Setting the Record Straight: Qifu Technology Responds to Claims
Qifu Technology, Inc. (NASDAQ: QFIN), a leading Credit-Tech platform in China, has made significant efforts to address claims made in a recent report by a short seller. The company firmly believes that the assertions laid out in the report are unsubstantiated and misrepresentative of its operations.
Clarification on Financial Data Discrepancies
One of the primary concerns raised in the report pertains to the financial data referenced from the State Administration for Market Regulation (SAMR). Qifu Technology argues that the report inaccurately presents the combined revenues and net profits as depicted in the SAMR filings. According to the company's records, its major operating entities reported revenues of RMB 17.0 billion in 2022 and RMB 16.0 billion in 2023, alongside net profits of RMB 5.2 billion and RMB 4.7 billion respectively. These figures reflect adherence to PRC GAAP standards.
U.S. GAAP versus PRC GAAP
For the same years, filings with the U.S. Securities and Exchange Commission (SEC) show total revenues of RMB 16.6 billion and RMB 16.3 billion and net profits of RMB 4.0 billion and RMB 4.3 billion under U.S. GAAP. The difference arises from various accounting methods and the scope of entities included in financial reporting, illustrating that Qifu's financial health remains solid.
Robust Operating Cash Flow
In addition, Qifu Technology has shown a consistent ability to generate strong operating cash flow, returning substantial value to its shareholders via dividends and stock repurchases. Over the current year, the company has invested over US$300 million to buy back America Depositary Shares (ADSs) and has distributed approximately US$180 million to shareholders as dividends.
Refuting Claims About Regional Headquarters
The report also cites dubious claims regarding the company's regional headquarters in Shanghai. Qifu clarifies that the structure, established as part of a joint venture in 2020, has been transparent and fully disclosed in SEC filings. The acquisition of a 30% equity stake in this venture has enabled the consolidation of the company’s operations and improved efficiency.
Land Acquisition Misreporting
Moreover, the allegation that Qifu has acquired land in the Huangpu District is simply false. The details of their expansion efforts have been communicated openly, further emphasizing the integrity and strategic planning behind their business operations.
Response to Financial Manipulation Claims
The company also faces unfounded allegations regarding financial manipulations through its relationship with Shanghai Qibutianxia Information Technology Co., Ltd. This firm previously served as a holding company for Qifu’s operations prior to its reorganization in 2018. The contractual arrangements in place allow Qifu Technology to exercise significant control over its VIEs, contrary to claims suggesting otherwise.
Understanding Provision Ratios and Cash Positions
Additionally, the report raises concerns about provision ratios and delinquency rates. Qifu Technology emphasizes that its financial practices align with U.S. GAAP standards, enabling a clear distinction between different categories of provisions. The focus on traditional delinquency metrics fails to capture the proactive measures the company employs to manage credit risk effectively.
Cash Position Explained
As for the decrease in cash reserves, the transition from RMB 10.5 billion at the end of 2022 to RMB 8.4 billion by mid-2024 primarily results from strategic growth in loans and shareholder returns. The company's robust approach to financial management is evident as it allocates resources for growth while ensuring shareholder value.
Addressing Interest Rate Allegations
Concerns regarding the company's loan interest rates have also been highlighted. Qifu Technology clarifies that all its lending practices remain within legal parameters outlined by the Chinese legal framework, demonstrating a commitment to compliance and ethical financial practices.
Conclusion: Qifu’s Commitment to Transparency
In summary, Qifu Technology stands resolute in refuting any false claims and accusations. Its board of directors is currently reviewing these allegations to consider the most suitable actions while reaffirming commitment to transparency, corporate governance, and shareholder interests.
About Qifu Technology
As a prominent player in the Credit-Tech landscape, Qifu Technology provides essential technology services to facilitate loan processes for both financial institutions and borrowers. Its mission centers around making credit services more accessible and catering specifically to the needs of consumers and SMEs.
Frequently Asked Questions
What is Qifu Technology’s response to the report?
Qifu Technology strongly refutes the claims made in the report, stating that they are misleading and unsubstantiated.
How does Qifu report its financial data?
The company reports financials under both PRC GAAP and U.S. GAAP, showcasing its adherence to regulatory standards in both regions.
What measures does Qifu take regarding shareholder returns?
Qifu Technology has returned substantial value through dividends and stock buybacks, reinforcing its commitment to shareholders.
What is the significance of the Shanghai headquarters?
The regional headquarters in Shanghai is pivotal for operational efficiency, consolidating resources and enhancing productivity.
What should investors know about Qifu’s financial practices?
Qifu employs rigorous financial practices, including detailed provision management and proactive risk assessments, ensuring stability and transparency.
