On March 13, Qifu Technology announced financial results for Q4 and the full year of 2023, declared a semi-annual dividend, and announced a new share repurchase plan. After the results were announced, the stock price surged by more than 12%.

There are many highlights of this performance:

1. Continued improvement in profitability

Qifu Technology's revenue in 2023 was 16.29 billion yuan (about 2,294 million US dollars), operating profit was 4.857 billion yuan (about 684 million US dollars), adjusted operating profit was 5,043 billion yuan (about 710 million US dollars), net profit was 4.285 billion yuan (about 600 million US dollars), and net profit after deduction was 4.45 billion yuan, an increase of 5.9% over the previous year.

The company's performance has continued to improve quarter by quarter since 2023. Total net revenue for the fourth quarter of 2023 was 4.5 billion yuan, and non-GAAP net profit was 1.15 billion yuan. During the quarter, operating cash flow reached approximately $2.35 billion.

On the profit side, the company's net profit increased by 5.92% in 2023, and the increase came from better cost-side control. Sales expenses fell 12% year on year, reflecting the cost side optimization brought about by the company's continued refined operation. The company issued a total of 12.5 billion yuan of ABS in 2023, an increase of 56% over the previous year, while the financing cost of ABS was low, and the new ABS issuance drove the company's financing costs to continue to decline in 2023.

The company stated, “We will continue to carefully plan our business, continue to tighten risk control strategies, optimize our business portfolio, and focus on improving profitability and operational efficiency to achieve qualitative growth.” It is expected that in the future, the company will pay more attention to optimizing operational efficiency, which in turn will lead to profit growth.

2. The company's basic market is stable, with future efficiency first and quality first

By the end of the fourth quarter, Qifu Technology had established partnerships with 157 financial institutions to help them provide credit services to more than 50.86 million users. The consolidated loan scale in the fourth quarter reached 119 billion yuan, an increase of 13.8% over the previous year. In 2023, Qifu Technology achieved another good result. The matching loan scale reached 475.8 billion yuan, a significant year-on-year increase of 15.4%.

Qifu Technology has maintained a steady and upward trend in recent quarters.

The balance of 202Q4-2023Q4 managed loans was $163.5 billion, $171.3 billion, $184.5 billion, $189.1 billion, and $186.5 billion, respectively, gradually rising and currently stabilizing at the level of 180 billion +; 50.86 million credit users in 2023, an increase of 14.4% year on year; 475.8 billion new loans were added in 2023, up 15.4% year on year.

At present, Qifu Technology's basic market is stable, and it has entered a new stage of “efficiency first, quality first”. In the foreseeable future, there are no major risks, and the company's profitability is rising steadily.

3. The main reason for the sharp rise in stock prices was that the company announced an unbelievable dividend+repurchase plan.

In terms of dividends, the company declared $0.50/0.58 per ADS for 1H23/2H23, respectively, for a total dividend of US$170 million in 2023. In terms of repurchases, the company has repurchased 8.4 million ADS from June 20, 2023 to March 12, 2024, with a total repurchase price of US$132 million, with an average repurchase price of US$15.7 million. Furthermore, on March 12, 2024, the company announced an additional US$350 million repurchase plan over the next 12 months, demonstrating confidence in long-term development.

What kind of concept is this?

The 2023 Qifu Technology dividend plus repurchases is approximately 50% of the 2023 profit. Repurchase efforts will be stepped up in 2024, and this ratio is almost 80%.

The company has a market value of 3 billion US dollars. Based on the current stock price, the dividend yield is close to 10%, and if the repurchase plan is successfully implemented, more than 10% of the shares issued will be repurchased in the next year. The total dividend+repurchase will bring investors a yield of more than 20%. This kind of return is rare in China Securities.

Of course, the company's ability to implement such a policy is itself a source of confidence for steady future development. The company has money on its accounts, and future profit side profits are not bad.

In terms of valuation, the company currently still has 600 million US dollars in cash. The net profit for the full year of 2023 is NON-GAAP net profit of 4.454 billion yuan. The NON-GAAP net profit margin is 27.3%, 4.7 times the current PE in 2023.

Qifu Technology's dividend rate is 10%, and its profitability (ROE > 20%) is at its best in the fintech sector. Furthermore, its growth capacity cannot be ignored (net profit increased 22.56% in the past 3 years), and its investment value is indeed undervalued.

After the financial report, Guotai Junan Securities gave it an increase in its holdings, stating that “the reduction in the company's sales expenses, capital costs, etc. led to a decrease in costs. “In the future, the company will pay more attention to refined operations, tighten risk control strategies, and achieve qualitative growth”; Huatai Securities maintains its “buy” rating, and CITIC Construction Investment Securities believes that “the company takes high-quality growth and enhanced profitability as its primary goal this year, and it is expected that credit investment will gradually recover throughout the year”, giving it a target price of 24.72 US dollars for 6 months.

With high repurchases, high dividends, and steady growth, the value of Qifu Technology will gradually be recognized by the market.