QFIN Qfin Holdings, Inc.

Verdict: TOO HARD (confidence 2/5) · price $6.20 per ADS on 2026-10-09 · tranches $5 / $4 / $3 (placeholders if the owner overrides) · trim above $12 The screen's 1.4x TTM P/E and $15.77 Sticker use earnings from before the fall. Q2 2026 net income fell ~77% and the company guides Q3 down by a similar amount; buybacks are suspended. ROIC has been 18–37% for years and there is almost no debt, but this is a Chinese lender under regulatory pressure, where the story, not the price, is the problem. Research, not advice.

R · Radar

• Screen: BUY, tier A, rank 5.98, 3 methods agree but methods_disagree is true, 78% below the 52-week high, marker score 0.88. Flags: PE<5 (check one-offs), financial, CNY converted at 6.683, 1 ADS = 2 shares, micro-cap. No gurus, no insider data.
• Radar 2026-10-09: NOISE (US-listed China ADRs down 9% in 5 days). The company's own Q2 report is the bigger news [1][2].
• Street: 13 analysts, rating 2.23/5 (3 strong buy, 5 buy, 3 hold, 1 sell, 1 strong sell), targets $8.05 / $14.85 / $23.09 (as of 2026-10-10). Street EPS: −63% this year, +11% next. The street is betting on a trough; I can't confirm one. Signal: mixed. Targets are not value to me.

U · Understand

• The business in one sentence: Qfin ("360 Finance") matches Chinese consumers with banks and other funders that lend to them, and earns fees for matching and servicing.
• Money: loan facilitation and origination volume fell 25.1% to RMB 63.4B in Q2; net revenue fell 31.6% to RMB 3.57B [1][2]. Segment shares: not found. Rivals: Lufax, FinVolution, Qudian, big-tech credit products and banks.
• Weather: Chinese consumer-credit regulation, a sudden industry liquidity shock in late June 2026 [2], VIE structure, US-China delisting risk. Country risk is a checklist item (METHOD 2).
• Circle of competence: 1/5. I can't judge Chinese credit quality or policy direction.

L · Love (moat and management)

• Moat: funder relationships and borrower data; no clear switching costs. Replication: other platforms do the same. ROIC (fact pack): 22–37% in 2017–21, 18–24% in 2022–25. Revenue peaked in 2021 ($2.62B), fell to $2.30B in 2023, and recovered to $2.76B in 2025: results track policy, not pricing power.
• Management: shares fell from 328M (2023) to 272M (2025) through buybacks, now suspended (late June) [2]. Debt ~$37M. A first-half dividend of $0.46 per ADS was approved [2]. Proxy and incentives: foreign private issuer, not read. A law-firm "investigation" notice exists; that is solicitation, not a finding [2].
• Values: consumer lending in China. The owner decides.
• Would I buy the whole company at this price? Not knowingly. Market cap ~$844M against ~$666M net cash (screen) prices the operations at ~$180M, which is why it looks cheap; I can't judge whether the cash is accessible or what the loan book needs.

E · Event

• What happened: Q2 2026 report (August): net income RMB 401M (~$59M) vs RMB 1.73B a year earlier, helped down by a ~RMB 500M tax expense; Q3 guide non-GAAP net income RMB 400–500M, 67–73% lower; volume to fall further [1][2]. Sources conflict on the share-price reaction (12% vs 19%), so I leave it out.
• Event checks (METHOD 7):
  1. Known: ✔ regulation and liquidity, though the mechanism is only partly explained.
  2. Easy to find: ✔.
  3. Needs at least a year: ✔.
  4. Resolves within ~3 years: ? depends on Beijing.
  5. No new debt needed: ✔.
  6. You would own it for life: ✘.
• Event or problem? A changed story under a regulator I can't read. LESSONS: when the story changes, sell, even at a loss (Alibaba). Cheap with a falling top line is not an event.

R · Reduce basis (tranches only, no options)

The screen's plan ($15.77 / $7.88 / $6.70) uses TTM EPS from before the fall; I don't use it. Placeholders only (verdict TOO HARD). Equal dollar tranches; keep dry powder. Stop buying above $5. Trim above $12.

S · Story

• Thesis: the platform keeps its funders and borrowers, the regulatory reset ends within two years, earnings recover from ~RMB 1.8B a year toward the past RMB 4B+, and the cash is returned.
• Three things that must stay true: (1) no rule that shuts the model; (2) funders keep lending; (3) the dividend is paid and cash is not trapped.
• Inversion: bear case: the industry shrinks for good, borrowing-cost caps remove the margin, and the ADS faces delisting. Concession: I have no facts to rebut this.
• Sell triggers (if owned): Q4 volume down again; a dividend cut; quarterly net income below RMB 300M; any regulatory action naming the company.

Markers

• ✔ roic_consistent: ROIC ≥10% every year shown.
• ✔ roic_not_falling: 3-year average is 81% of the 10-year (but the latest quarters are worse).
• ? growth_coherent: not enough data.
• ✘ margin_stable: spread 5.9 points. Confirmed: policy-driven.
• ✔ fcf_margin (56%) and ✔ cash_real (1.84): override: not meaningful for a loan platform.
• ✔ low_debt (0.003 years): confirmed, ~$37M debt, net cash.
• ✔ no_dilution: shares −2.4% a year; buybacks now suspended.
• ? predictable: revenue rose in 75% of years; the latest quarters are falling.
• ✔ recession_tested: ROIC 34% in 2020. Says little about a regulation shock.

Numbers

No deep-dive model exists.

Sources

1. Qfin Form 6-K, Q2 2026 results (SEC)
2. Qfin: net income falls 77% as loan volume drops 25% (Pulse 2.0)
3. Qfin Q2 2026 earnings summary (Quartr)

Figures came from search summaries; the 6-K and 20-F were not read in full.

Changelog

• 2026-10-10: created. TOO HARD: changed story, China risk, screen values stale.