First Read: QFIN Holdings "Will buyback resumption catalyse a shift of..."

研报英文原文证据摘录

First Read: QFIN Holdings "Will buyback resumption catalyse a shift of..."

What were the most noteworthy areas in the results? 12/26E 27.34 29.12 7 27.61

12/27E 23.28 26.98 16 28.97

1) Average loan pricing saw another sizable decline to 18.7% in Q126 from 19.4% in 12/28E 25.98 29.22 12 34.23

prior quarter. We expect this to settle at close to 18% by end-2026. 2) Provisioning

buffer. By our estimate, QFIN's provision-to-loan ratio reached 10.3% in Q126, marking Alex Ye

another historical high. The company has continued to step up provisions on new loans Analyst

despite an improving asset quality trend. 3) C-M2 ratio improved to 0.81% in Q126 alex.ye@ubs.com

+86 755 2215 8858

from a peak of 0.97% in Q425, in line with industry trend.

May Yan

Q: Has the company's outlook/guidance changed? Analyst

may.yan@ubs.com

On regulatory risk, earlier Caixin article suggested that the most extreme downside case +852-2971 7157

of a universal interest rate cap at 4x LPR looks quite unlikely to be implemented given its

profound impacts. We think the removal of this extreme case may be one of the reasons

prompting QFIN's buyback resumption, aside from attractive valuation. While a higher

interest rate cap at 18% or 20% remains a tail-risk, the fact that QFIN is proactively

lowering its average loan pricing would put it better positioned than peers should these

downside cases materialise. On earnings outlook, assuming regulatory environment

stays status quo, we expect an overall steady earnings in coming quarters, as a gradual

release of its provisioning buffer would help cushion the top-line pressure.

Valuation: Raise PT from US$20.70 to US$22.50; Buy

Highlights (Rmbm) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 16,065 16,939 19,354 13,599 12,697 13,298 13,907 14,529