360 DigiTech (NASDAQ: QFIN) Q4 2020 Research Summary

360 DigiTech, Inc. (NASDAQ: QFIN) has carved a distinct segment for itself in China’s monetary service sector with a singular enterprise mannequin that helps underserved debtors meet their funding wants in a handy method. In what might be a milestone in its profitable journey, the fintech agency just lately modified its title to raised outline the model.

The corporate has remained resilient to the pandemic up to now and maintained its market-leading place, supported by efficient threat administration and strategic partnerships. Integrated round 4 years in the past, the corporate connects customers and small & medium-sized enterprises with monetary establishments by way of a straightforward and clear process. It caters primarily to new mortgage aspirants who would wish to use the merchandise as a complement to bank card debt.

On Progress Path

China’s favorable regulatory setting and secure demand for credit score have helped the corporate in its transition to the low-risk enterprise mannequin. The prevalence of e-commerce and on-line banking have contributed considerably to the expansion of client lending, which is an rising phase. The excellent news is that the pattern is predicted to proceed within the foreseeable future. 360 DigiTech’s predominant enterprise items are:

  • Shanghai Qiyu Info & Know-how Co.
  • Fuzhou 360 On-line Microcredit Co.
  • Fuzhou 360 Financing Assure Co.
  • HK Qirui Worldwide Know-how Firm
  • Shanghai Qiyue Info & Know-how Co.
  • Shanghai 360 Financing Assure Co.

Of late, the main focus has been on the extremely profitable capital-light mannequin, which is projected to develop in double digits this yr – an outlook that underscores 360 DigiTech’s relevance in China’s altering regulatory setting that appears to scale back threat and guarantee correct demand-supply stability in monetary providers. The demand for client credit score has recovered notably, after being hit by the pandemic early final yr, reflecting the development in market sentiment and general financial exercise. The optimistic pattern prompted the management to lift its monetary steerage.

Key Statistics

All the important thing working metrics rose to document highs within the September-quarter, aided by the general enchancment in working situations. Revenues surged 43% yearly to $545.5 million, with each the enterprise segments registering sturdy progress. That, mixed with a marked lower in working bills, resulted in a 70% spike in adjusted revenue to $190 million. Like within the earlier quarter, the uptrend was led by the capital-light enterprise. Throughout the quarter, capital-light and different tech-based companies grew to about 28% of complete mortgage origination, whereas the asset high quality improved to an all-time excessive.


360 DigiTech seems to beat competitors by way of its threat administration capabilities, aggressive pricing, and improvements just like the recently-launched digital credit-card to draw clients in a market that’s witnessing an inflow of recent gamers. With an enormous repository of buyer information at its disposal, the corporate enjoys an edge over its rivals. Buyer credit score expertise agency Qudian Inc. (NYSE: QD), which operates within the home market below the 2 segments of Instalment Credit score Companies and Transaction Companies, and Yirendai (NYSE: YRD) — providing diversified merchandise together with loans for schooling mortgage and residential reworking — are among the many predominant rivals.

360 DigiTech Q3 2020 earnings infographic


When the corporate revealed the newest quarterly report, an working metric that raised issues was its excessive contingent liabilities that weighed on margins. On the optimistic aspect, the state of affairs is predicted to enhance significantly as soon as normalcy returns to the market and the broad economic system even because the administration stays vigilant on provisions. Although China recovered from the virus disaster by a big lengthen, earlier than it might take a toll on the economic system, uncertainty nonetheless lingers. Furthermore, China’s non-traditional monetary providers sector is vulnerable to macroeconomic fluctuations and credit score cycles.


After slipping into the single-digit territory within the early weeks of the virus outbreak, when markets the world over witnessed a mass sell-off, shares of 360 DigiTech bounced again and stayed above the $10-mark throughout the remainder of 2020. After a sequence of ups and downs, the inventory ended the yr on an encouraging word, with the worth rising steadily in the previous few classes.

Vital Updates

Just a few months in the past, the model was rechristened from 360 Finance, Inc. to 360 DigiTech, Inc. because the administration expects that the brand new id would assist in representing the agency’s long-term strategic positioning out there extra successfully. Earlier, it turned the biggest shareholder of Kincheng Banking Corporation (KBC) after securing approval from the China Banking and Insurance coverage Regulatory Fee. As of September 2020, the corporate’s complete cumulative mortgage origination quantity stood at RMB504 billion, with complete cumulative registered customers of 156 million and monetary establishment companions of 97. The implementation of Embedded Fintech, a brand new enterprise initiative whereby fintech firms present their service in Infrastructure-as-a-Service, is on course.


Having entered 2021 on a shiny word, with a powerful money stability and secure buyer progress, the corporate seems poised to emerge stronger from the coronavirus disaster. The administration has revised up its steerage for full-year mortgage origination quantity within the ultimate months of fiscal 2020, which additionally consists of seasonal components. Within the Chinese language market, it is extremely tough for the banking sector to amass the total functionality to supply client credit score by itself, quite it operates in collaboration with new-age mortgage facilitation platforms. Additional forward, synergies and merchandise co-developed with KCB ought to add to revenues within the subsequent fiscal yr.

Read management/analysts’ comments on 360 DigiTech’s Q3 earnings


The Chinese language fintech trade is witnessing main regulatory adjustments and a few of them might pose challenges for firms working within the sector. In response to the current regulatory amendments, 360 DigiTech tightened its coverage in threat administration and buyer acquisition. Nonetheless, the longer term prospects of the trade look shiny because the authorities are encouraging good practices and quashing unhealthy ones.

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Huynh Nguyen

My name is Huynh and I am a full-time online marketer.

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