360 DigiTech (QFIN) Stock Forecast for 2024, 2025, 2026. Sell or Buy?

The Value Pendulum, an authoritative financial analyst with a substantial following of 12,049 subscribers and an impressive portfolio of 2,618 publications since 2012, presents a new analytical article on QFIN stock. Known for their well-regarded and influential insights, The Value Pendulum maintains a bullish stance on QFIN, a perspective that draws attention given their high credibility within the financial community. Their consistent output over the years and significant readership reflect both the popularity and trustworthiness of their analyses. This review will delve into the key factors that underpin The Value Pendulum’s positive outlook on QFIN, leveraging their extensive experience and respected viewpoint in the financial markets.

Key Theses

• QFIN's third-quarter bottom-line growth prospects are favorable due to expectation of provision write-backs and lower operating costs.
• Qifu Technology offers an attractive shareholder yield for fiscal year 2024 estimated to be in the mid-teens percentage range.
• Despite positive earnings outlook and attractive shareholder yield, QFIN is trading at a depressed mid-single digit P/E ratio.

Factors Influencing QFIN Stock Price

Qifu Technology recognized a substantial RMB480 billion in 'write-backs of previous provisions' for Q2 2024. These write-backs directly contribute to increased net income, significantly boosting the company's stock price.

QFIN's operating expenses decreased by 20% YoY in Q2 2024, including a notable reduction in S&M and G&A expenses. These cost savings improve the company's profitability, making the stock more attractive to investors.

Qifu Technology's aggressive share buyback program and increased dividend yield highlight its commitment to returning capital to shareholders. This results in a potent 15.2% potential shareholder yield for FY 2024, enhancing stock appeal.

The company's key asset quality metrics, like the 30-day collection rate and Day-1 delinquency rate, have improved significantly, justifying further provision write-backs. This improvement reassures investors about the company's financial health and stability.

With a P/E ratio currently at 4.6 times and consensus earnings CAGR of 12.1% for FY2023-2026, QFIN has considerable upside potential if the P/E multiple rerates to a higher level. This re-rating potential makes the stock an attractive investment opportunity.

Commentary

Qifu Technology is positioned for an exciting time ahead. The blend of provision write-backs amounting to RMB480 billion and effective cost management resulting in a 20% reduction in operating expenses highlights the company's robust strategy. These factors, combined with improved asset quality metrics, underpin its healthy financial status, setting an optimistic stage for significant bottom-line growth in the short term. Investors are likely to find Qifu's potential for further profits highly attractive.

Moreover, Qifu's commitment to returning value to shareholders via an aggressive buyback program and an elevated dividend yield suggests a shareholder yield in the mid-teens for FY 2024. Even with these impressive prospects, the stock trades at a surprisingly low P/E ratio of 4.6, signaling a possible re-rating ahead. Average influence strength on the stock price is notably high, ensuring strong bullish momentum in the coming weeks. In conclusion, Qifu Technology presents a compelling investment opportunity with its favorable earnings outlook and strong yield commitment.