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Qifu Stock: More Upside Potential On Upbeat Outlook

The loan services provider has delighted investors with bumper earnings and an upbeat outlook, only months after fighting off allegations that it overstates its profits

Key Takeaways:

Qifu reported a 46% jump in annual net profit, fueled by a strong fourth quarter

The company said it had reduced its credit risks by using less of its own capital for lending 

China's economy may face plenty of challenges, but the online credit business looks to be thriving, at least for loan services provider Qifu Technology Inc. (QFIN.US, 3660.HK).

The firm, which facilitates small-scale loans through an AI-powered platform, delivered a forecast-beating set of earnings this month, helped by a persistent demand for credit in the private sector and by a move to scale back lending directly from its own pocket.

Qifu logged revenues of 17.2 billion yuan ($2.37 billion) for 2024, up 5.38% from the previous year. But the growth in the bottom line was more impressive. Net profit surged 46.2% to 6.26 billion yuan, with a net profit margin of 36.4% and earnings per share reaching 21.02 yuan ($2.9). The company attributed the rise to operational efficiencies under what it called its "capital-light" model, a tech-focused strategy of relying on partner institutions rather than its own resources to provide the actual loans.

Qifu announced a ...