"Big Banks" JP Morgan: The shareholder return outlook for QFIN is unclear, lowering the target price to $16

JP Morgan published a research report indicating that it recently communicated with the management of QFIN-S (03660.HK), who revealed that they expect the net take rate to decline from 4.8% in the first three quarters of 2025 to about 3% to 4% in 2026 and 2027, mainly due to the tightening of regulatory policies. This includes a cap on the annualized interest rate for all loans at 24%, and by the end of 2027 at the latest, the comprehensive financing cost for micro-lending companies must be reduced to within four times the one-year loan market quotation rate. JP Morgan expects this may lead to losses for QFIN-S.

JP Morgan also noted that the management has retracted its commitment to return 70% of profits to shareholders through share buybacks or dividends, making the outlook for shareholder returns more uncertain. It has currently lowered its earnings forecasts for 2026 and 2027 by 2% and 8%, respectively, and reduced the target price for QFIN (QFIN.US) from $21 to $16, maintaining a "Neutral" rating