360 DigiTech (NASDAQ: QFIN) Q1 2022 Research Summary

360 DigiTech, Inc. (NASDAQ: QFIN) is a leading online consumer finance company focused on underserved borrowers, providing a technology platform that enables financial institutions to connect with customers. The company serves loan seekers primarily in China through its proprietary system that supports the full cycle of the loan process, from loan application to settlement.


Founded in July 2016, 360 Digitech is headquartered in Shanghai, China. It functions as a link between retail consumers and financial institutions primarily through the 360 ​​Jietiao app. The use of advanced technologies such as artificial intelligence differentiates the company from traditional banks, which also allows it to carry out activities such as post-loan management and identity authentication more efficiently.

The main steps in the loan process are customer acquisition, product matching, risk management and post-loan management. The company owes its success primarily to strategic partner 360 Group. In addition to consumer credit, it also offers insurance/banking products and wealth management services.

The market

Others engaged in similar activities in the United States include LendingTree, Inc. (NASDAQ: TREE) and M. Cooper Group Inc. In China, 360 DigiTech competes with Ant Financial, promoted by e-commerce giant Alibaba Group Holdings (NYSE: BABA), and WeBank, a subsidiary of Tencent Holdings. Customer credit technology company Qudian Inc. (NYSE: QD) and Yirendai (NYSE: YRD), a provider of education and home improvement loans, also share the market with 360 DigiTech.

360 DigiTech enjoys an edge over most of its rivals in the fast-growing fintech industry, aided by the low-cap business strategy and competitive pricing. The data-driven model attracts customers to the platform and the superior risk management capabilities keep the business sustainable. It has remained on a growth path steadily over the years despite growing competition and changing regulatory environment in China.

Read Management/Analyst Comments on 360 DigiTech’s 2021 Fourth Quarter Earnings Report

Financial Highlights

Over the past few quarters, 360 DigiTech has seen consistently strong revenue growth, which has translated into steadily improving profitability. Continuing the upward trend, revenue increased by a third to RMB 4.42 billion in the fourth quarter of 2021, with strong contributions from the platform services segment. Net profit, adjusted for exceptional items, increased 5% year-on-year to $1.38 billion in the three-month period.

The borrower base further widened and reached a new high, while total loan origination volumes approached prior quarter record highs. At the end of fiscal 2021, the platform connected 119 financial institutional partners and 188.2 million consumers with potential credit needs, an increase of 116% over the previous year. Driven by the continued growth of the SME business, management is investing in this segment by improving services and seeking new partnerships.

Activity area

Subsidiaries :

HK Qirui International Technology Company Ltd.
Shanghai Qiyue Information Technology Co., Ltd.
Shanghai Qidi Information Technology Co., Ltd.
Beihai Qicheng Information & Technology Co., Ltd.

Variable Interest Entities:

Shanghai Qiyu Information Technology Co., Ltd.
Fuzhou 360 Online Microcredit Co., Ltd.
Funding Guarantee Fuzhou 360 Co., Ltd.
Shanghai 360 Funding Guarantee Co., Ltd.


In May 2022, 360 DigiTech provided an update on its identification by the Securities and Exchange Commission, under the Holding Foreign Companies Accountable Act, as a company that used a registered public accounting firm whose document of work cannot be inspected or investigated completely by the public company. United States Accounting Supervisory Board.

Previously, the Board of Directors approved a dividend of $0.13 per common share, or $0.26 per ADS, for the fourth quarter of 2021 in accordance with management’s dividend policy. The dividend will be paid on May 13, 2022 to shareholders of record on April 6, 2022.


Part of an emerging sector of the financial services industry, Chinese fintech companies are under constant scrutiny by the country’s regulators. They often face pushbacks, although the environment has become friendlier and most players find the new rules supportive. It’s important for businesses to keep up with changing guidelines and stay up to date, which is probably the biggest challenge they face.

Online lending companies are forced to adopt effective measures to ensure low delinquency rates without affecting business growth, as the technology that powers their systems is still evolving. Another concern is the security of user data which is very sensitive in nature. In addition, the sector is sensitive to volatile credit cycles and macroeconomic fluctuations.


360 DigiTech executives currently expect total loan facilitation and origination volumes to be between RMB 410 billion and 450 billion in fiscal 2022, representing year-on-year growth. from 15% to 26%. The strong forecast shows that the positive momentum seen throughout last year has carried over into the current fiscal year. Growth will continue to be driven by the small cap segment, supported by stable demand and continued technology adoption.

Bank earnings give mixed signals amid fears of rising rates and inflationary pressures

The stock

Shares of 360 DigiTech have been on a losing streak for about a year, with the recent market selloff adding to the weakness. It traded mostly below the long-term average and often underperformed the market. The current valuation is well below the records reached about a year ago. The company’s market value has remained just under $2 billion so far this year.


360 DigiTech remained largely untouched by the pandemic, but instead benefited from the widespread adoption of digital technologies during the crisis. The company appears well positioned to exploit emerging opportunities in the fintech market, through continued innovation. However, changes in the regulatory environment both domestically and in the United States may be of concern to management in the near future.

About Ellie Cohn

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