Qifu Technology: Navigating Uncertainty with AI-Driven Resilience

In an era of economic volatility, Qifu Technology (NASDAQ: QFIN; HKEx: 3660) stands out as a rare blend of stability and growth. Leveraging its AI-powered credit-tech platform, the company has not only weathered macroeconomic headwinds but positioned itself to capitalize on long-term opportunities in China’s financial services sector. Let’s dissect how Qifu’s strategic moves—ranging from user expansion to a landmark convertible notes offering—counterbalance risks and signal a compelling investment thesis.

Financial Resilience: Growth Amid Headwinds

Despite a challenging 2024, Qifu delivered strong financial results, with net income surging to RMB6.25 billion (US$856 million), a 46% year-over-year increase. While total loan volume dipped 12.8% due to macroeconomic pressures, its capital-light ICE model (Intelligence Credit Engine) saw 23.2% growth, driving higher-margin revenue. This shift underscores Qifu’s focus on quality over quantity, prioritizing loans originated via partnerships with financial institutions—a strategy that mitigates credit risk while maintaining profitability.

The user base expansion remains a pillar of resilience. With 261.2 million registered consumers (up 11%) and 93.1% of loan volume coming from repeat borrowers, Qifu’s platform demonstrates sticky customer engagement. Even more compelling: 47% of new credit users now originate from embedded finance partnerships, a low-cost, high-quality channel that reduces reliance on traditional marketing.

The Convertible Notes Offering: A Masterstroke in Capital Allocation

Qifu’s March 2025 US$690 million convertible notes offering—priced at a 35% premium to its stock price—was a strategic coup. By issuing low-interest debt (0.5% annual rate) with a maturity of 2030, Qifu secured long-term capital at minimal cost while avoiding equity dilution. The proceeds were immediately deployed into a new US$450 million share repurchase plan, which saw the company buy back 5.1 million ADSs at an average price of US$44.23. This move is immediately accretive to earnings per share (EPS), boosting investor confidence at a critical juncture.

The notes’ cash-par settlement structure further insulates shareholders: upon conversion, Qifu will pay cash for the principal amount, limiting dilution. Meanwhile, the 35% conversion premium acts as a built-in hedge, aligning investor incentives with Qifu’s rising stock performance.

Institutional Sentiment: A Bullish Backing

Institutional investors are voting with their wallets. Notable buys include:
- Mirae Asset Global Investments, which boosted its stake by 10,812% in Q1 2025 (US$908.8 million).
- Krane Funds Advisors, adding 5.48 million shares since Q4 2024, now holding over US$2.7 billion in QFIN.

Even as legacy players like Bank of America cut their stakes, the net inflow of US$3.6 billion from new institutional buyers signals confidence in Qifu’s risk management and growth trajectory.

Risk Management: Stabilizing in an Unstable Environment

Critics may point to Qifu’s 90-day delinquency rate rising to 2.09% in late 2024—but this figure masks progress. The metric has stabilized after peaking in 2023, and leading indicators like the Day-1 delinquency rate (5.0%) and 88.1% 30-day collection rate suggest robust underwriting discipline. Management’s early 2024 pivot to stricter risk standards has paid off, with repeat borrowers—who historically default less—now accounting for 93.9% of loan volume.

The embedded finance ecosystem further insulates Qifu. By partnering with 163 financial institutions, Qifu leverages partners’ risk appetite while minimizing its own balance sheet exposure. This “capital-light” model is a key differentiator in an industry rife with overleveraged players.

Why Invest Now?

Qifu’s AI-driven efficiency and strategic capital moves position it to thrive in 2025 and beyond. With:
1. Share repurchases boosting EPS,
2. Institutional support signaling long-term conviction,
3. Risk metrics trending downward, and
4. Embedded finance partnerships driving high-quality growth,

Qifu is primed to outperform peers in a sector ripe for consolidation. The convertible notes’ low cost of capital and accretive repurchases create a virtuous cycle of value creation.

Conclusion: A Buy at Current Levels

While macroeconomic clouds linger, Qifu’s tech-led resilience and institutional backing make it a standout play in China’s credit-tech space. At current prices—well below the convertible notes’ US$59.71 strike price—investors get a double lever: exposure to Qifu’s growth and protection via the notes’ premium. This is a strategic buy for portfolios seeking stability in uncertainty.

The path forward is clear: Qifu’s blend of AI innovation, disciplined risk management, and shareholder-friendly capital allocation makes it a long-term winner. Act now, before the market catches up.

DISCLAIMER: This analysis is for informational purposes only and not financial advice. Always conduct independent research.