Qfin Holdings, Inc. (QFIN): A Bull Case Theory

We came across a bullish thesis on Qfin Holdings, Inc. on Archetype Capital’s Substack. In this article, we will summarize the bulls’ thesis on QFIN. Qfin Holdings, Inc.'s share was trading at $19.59 as of December 2nd. QFIN’s trailing P/E was2.85 according to Yahoo Finance.

QFIN represents one of the most compelling opportunities in the Chinese fintech lending sector, which has been oversold due to sector-wide pessimism and investor caution around China. QFIN operates a high-margin, capital-light credit-tech platform connecting financial institutions with consumers and SMEs needing small loans, while also generating fee income through its platform and referral services.

Its business model is resilient: roughly half of its revenue comes from on-balance-sheet lending, while the other half is derived from off-balance-sheet, capital-light loan facilitation, which provides a SaaS-like, high-margin revenue stream. The company’s fundamentals remain solid, with stabilizing credit performance and a growing mix toward the higher-margin platform segment.

Despite a cautious Q3 guide, data-policy headlines, and minor QoQ shifts in mix, QFIN’s cash engine remains intact. Valuation is extremely attractive, with EV/EBIT at 2–3× and P/E at 3×, while net cash and shareholder-friendly returns via dividends (~6%) and potential buybacks further enhance upside. A conservative re-rating to mid-cycle EV/EBIT of 5–6× implies potential equity upside of 2–3× from current levels without requiring acceleration in growth.

Risks include PRC regulatory policy, VIE and HFCAA frameworks, credit-cycle volatility, partner concentration, and potential drift back to heavier lending. However, QFIN’s disciplined management, transparent operations, and shareholder-aligned capital allocation position it to capture the re-rating as sentiment normalizes, making it an undervalued, high-reward fintech investment.

Previously we covered a bullish thesis on Bread Financial Holdings, Inc. (BFH) by Stock Analysis Compilation in November 2024, which highlighted the company’s loan growth, debt reduction, and expanding direct-to-consumer funding. The stock has appreciated approximately 21.33% since coverage. The thesis still stands as BFH remains undervalued. Archetype Capital shares a similar perspective but emphasizes QFIN’s capital-light, high-margin fintech platform in China.

Qfin Holdings, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held QFIN at the end of the second quarter which was 33 in the previous quarter. While we acknowledge the potential of QFIN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.