Huitongda Network (9878.HK) : The first annual performance released, rapid growth in the future

2022-06-13 0 By

Since the beginning of the year of the Tiger, the performance of capital markets has been volatile.In the Hong Kong stock market, the overall performance of new shares is not good, “sinking market first stock” Huitongda Network (9878.HK) officially listed in The Hong Kong Stock Exchange on February 18, attracted close attention of the capital market, the share price rose 4.88% on the first day of listing, up to March 31, the cumulative increase of 7.44%.On the evening of March 30, the company handed over its first report card to the market after being listed. In the current era of stock users, Huitongda Network still maintains a high growth trend. In 2021, the company achieved operating revenue of 65.76 billion yuan, up 32.5% year on year.Adjusted net profit of RMB 330 million, up 66.4 percent year on year.Moreover, the company’s operational efficiency has improved significantly, with inventory turnover days reduced by 6 to 14 days compared to 2020.So, huitongda network in the business as the last piece of traffic treasure “sinking market”, what is the magic weapon to support its high growth intrinsic value?The unique business model of “transaction + Service” enables rural economic development. China’s market is like a pyramid, and it gets bigger as it goes down.The “sinking market” that has exploded in recent years is moving from tier 1 and 2 cities to tier 3 and below cities and rural areas.This market is the long tail at the bottom of the pyramid, and its market size is particularly significant.Frost Sullivan data also shows that China’s sunken retail market is a huge market of more than 10 trillion levels.Huitongda Network, which was listed in Hong Kong stock market in February this year, has made remarkable achievements in the sinking market with its unique business model of “transaction + service”.Specifically, transaction business, one of huitongda network’s core businesses, achieved revenue of 65.22 billion yuan in 2021, up 32.3% year on year.Revenue from services, another core business segment, surged 80.4 percent to 440 million yuan.In terms of trading business, huitongda network, according to the unique attributes of the sinking market, enables the revitalization of rural industries and provides more stable and efficient commodity trading solutions for member retail stores.With the deepening of the concept of consumption upgrading, Huitongda Network also provides customers with competitive supply chain products, such as apple and Dell in consumer electronics, Wuliangye and Guizhou Alcohol in drinks, etc. These products are highly suited to the consumption preferences of the sinking population, and the market demand is gradually expanding.The company seized the market opportunity, its trading segment of consumer electronics, home building materials, drinks and other business revenue achieved rapid growth.Figure 1: Income of Huitongda Online Trading sector source:Company announcements, long hui finishing at the same time, huitong of word-of-mouth network also USES sinking people fission effect and be fond of the phenomenon of the traditional, take the customer as the center, for member retail stores all kinds of trading activity, held a total of more than 20 large-scale promotional activities throughout the year, more than 20000 members of the covering retail stores, significantly improve the customer’s trading activity and viscosity.In addition, the company also carried out more than 40,000 member retail store training, in-depth grassroots directly touch the pain point of customers.In terms of service business, Huitongda network also deeply excavates the value-added needs of member retail stores, and makes portraits of these users who have not been connected to the Internet for a long time, further promoting the company’s SaaS+ business strategy to land quickly.For the sinking crowd, the product must be simple and convenient to attract users.And huitong network to further clarify its SaaS + product “” for help” help buy “” help management” three core functions, is the customer value oriented, users don’t need to worry too much get started quickly, companies such as precision fit user requirements of marketing services to achieve the two-way choice and to enhance the memory retention rate of users.In addition, Huitongda network strengthened the data analysis function of the platform, and launched intelligent promotion, collection of SLR and other functions, matching the supply and demand of upstream and downstream, greatly improving the social and economic benefits, so as to achieve convenient procurement of member retail stores.Based on differentiated customer needs, the company also carries out hierarchical classification of products and customers to achieve rapid expansion of subscribers. In 2021, the company’s paid store SaaS+ users increase 596.4% year on year to 18,000, and the subscription service revenue reaches 280 million yuan, a year-on-year increase of 133.8%.On the whole, huitongda network’s “transaction + service” business model is like a duck to water in the sinking market. According to the differentiated needs of users, huitongda network provides more in-depth products and services, which are widely accepted by the sinking enterprise customers and realize the leapfrog growth of the company’s performance.In the “Long tail” theory, hot, popular demand is called head demand, shown in red, and unhot, fragmented demand is called the long tail demand, shown in blue.If the long tail theory is applied to China’s retail market, the sinking market must be the thinking concept of “differentiation” and “multiple sales”.Figure 2: Demand curve of the long Tail Theory Data source: Public data, The Arrangement of The Long Tail To meet the needs of differentiated users, it is necessary to carry out accurate portraits of users, behind which is the need for capital investment and the construction of the main system.Huitongda network has spared no effort in the early stage of technology investment, constantly increasing IT infrastructure investment, and promoting the construction of innovative technology and digitalization.At present, the “Cloud Field Project”, which the company focuses on promoting, has completed system construction and delivery, fully realizing 12 functions online, ensuring the online trading closed loop of the whole scene and customer life cycle management, which will significantly improve the operation efficiency of customers at each end of the link in the future.Moreover, with one-stop digital solutions as the main tone, the company has upgraded the product system with S2B2C and precision marketing as the core, to provide customers with differentiated precision services.In addition, from the development of Huitongda network, the number of customers of the company grows faster.According to the unit cost formula, “multiple selling” will reduce the upfront cost and fixed cost expenses.In the process of the gradual accumulation of customers, the company will continue to reduce the unit cost, truly achieve “high profits and more sales”, into a virtuous cycle of high-speed development, huitongda network’s future development is worth optimistic.This article is from Gronhui