][8][9] - The report suggests that the company has been manipulating its profit by under-provisioning for bad debts, despite increasing delinquency rates [12][13][14] - The report highlights a significant discrepancy between the company's reported profits and the profits reported to the State Administration for Industry and Commerce (SAIC) [4][5] - The report criticizes the company's controlling shareholder, Zhou Hongyi, for a history of actions that allegedly harm public shareholders' interests [16][18][19][20] Company Overview - The company, formerly known as "360 DigiTech," rebranded as "Qifu Technology" in 2023 [1] - The company is widely recognized by its brand name "360 Jietiao," which was recently renamed to "Qifu Jietiao" [3] - Zhou Hongyi, the former chairman of the board, resigned in August 2024 for "personal reasons" [3] Financial Discrepancies - The company reported a net income of 4 billion RMB to the SEC in 2022, while the SAIC data showed a net income of only 3.15 million RMB for the same year, a difference of 1271 times [4] - In 2023, the company reported a net income of 4.27 billion RMB to the SEC, while the SAIC data showed a net income of 3.08 million RMB, a difference of 1384 times [4] - The report highlights a significant discrepancy in total revenues reported to the SEC and SAIC, with a 23.1% difference in 2022 and a 17.2% difference in 2023 [5] Related-Party Transactions - The company has engaged in significant related-party transactions with Shanghai Qibutianxia, a subsidiary controlled by Zhou Hongyi [7][8] - The report alleges that Shanghai Qibutianxia has a large number of employees (5000-9999 or over 10,000) but no discernible business operations, suggesting that the company may be using it to shift employee costs [10][11] - The company's employee count increased from 2129 in 2021 to 3121 in 2023, while Shanghai Qibutianxia's employee count remained significantly higher [11] Profit Manipulation - The company's bad debt provisions accounted for 55% of total operating expenses in 2022 and 50% in 2023, making it a significant factor in profit manipulation [12] - The 90-day delinquency rate increased from 2.03% in 2022 to 3.40% in Q2 2024, indicating deteriorating loan quality [12][13] - Despite a 33% increase in accounts receivable from 2022 to 2023, the company reduced its bad debt provisions by 12% [13][14] - The company's cash and cash equivalents decreased by 2.1 billion RMB from 2022 to H1 2024, despite reported revenue and net income growth [15] Controlling Shareholder's History - Zhou Hongyi has a history of actions that allegedly harm public shareholders' interests, as seen in his other listed companies, LUDASHI and 360 [16][18][19] - LUDASHI's stock price surged due to a special dividend announcement but plummeted after Zhou Hongyi's controlled entity sold a significant portion of its shares and the dividend plan was canceled [18] - 360's stock price experienced a significant decline after its re-listing in China, despite an initial surge [19] - The report estimates that insiders have sold over 230 million USD worth of shares since 2020 [20] Conclusion - The report concludes that the company's stock is likely to experience a significant decline, similar to the performance of Zhou Hongyi's other listed companies [20]
奇富科技-S：“360借条”奇富科技被质疑财务造假，做空机构称实控人周鸿祎多次“损害公众股东利益”