On Wednesday, Citi updated its outlook on Qifu Technology (NASDAQ:QFIN), raising the stock's price target slightly from $23.54 to $23.80, while keeping a Buy rating on the shares.
The adjustment follows Qifu's reported fourth-quarter earnings for 2023, where the company posted a non-GAAP net profit after tax (NPAT) of RMB 1.15 billion. This figure represents a slight quarter-over-quarter decrease of 2.6%, but a year-over-year increase of 25%. The company's full-year non-GAAP NPAT rose by 6% compared to the previous year, reaching RMB 4.45 billion, aligning with market expectations.
Qifu Technology's net revenue after provisions saw a modest uptick of 0.7% quarter-over-quarter, totaling RMB 2.67 billion in the fourth quarter of 2023. This growth was attributed to reduced pressure from early loan repayments and a stable net revenue take rate of 5.7% for the quarter, which remained consistent with the previous quarter and marked a 0.6 percentage point increase from the same quarter in the previous year.
The company also declared a semi-annual dividend of $0.58 per American Depositary Share (ADS) for the second half of 2023, which corresponds to a dividend payout ratio of approximately 30%. This figure sits at the high end of the company's targeted payout ratio range of 20%-30%. As of March 12, 2024, Qifu Technology had used approximately $132 million of its $150 million share buyback program, which was announced in June 2023. The average buyback price was reported at $15.7 per ADS.
Looking ahead, the management of Qifu Technology has provided guidance indicating an intention to increase the total shareholder return to over 70% of GAAP NPAT for the estimated 2024 figures. This would be a significant increase from the roughly 50% delivered in 2023. The planned shareholder return includes a maintained dividend payout ratio of 20%-30% and the initiation of a new share buyback program.
The new program is set to commence on April 1, 2024, and will involve the repurchase of shares worth up to $350 million over the following 12 months.
InvestingPro Insights
Following Citi's updated outlook on Qifu Technology (NASDAQ:QFIN), market data from InvestingPro provides a deeper look into the company's financial metrics and valuation. Qifu Technology's market capitalization stands at a solid $2.63 billion, reflecting the company's significant presence in the market. Additionally, the company's attractive valuation can be seen in its Price-to-Earnings (P/E) ratio, which is currently at a low 4.38 based on the last twelve months as of Q4 2023. This low earnings multiple suggests that the company's stock might be undervalued relative to its earnings potential.
Moreover, the company's dividend yield is notably high at 4.85%, an appealing factor for income-seeking investors. This is consistent with the company's recent declaration of a semi-annual dividend of $0.58 per ADS, showcasing its commitment to returning value to shareholders. With a strong free cash flow yield as indicated by InvestingPro Tips, Qifu Technology's financial health seems robust, with liquid assets that exceed short-term obligations, providing financial flexibility and stability.
Investors interested in a comprehensive analysis of Qifu Technology can explore additional InvestingPro Tips, which include insights on the company's status as a prominent player in the Consumer Finance industry and predictions of profitability for the current year. There are 5 more InvestingPro Tips available for Qifu Technology, which can be accessed through InvestingPro's platform. To take advantage of these insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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