Impact on Margins & Profitability
QFin’s AI‑driven credit‑technology platform continued to lift the company’s cost structure in Q2 2025. The AI underwriting engine has accelerated loan‑approval cycles and tightened risk‑assessment, which translated into a higher gross margin – roughly a 3‑4 percentage‑point lift versus the same period in 2024. At the same time, the automated collection and fraud‑detection layers trimmed operating expenses, pushing EBITDA margin up from the low‑20 % range to just over 30 %. Net income turned positive for the first time in the six‑month period, driven by a combination of increased fee‑income (from higher‑value corporate credit products) and a lower provision for credit losses, reflecting the platform’s superior predictive accuracy.
Trading Implications
The margin expansion signals that QFin’s AI engine is moving beyond a growth‑stage expense driver to a genuine profit engine, which should support a re‑rating of the stock on a forward‑PE basis. Investors may look for a breakout above the recent resistance around $12.50 (the 50‑day SMA) on volume, as the market begins to price in a sustainable profitability trajectory. Conversely, be cautious of execution risk in scaling the AI platform across tier‑2 cities—any slowdown could pressure margins. A short‑to‑mid‑term buy‑on‑dip strategy around $11.80‑$12.00, with a stop‑loss just below the 200‑day SMA (~$10.80), aligns with the fundamentals while respecting technical risk.