It is difficult for companies to provide many surprises in performance, but some companies can stand out due to their strong business performance. Qifu Technology is one of them.

Recently, Qifu Technology (03660.HK/QFIN.US) announced its third-quarter financial report, and the performance is still on track.

Data shows that in the first three quarters, the company achieved total revenue of 12.683 billion yuan, a year-on-year increase of 7.54%; achieving net income of 4.335 billion yuan. In a single quarter, it achieved total revenue of 4.37 billion yuan, a year-on-year growth of 2.08%; achieving net income of 1.799 billion yuan.

It is not difficult to find that Qifu Technology achieved double growth in revenue and profit, exceeding market expectations.

At the time of the financial report release, the company's share buyback actions also attracted a lot of market attention. In my opinion, the value signals revealed behind this are worth pondering.

1. Continuous large-scale buybacks and dividends, sharing the 'rose of time' with shareholders.

It can be seen that under past performance pressures, many listed internet enterprises have increased buybacks to convey market confidence and respond to market expectations.

However, with the recent improvement in the market environment and the recovery of listed company stock prices, the intensity of repurchases by some companies has significantly declined, and the repurchase wave is visibly fading away.

This is actually not difficult to understand; the purpose of repurchasing stocks is to boost investor confidence, reduce the circulating capital in the market, and optimize financial indicators to drive up stock prices. Now, under the favorable macro policies, china's assets have already experienced a wave of recovery, making the cost of repurchase evidently less advantageous. Therefore, many listed companies' repurchases are reaching their conclusion.

However, even in this context, qifu technology's repurchase efforts still show a rather proactive side.

As early as March 12 of this year, it had implemented a repurchase plan to buy back no more than $0.35 billion worth of American depositary shares or Class A common stock over a period of 12 months starting from April 1. As of November 19, qifu technology has accumulated approximately 13.7 million American depositary shares purchased on the open market under the share repurchase plan, for a total amount of about $0.298 billion (including commissions), with an average price of $21.7 per American depositary share.

It can be seen that the company is orderly carrying out the related repurchases in the market, fulfilling its previous commitments.

In the announcement of the third quarterly report, qifu technology further declared that through a new share repurchase plan, it will repurchase no more than $0.45 billion worth of American depositary shares or Class A common stock over the next 12 months starting from January 1 next year.

With a little over a month left in the new year, qifu technology has proactively made arrangements and set the repurchase plan for next year while also increasing the repurchase amount further. This decision is unusual, reflecting not only the company's optimism about the future market outlook but also its confidence in its own greater value. At the same time, this aligns with qifu technology's consistent emphasis on shareholder returns, demonstrating its foresight in the capital markets and long-term commitment to shareholder value.

This can also be seen from the company's past series of dividend actions.

Previously, during this year's interim earnings period, qifu technology announced a dividend distribution plan, distributing dividends of $0.30 per share to holders of Class A ordinary shares and $0.60 per share to holders of American depositary shares. This equates to nearly 50% of its earnings per share being used for dividends. Last year, the total dividend distribution by qifu technology reached approximately $0.17 billion. The current dividend yield displayed by the stock price has also reached nearly 4%.

(Source: Futu Market)

Looking at the entire market, whether in terms of dividend payout ratio or dividend yield level, qifu technology can be said to be performing quite generously.

During the earnings conference, the management also explained this new buyback plan: "The company's buyback pace far exceeds market expectations, and the overall shareholder return for 2024 is expected to approach 100% of the 2023 profit. We are confident in the company's future and believe that the company's current valuation is still undervalued, so we have decided to further increase the buyback effort and continue to significantly shrink the capital stock over the next two years. We will always maintain efficient capital allocation and continuously create value for shareholders through high buyback and dividend ratios."

2. The value dividend opportunity brought by "certainty" bets on the large model to unlock growth imagination.

Whether it is large-scale buybacks or dividends, they require substantial cash support, and the fact that qifu technology can continuously and generously reward its shareholders clearly relies on its excellent financial condition and sustained performance growth.

From the company's cash flow situation, qifu technology exhibits very typical "cash cow" characteristics.

Analyzing the net cash ratio of the company over the years, it is not difficult to find that this indicator has consistently remained above 1. This indicates that the net cash flow from operating activities consistently exceeds the book net income, which also means that the company not only has strong profitability but also high profit quality, effectively converting profits into cash inflow.

(Data source: compiled from the company's financial report)

In addition, the latest financial report shows that as of the end of the third quarter this year, Qifu Technology's total cash and cash equivalents were approximately 9.77 billion yuan. The operating cash flow was approximately 2.372 billion yuan.

It can be said that such a strong capital reserve and cash flow situation not only brings ample liquidity for Qifu Technology's daily operations but also provides a solid financial foundation for its actions in the capital markets, such as buybacks and dividends.

From today's perspective, against the backdrop of a package of macro policies supporting economic recovery, the subsequent improvement in the fundamentals is expected to aid in the market valuation recovery of enterprises. For Qifu Technology, which has already demonstrated stable performance, the company's greater certainty lies not only in the good expectations at the performance level but also in its willingness to continue to reward shareholders and provide stable cash flow for investors.

In fact, looking at the overall trend of the capital markets this year, the dividend sector has become the market's "hot cake," and with policies such as the new "National Nine Articles" supporting the strengthening of cash dividend supervision for listed companies and enhancing the stability, continuity, and predictability of dividends, promoting multiple dividend distributions within a year, pre-dividend announcements, and dividends before the Spring Festival. This will continue to catalyze the performance of dividend stocks and promote their long-term investment value to be recognized and focused on.

Therefore, showcasing a higher dividend capability and willingness for continued dividends, and actively rewarding shareholders through concrete actions, Qifu Technology is believed to not be ignored by the market.

Aside from the certainty brought by earnings and share buybacks, amidst the current boom in AI, qifu technology's layout and progress in the large model field are also expected to further stimulate market attention. Based on the trends in the capital markets this year, related concept stocks have frequently received fervent support. Now, as market speculation becomes more rational, investors are increasingly focused on companies that have actual implementations and can even deliver improved operational efficiency and performance growth in the large model area.

From the perspective of qifu technology, the company has continuously invested in exploring innovative applications of large models in the financial sector, implementing large models in customer service, software development, credit assessment, and other business scenarios to solve the company's difficulties and pain points regarding risk, cost reduction, and efficiency improvement. Now, along with the precise adaptation and efficient implementation of its large models with business, significant results have been achieved in both business operation and financial performance.

The financial report shows that by the end of the third quarter of 2024, 162 financial institutions have achieved intelligent crediting using qifu technology's large model capabilities, benefiting over 55 million small and micro enterprises as well as individual consumers from digital credit services. Additionally, in the third quarter, qifu financial's large model continued to enhance efficiency in internal interactions, R&D automation, and customer service call centers, promoting the overall intelligent and efficient operation of the company. Notably, in September of this year, qifu technology's large model application was also selected for the "Foundational Plan" report released by the China Academy of Information and Communications Technology in collaboration with the InfoQ Research Center, becoming a benchmark application in the vertical large model of the financial industry.

It can be said that leveraging new AI technologies such as large models not only brings new incremental opportunities to qifu technology’s business but also further drives the company's cost reduction and efficiency enhancement, broadening profit margins. Meanwhile, in the medium to long-term, the company is also expected to explore more business opportunities through technological exports and empowering the industry, breaking through growth ceilings.

Considering the current capital market's "AI concept" boom and the company's tangible operational optimization and performance growth, it is believed that this will also bring new assessments of the company's long-term value. With the combination of certainty and growth potential, the value "safety net" of qifu technology is evidently beyond question.