Qifu Technology Addresses Allegations from Short Seller Report
Qifu Technology Responds to Claims from Short Seller Report
Qifu Technology, Inc. (NASDAQ: QFIN; HKEx: 3660), a prominent Credit-Tech platform in China, recently issued a series of responses challenging the claims made by Grizzly Research, a recognized short seller, in a report published on September 26, 2024. This response aims to clarify misconceptions portrayed in the report regarding the Company’s financial standing and operational integrity.
Clarification on Reported Financial Data
Misperceptions on Financial Filings
The Company asserts that the financial data referenced in the report is inaccurate. Grizzly Research inaccurately referred to combined revenue and net profits derived from filings with the State Administration for Market Regulation (SAMR). Qifu Technology’s actual filings show significant revenues and profits accurately represented under PRC GAAP. For instance, the Company’s major operations reported total revenues of RMB 17.0 billion in 2022 and RMB 16.0 billion in 2023, with respective net profits of RMB 5.2 billion and RMB 4.7 billion.
Differences in Accounting Standards
Comparing these figures with the filings to the U.S. Securities and Exchange Commission (SEC) reveals slight discrepancies due to the varying accounting standards between PRC GAAP and U.S. GAAP. The filings show consolidated revenues of RMB 16.6 billion for 2022 and RMB 16.3 billion for 2023, which reflect the Company’s robust cash flow and dedication to generating shareholder returns.
Addressing Allegations About Corporate Structure
Untruths Regarding Regional Headquarters
Further allegations concerning the Company’s regional headquarters in Shanghai have also been rebutted. The report cited dubious media claims regarding land acquisitions and operational integrity. In reality, Qifu Technology established a joint venture in Shanghai back in 2020, designed to bolster their operational capabilities.
Transparency in Operational Efficiency
In 2021, the Company expanded its investment in the regional joint venture, enhancing its operational efficiency significantly. By consolidating its Shanghai-based departments into a single location, Qifu plans to enhance operational synergies while reducing administrative costs.
Refuting Claims of Financial Manipulation
Clarifications on Financial Oversight
Next, the Company directly refuted the allegations that it engaged in financial manipulation using entities such as Shanghai Qibutianxia Information Technology Co., Ltd. Contrary to the claims, Qifu's corporate restructuring was legally conducted and compliant with both local and international regulations. As part of its transition to a Nasdaq listing, the Company incorporated a holding entity to facilitate operations and ensure robust oversight.
Financial Accountability and Risk Management
Qifu Technology guarantees all operational subsidiaries’ benefits and maintains rigorous risk management strategies. The financial institutions’ back-to-back guarantees were provided as a complement to their contractual arrangements, ensuring appropriate due diligence and risk assessment procedures were adhered to.
Defending Against Factual Misrepresentations
Misunderstandings Around New Provisions
The report’s focus on delinquency rates and provisions for loan receivables reflects a misunderstanding of the Company’s financial practices. The inaccuracies in calculating provision ratios and aggregating contingent liabilities with receivables provisioning have been highlighted. The Company employs distinct categories for provisions to adhere to U.S. GAAP and ensure transparency in accounting.
Prioritizing Accurate Risk Assessment
Qifu places emphasis on forward-looking metrics such as the Day-1 delinquency rate and 30-day collection rate. These indicators provide critical insights into the Company’s credit management, enabling proactive risk mitigation efforts compared to traditional retrospective delinquency assessments.
Commitment to Shareholder Value
Returning Value to Investors
The Company has consistently returned substantial value to its shareholders through dividends and stock repurchases. As of the announcement, over USD 300 million has been dedicated to repurchases and approximately USD 180 million distributed in dividends, reflecting Qifu’s dedication to shareholder engagement and value enhancement.
Engaging with Stakeholders
To ensure transparency and maintain trust, Qifu Technology engages its Board of Directors in reviewing the allegations presented. The Company is committed to making necessary disclosures in alignment with SEC regulations, aiming to clarify any misunderstandings related to its business operations.
About Qifu Technology
Qifu Technology stands out as a leader in the Credit-Tech domain in China, providing comprehensive services to assist both financial institutions and end consumers throughout the loan lifecycle. Their mission focuses on making financial services more accessible and suited to the needs of small to medium enterprises, aligning with modern technology needs.
Frequently Asked Questions
What is the purpose of Qifu Technology's response?
The response aims to clarify misconceptions and defend against inaccuracies presented in a short seller report regarding Qifu's financial standing and operations.
How does Qifu Technology manage its finances?
Qifu employs strict financial management practices and maintains transparency in its financial reporting, adhering to regulatory standards in both PRC and the U.S.
What recent changes have been made to Qifu Technology's structure?
Qifu has consolidated its operations by establishing a joint venture in Shanghai to enhance operational efficiency and reduce administrative costs.
How does Qifu Technology prioritize shareholder returns?
The Company has invested over USD 300 million in stock repurchases and distributed approximately USD 180 million in dividends, signifying their commitment to returning value to shareholders.
What metrics does Qifu Technology utilize for risk assessment?
Qifu focuses on leading indicators, such as the Day-1 delinquency rate and 30-day collection rate, to proactively manage credit risks in its portfolio.
About Investors Hangout
Investors Hangout is a leading online stock forum for financial discussion and learning, offering a wide range of free tools and resources. It draws in traders of all levels, who exchange market knowledge, investigate trading tactics, and keep an eye on industry developments in real time. Featuring financial articles, stock message boards, quotes, charts, company profiles, and live news updates. Through cooperative learning and a wealth of informational resources, it helps users from novices creating their first portfolios to experts honing their techniques. Join Investors Hangout today: https://investorshangout.com/
Disclaimer: The content of this article is solely for general informational purposes only; it does not represent legal, financial, or investment advice. Investors Hangout does not offer financial advice; the author is not a licensed financial advisor. Consult a qualified advisor before making any financial or investment decisions based on this article. The author's interpretation of publicly available data shapes the opinions presented here; as a result, they should not be taken as advice to purchase, sell, or hold any securities mentioned or any other investments. The author does not guarantee the accuracy, completeness, or timeliness of any material, providing it "as is." Information and market conditions may change; past performance is not indicative of future outcomes. If any of the material offered here is inaccurate, please contact us for corrections.
Related Articles
- Sompo Seguros Mexico Receives Strong Credit Ratings from AM Best
- MBWS Financial Report Insights for Investors and Stakeholders
- Stock Market Rallies as Costco Reports Strong Quarterly Earnings
- Analysts Adjust Forecasts Ahead of McCormick's Earnings Report
- Qifu Technology's Strong Defense Against Financial Accusations
- Strategic Opportunities Arising From China's New Stimulus Measures
- Jack Nathan Health Reports Strong Q2 Fiscal Results with Growth
- Envestnet, Inc. Faces Major Allegations in Trade Secret Case
- Allied Gaming Addresses Shareholder Concerns with Transparency
- Iambic Therapeutics: A New Vanguard in Biotechnology Innovation
Recent Articles
- Remarkable Returns: A Year in Crypto Investments Explained
- Equinix: Analyzing Price-to-Earnings Ratio Insights
- Unlocking Savings: How New Construction Homes Are Changing Prices
- Leadership Changes at Central Garden & Pet Drive Future Growth
- Strategic Opportunities Arising From China's New Stimulus Measures
- Jack Nathan Health Reports Strong Q2 Fiscal Results with Growth
- Vocodia Strengthens Market Position with $2.4M Customer Commitment
- Spectral Capital's $15 Million Fundraising for Quantum Innovations
- WeRide and Uber Form Strategic Alliance for Robotaxi Rides
- KKR Shares Dip Amid Climate Strategy Partnership Insights
- US PCE Inflation Steady and Signals Potential Fed Action
- Empowering Communities: The Vital Role of Local Leaders
- Envestnet, Inc. Faces Major Allegations in Trade Secret Case
- Agricultural Organizations Call for Urgent Action on Ports Strike
- Building Cultural Bridges: A Young Egyptian's Journey
- Benitec BioPharma's Promising Future in OPMD Treatment
- Context Therapeutics Gains Momentum Amid Positive Analyst Ratings
- Brijjit Scar Therapy: Revolutionizing Scar Prevention for Patients
- Altamira Medica Expands ISO Certification to Enhance Quality
- Discover the Scares: Top Haunted Attractions Across America
- Alumis Inc.'s ESK-001 Shows Promise for Psoriasis Treatment
- Kuehn Law Investigates Key Mergers Involving RVNC, RFL, BTTR, ARC
- Allied Gaming Addresses Shareholder Concerns with Transparency
- Crinetics Pharmaceuticals: Path to Approval and Analyst Insights
- Gryphon Digital Mining Strengthens Leadership with Key Moves
- Piper Sandler Upgrades Soleno Therapeutics with Price Target Boost
- Analysts Predict Potential Surprises in Earnings for Key Stocks
- Rising Trends in Restaurant and Grocery Delivery Spending
- Key Insider Transactions to Watch This Week in Stock Market
- Analyst Reactions: Intuit's Strategic Innovations Shine Bright
- Understanding the Dynamic Changes in Commodity Markets Today
- The Impact of AI on Crowded Trades in Financial Markets
- Bitcoin's Surge and Impending Options Expiry: What to Know
- Examining the Impact of Raising the Retirement Age
- Stock Split Impacts and Insights on Super Micro Computer
- Joyce University Introduces Innovative Nursing Program in Arizona
- LEO Pharma Shows Positive Tralokinumab Results for AD Relief
- Middlefield Canadian Income PCC: Insights on NAV Performance
- Raise Achieves Bronze Accreditation for Indigenous Relations
- Hammond Power Solutions Secures $65.5 Million in Offering
- Quantum Health Welcomes Fares Alraie as New CTO in AI Initiative
- Altamira Therapeutics Expands Quality System Certification for Bentrio
- SYLA Technologies Reveals Financial Growth and Strategies
- Curtiss-Wright Prepares for Third Quarter Financial Announcement
- Exploring Entrata's Innovative ELI+ Product Launch at Summit
- UST Celebrates Leadership Excellence with 2024 Achievements
- Colbeck Capital Management Aids Homeless with Comedy Event
- New York Life Investments Unveils ETF Liquidation Strategy
- Tennant Company Strengthens Community Impact with Corporate Giving
- C3 Industries Expands Reach with High Profile Metropolis Dispensary