The thesis

QFIN operates in financial credit services through its 360 Jietiao platform. The company's revenue growth is -17.8% YoY, indicating a decline. Despite this, QFIN maintains a gross margin of 6077.0% and a net margin of 2326.0%, with a low P/E ratio of 2.3x. The conviction score is 0/100, indicating a dormant conviction, contrasting with the analyst consensus rating of BUY.

Why now

The recent rebranding in March 2023 and the confident tone from related companies like BIDU and AS may signal a potential turnaround. The current low valuation and high margins make the setup interesting.

What to watch

Revenue growth recovery and changes in analyst conviction scores over the next 1-3 quarters will be key indicators. The company's ability to maintain high margins despite declining revenue is another metric to monitor.

Key risks

The declining revenue growth and low conviction score pose execution and valuation risks. The competitive landscape in fintech credit services is another risk that could invalidate the thesis.

Theme exposure

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