(Yicai) Aug. 15 -- Qifu Technology’s shares surged after the credit tech firm posted better-than-expected quarterly earnings and raised its first-half dividend. Formerly known as 360 DigiTech, Qifu also said Chairman Zhou Hongyi had resigned, which observers took to be the firm putting more distance between itself and former parent 360 Security. Zhou is 360’s founder and chairman.

Qifu Technology [HKG: 3660] finished 9.1 percent higher at HKD91.85 (USD11.79) a share in Hong Kong today. The company’s New York-listed stock [NASDAQ: QFIN] soared 12.3 percent to close at USD23.70 yesterday.

Net profit jumped 26 percent to CNY1.4 billion (USD189.4 million) in the three months ended June 30 from a year earlier,  its highest quarterly profit over the past 11 quarters, the Shanghai-based firm’s financial report showed yesterday. Revenue rose 6.3 percent to CNY4.2 billion.

After the earnings beat, Morgan Stanley increased its price target for Qifu’s shares to USD27.90 from USD26 and kept its ‘overweight’ rating on the stock, citing Qifu’s credit quality and take rate, or the fees its collect for enabling third-party transactions. The firm’s net take rate rose by over 1 percentage point year-on-year to about 4.4 percent in the quarter.

On an earnings conference call, Chief Executive Officer Wu Haisheng pointed to enhanced asset quality, efficient capital management, effective user acquisition, strategic partnerships, and technological advances for the uptick in earnings.

Founded in 2016, Qifu is an affiliate of cybersecurity giant 360 Security Technology and provides a comprehensive suite of technology services to assist financial institutions, consumers, and small and medium-sized enterprises in the loan lifecycle, ranging from borrower acquisition, preliminary credit assessment, fund matching, and post-facilitation services.

Zhou’s Departure

Qifu has appointed Zhao Fan as the company’s new chairman and Liu Xiangge as an independent board director, effective Aug. 13, to replace Zhou Hongyi, who owned 13.2 percent of Qifu as of the end of last year.

Market insiders interpreted the move as Qifu further distancing itself from Beijing-based 360 Security and the ‘360’ image, six years after it was spun off.

“Zhou has played a pivotal role in the establishment of the company and provided his critical insights in further development of our business,” Wu said. “We would like to express sincere gratitude to Zhou for his valuable contribution to the company during his tenure of service.” 

Second-Quarter Numbers

Revenue from credit-driven services inched up 4.4 percent to CNY2.9 billion, while that from platform services jumped 11 percent to over CNY1.3 billion. Operating costs and expenses dropped 20 percent to CNY2.2 billion.

Some 160 financial institution partners issued more than 19.1 million loans through Qifu’s platform in the three months, with the total facilitation and origination loan volume down 23 percent to CNY124.2 billion (USD17.4 billion).

Among these loans, CNY61.9 billion (USD8.7 billion) were under capital-tight model, Intelligence Credit Engine, and other technology solutions, accounting for 65 percent of the total.

Qifu’s outstanding loan balance fell nearly 15 percent to CNY157.8 billion. Over CNY103.8 billion of them were under the capital-light model, ICE, and other technology solutions.

Share Buyback, Dividend

Qifu also disclosed the progress of its share repurchase program, which kicked off at the start of the second quarter. As of Aug. 13, the company had bought about 10.7 million of its own American depository shares in the open market for a total of around USD211 million at an average price of USD19.70 each.

“During the quarter, we started to execute the 12-month, USD350 million share repurchase program at an accelerated pace,” Chief Financial Officer Alex Xu said. “Our strong financial position not only enables us to pursue business opportunities, but also allows us to generate strong shareholder returns through dividend payout and share repurchase.”

Xu said Qifu was raising its semi-annual dividend for the second time in a row. The board has approved a first-half payment of 30 US cents per Class A ordinary share, or 60 US cents per ADS. A year earlier, it approved 25 cents per Class A ordinary share, or 50 cents per ADS.

Editor: Futura Costaglione