Banks Equity & Credit Research Analyst

Venkata D Ravi Kumar Dasari, CFA

Equity Bottom-Up

<ul>
<li>Revenue held up in 3Q25 as credit-driven services offset weakness in platform services, while regulatory and macro pressures continued to drive a strategic shift toward capital-heavy lending.</li>
<li>Provisions surged due to regulatory-driven business mix changes rather than asset-quality deterioration, pushing cost of risk sharply higher and weighing on profitability.</li>
<li>Despite lower FY25 guidance and reduced RoE, valuation remains attractive with meaningful upside supported by a higher target P/B and strong total return potential.</li>
</ul>


Revenue held up in 3Q25 as credit-driven services offset weakness in platform services, while regulatory and macro pressures continued to drive a strategic shift toward capital-heavy lending.
Provisions surged due to regulatory-driven business mix changes rather than asset-quality deterioration, pushing cost of risk sharply higher and weighing on profitability.
Despite lower FY25 guidance and reduced RoE, valuation remains attractive with meaningful upside supported by a higher target P/B and strong total return potential.


Qfin Holdings Inc.(QFIN): Rising Risk Costs Temper Otherwise Decent 3Q25 Result

<ul>
<li>QFIN shares are down ~19% MTD on regulatory concerns in China’s consumer finance sector, though the proposed credit-risk sharing rules may only modestly impact near-term RoE (1–3ppt).</li>
<li>While speculation over a lower NFRA loan yield cap persists, QFIN’s current yield profile suggests limited sensitivity; any tangible financial impact will depend on actual regulation rollout.</li>
<li>QFIN’s 0.9x P/B reflects overly bearish loss expectations. Even under a bear case with a 5ppt RoE reduction, the stock offers 56% upside, implying a fair value of $34.</li>
</ul>


QFIN shares are down ~19% MTD on regulatory concerns in China’s consumer finance sector, though the proposed credit-risk sharing rules may only modestly impact near-term RoE (1–3ppt).
While speculation over a lower NFRA loan yield cap persists, QFIN’s current yield profile suggests limited sensitivity; any tangible financial impact will depend on actual regulation rollout.
QFIN’s 0.9x P/B reflects overly bearish loss expectations. Even under a bear case with a 5ppt RoE reduction, the stock offers 56% upside, implying a fair value of $34.


Qfin Holdings Inc.(QFIN): Buying on Pullbacks Still Makes Sense Here

Equity Research Analyst - Long-Short

Raj S, CA, CFA

<ul>
<li>Regulation steady, not softer; policy silence reaffirms the 24% cap as industry standard, with industry participants electing to comply with immediate effect.</li>
<li>Asset stress rising; delinquencies peak as low-tier borrowers struggle, but QFIN’s disciplined underwriting and data scale set the stage for recovery in 2026e.</li>
<li>Leadership and capital strength, market-leading balance sheet and strong commitment to shareholder returns underpin confidence through the transition phase.</li>
</ul>


Regulation steady, not softer; policy silence reaffirms the 24% cap as industry standard, with industry participants electing to comply with immediate effect.
Asset stress rising; delinquencies peak as low-tier borrowers struggle, but QFIN’s disciplined underwriting and data scale set the stage for recovery in 2026e.
Leadership and capital strength, market-leading balance sheet and strong commitment to shareholder returns underpin confidence through the transition phase.


QFIN US - Follow-Up: Asset-Quality Pressure Undermines Early Bull Case; Recovery Shifts to 2026e

Event-Driven

<ul>
<li>New Chinese regulations mandate risk sharing with banks, likely raising Qfin’s platform CoR. Management is responding conservatively with tighter controls and higher provisioning before Oct 2025.</li>
<li>Strong 2024, early 2025 profits were supported by low CoR. Based on peer analysis, a conservative 4% CoR is assumed for Qfin’s platform, which lacks underwriting or credit guarantees.</li>
<li>Regulatory impact lowers expected RoE by ~2pts. With an 18% CoE, fair value is ~$43/share, implying ~60% total return and supporting a positive investment outlook.</li>
</ul>


New Chinese regulations mandate risk sharing with banks, likely raising Qfin’s platform CoR. Management is responding conservatively with tighter controls and higher provisioning before Oct 2025.
Strong 2024, early 2025 profits were supported by low CoR. Based on peer analysis, a conservative 4% CoR is assumed for Qfin’s platform, which lacks underwriting or credit guarantees.
Regulatory impact lowers expected RoE by ~2pts. With an 18% CoE, fair value is ~$43/share, implying ~60% total return and supporting a positive investment outlook.


Qfin Holdings Inc.(QFIN): Regulatory Risk Modest; Valuation Remains Attractive for Potential Upside.

<ul>
<li>QFIN US is down 30% since July on fear that the Oct 1 regulatory action on 24%+ loans will lead to significant and sustained earnings downgrades.</li>
<li>QFIN’s industry-leading franchise, risk management history, capital return yield (~18-20%), and strong balance sheet support a strong recovery post-regulatory clarity and cleanup.</li>
<li>Valuation at 1.2x FY1 P/BV already discounts worst case; QFIN’s recovery potential leaves scope for 100%+ upside (peak valuation at 2.4x in Mar-24 pre-regulation).</li>
</ul>


QFIN US is down 30% since July on fear that the Oct 1 regulatory action on 24%+ loans will lead to significant and sustained earnings downgrades.
QFIN’s industry-leading franchise, risk management history, capital return yield (~18-20%), and strong balance sheet support a strong recovery post-regulatory clarity and cleanup.
Valuation at 1.2x FY1 P/BV already discounts worst case; QFIN’s recovery potential leaves scope for 100%+ upside (peak valuation at 2.4x in Mar-24 pre-regulation).


2025 High Conviction: QFIN US – Event-Driven: Regulatory Overhang Sets Up 100%+ Upside Post-Clarity

China

360 Finance, Inc. operates as a holding company. The Company, through its subsidiaries, provides a digital finance platform to render loans and capital contributions. 360 Finance serves clients in China.

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360 Finance, Inc. (QFIN US)

Qfin Holdings Inc.(QFIN): Rising Risk Costs Temper Otherwise Decent 3Q25 Result

Revenue held up in 3Q25 due to credit-driven services, but provisions surged, impacting profitability. Despite lower guidance, valuation remains...

Venkata D Ravi Kumar Dasari, CFA

Qfin Holdings Inc.(QFIN): Buying on Pullbacks Still Makes Sense Here

QFIN shares fell 19% (MTD) on regulatory concerns in China, though RoE impact appears modest; stock offers 95% upside in the base case and 56% in...

Venkata D Ravi Kumar Dasari, CFA

QFIN US - Follow-Up: Asset-Quality Pressure Undermines Early Bull Case; Recovery Shifts to 2026e

Newsflash on QFIN: Market chatter today points to further tightening in China’s consumer finance regulations beyond the 24% capping. If confirmed,...

Raj S, CA, CFA

Qfin Holdings Inc.(QFIN): Regulatory Risk Modest; Valuation Remains Attractive for Potential Upside.

New Chinese rules increase risk sharing with banks, impacting Qfin's CoR. Management boosts controls and provisions. Fair value seen at $43/share...

Venkata D Ravi Kumar Dasari, CFA

2025 High Conviction: QFIN US – Event-Driven: Regulatory Overhang Sets Up 100%+ Upside Post-Clarity

QFIN US down 30% on regulatory fears, but strong fundamentals suggest potential for 100%+ upside post-regulatory clarity.

Raj S, CA, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Qfin Holdings Inc.(QFIN): Rising Risk Costs Temper Otherwise Decent 3Q25 Result

​Revenue held up in 3Q25 due to credit-driven services, but provisions surged, impacting profitability. Despite lower guidance, valuation remains...

Venkata D Ravi Kumar Dasari, CFA

Qfin Holdings Inc.(QFIN): Buying on Pullbacks Still Makes Sense Here

​QFIN shares fell 19% (MTD) on regulatory concerns in China, though RoE impact appears modest; stock offers 95% upside in the base case and 56% in...

Venkata D Ravi Kumar Dasari, CFA

QFIN US - Follow-Up: Asset-Quality Pressure Undermines Early Bull Case; Recovery Shifts to 2026e

Newsflash on QFIN: Market chatter today points to further tightening in China’s consumer finance regulations beyond the 24% capping. If confirmed,...

Raj S, CA, CFA

Qfin Holdings Inc.(QFIN): Regulatory Risk Modest; Valuation Remains Attractive for Potential Upside.

New Chinese rules increase risk sharing with banks, impacting Qfin's CoR. Management boosts controls and provisions. Fair value seen at $43/share...

Venkata D Ravi Kumar Dasari, CFA

2025 High Conviction: QFIN US – Event-Driven: Regulatory Overhang Sets Up 100%+ Upside Post-Clarity

​QFIN US down 30% on regulatory fears, but strong fundamentals suggest potential for 100%+ upside post-regulatory clarity.

Raj S, CA, CFA

Revenue held up in 3Q25 due to credit-driven services, but provisions surged, impacting profitability. Despite lower guidance, valuation remains...

QFIN shares fell 19% (MTD) on regulatory concerns in China, though RoE impact appears modest; stock offers 95% upside in the base case and 56% in...

QFIN US down 30% on regulatory fears, but strong fundamentals suggest potential for 100%+ upside post-regulatory clarity.