China's online lending industry is out of favor presently, thanks to challenges such as regulatory uncertainties, poor sentiments toward Chinese companies, and negative impacts from the COVID-19 outbreak. Understandably, investors have stayed away from the industry, leaving leading players such as 360 Finance Inc (NASDAQ: QFIN) to trade a low valuation of less than six times earnings. Yet if 360 Finance can overcome these challenges (which I think are temporary), its low valuation offers a good opportunity for long-term investors to consider its shares.
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360 Finance is an online lending platform in China, focusing on lending to underserved borrowers. It acts as the middleman to connect borrowers -- who have established credit histories but are underserved by traditional financial institutions -- and lenders -- institutional partners like banks. In return, it receives a fee after successfully matching those two parties.