Financial Performance - The company reported a revenue of RMB 1.2 billion for the fiscal year, representing a year-over-year increase of 15%[10]. - The company reported a total revenue of RMB 60.06 billion for the year ended December 31, 2024, a decrease of 27.0% compared to RMB 82.43 billion in 2023[11]. - The company achieved a net profit of RMB 461.77 million for the year, down from RMB 697.30 million in 2023[11]. - Net profit decreased by 33.8% to RMB 461.8 million in 2024, down from RMB 697.3 million in 2023[56]. - The company reported a net profit margin of 18%, an improvement from 15% in the previous year[10]. - Cash flow from operations increased by 30% to RMB 400 million, indicating strong operational efficiency[10]. - The effective tax rate slightly decreased from 12.5% in 2023 to 11.1% in 2024, with income tax expenses falling by 42.4% to RMB 57.5 million[52][53]. User and Market Growth - User data showed an increase in active users to 5 million, up 20% from the previous year[10]. - The number of registered retail member stores reached 248,560, representing a year-over-year growth of 4.8%[12]. - Active retail member stores increased to 95,111, up 4.9% from the previous year[12]. - The total number of SaaS and subscription users was 107,929, a decrease from 131,810 in 2023[12]. Strategic Initiatives - The company provided guidance for the next fiscal year, expecting revenue growth of 10% to 12%[10]. - Market expansion efforts are focused on Southeast Asia, with a target of entering three new countries by the end of the fiscal year[10]. - The company is investing RMB 200 million in R&D for AIaaS technologies over the next two years[10]. - The company plans to enhance its supply chain capabilities by establishing strategic partnerships with over 100 leading brands and aims to develop 5 to 10 additional top brands in high-growth categories by 2025[30][31]. - The company is focusing on new growth strategies, including new product categories, channels, and business models, to enhance market resilience and expand its ecosystem[34]. Acquisitions and Partnerships - The company completed an acquisition of a local tech firm for RMB 500 million to enhance its service offerings[10]. - The company acquired 100% equity of Nanjing Haoxiangjia Engineering Technology Co., Ltd. and has profit commitments for the fiscal years ending December 31, 2023, 2024, and 2025, with promised net profits of RMB 64.78 million, RMB 77.80 million, and RMB 83.97 million respectively[183]. Technology and Innovation - The company is focusing on AI applications, enhancing its SaaS+ platform with features like AI-driven marketing and customer service, which is expected to improve operational efficiency and customer satisfaction[27]. - The company is committed to leveraging technology to drive efficiency and create value in the supply chain, aligning with its mission to improve the lives of farmers[35]. Financial Management and Capital Structure - Cash and cash equivalents decreased to RMB 2.78 billion from RMB 3.75 billion in 2023[11]. - The company's capital debt ratio as of December 31, 2024, was 14.5%, calculated as total borrowings divided by equity[70]. - The group’s bank loans and other borrowings amounted to RMB 1,297.7 million as of December 31, 2024, primarily at fixed interest rates[122]. Governance and Leadership - Mr. Sun Chao has been appointed as Executive Director since February 2023 and has extensive experience in retail operations management[84]. - The company has seen significant leadership changes, with various board members bringing diverse expertise in investment and corporate management[85][86][90]. - The management team has a strong academic background, with degrees from prestigious institutions such as Fudan University and the University of Pennsylvania[87][89]. - The company is committed to improving its governance structure by including independent non-executive directors with extensive industry experience[88][90]. Risks and Compliance - Major risks include the potential loss of existing customers or failure to attract new ones, which could adversely affect financial conditions and business operations[111]. - The company has not faced significant environmental risks and has not incurred fines or penalties for non-compliance with environmental regulations during the reporting period[114]. - The company has confirmed compliance with the disclosure requirements of the Listing Rules regarding related party transactions for the fiscal year ending December 31, 2024[187]. Employee and Social Responsibility - The group employed 3,845 full-time employees, with a gender distribution of approximately 49.08% male and 50.92% female[115]. - The company made charitable donations totaling approximately RMB 23,000 for the year ending December 31, 2024[151]. - The group is committed to maintaining and promoting employee diversity, particularly gender diversity, as part of its sustainable development goals[115]. Shareholder Information - The board of directors has decided not to recommend a final dividend for the year ending December 31, 2024, consistent with the previous year[110]. - The total number of issued shares is 562,569,837, comprising 180,266,339 H-shares and 382,303,498 domestic shares[179]. - The total percentage of shares held by major shareholders, including Alibaba and its affiliates, indicates significant control over the company[180].

Core Viewpoint - The international trade environment is undergoing significant changes, prompting Jiangsu province to strengthen its foreign trade and investment efforts while accelerating the integration of domestic and foreign trade [1] Group 1: Company Initiatives - Huaitongda Network launched the "Orange Easy Procurement" platform and initiated two major activities: "Foreign Trade Quality Products Online" and "418 Town Market Shopping Festival" to help foreign trade enterprises tap into domestic markets [1][2] - The company has been focusing on the lower-tier markets since 2012, utilizing a "platform + membership store" model to serve rural retail outlets [2][3] - Huaitongda aims to provide a one-stop procurement platform and a smart distribution platform for upstream factories, targeting a million retail stores nationwide [3] Group 2: Market Opportunities - The lower-tier markets are seen as a new avenue for foreign trade enterprises, with Huaitongda setting up a dedicated area for foreign trade quality products to penetrate these markets [2][5] - Jiangsu province has established 34 county-level e-commerce industrial clusters to enhance the integration of local industries and e-commerce, boosting the efficiency and scale of county-level e-commerce [5] - The furniture industry in Suining has developed a significant e-commerce presence, with a product scale of 19 billion yuan and 25,000 online stores, indicating strong potential for domestic market expansion [6] Group 3: Strategic Collaborations - Companies like Huosheng Taigu Smart Technology are adjusting their strategies to enhance domestic sales and are looking to collaborate with platforms like Huaitongda for long-term strategic partnerships [7][8] - Many foreign trade enterprises are actively seeking new growth points through technological innovation and collaboration with e-commerce platforms, demonstrating resilience in challenging market conditions [10]

Core Viewpoint - Huitongda Network officially launched the "Orange Easy Procurement" mall and initiated two special activities, marking the full implementation of its new strategic layout of "3 major supply chain projects + 3 major AI projects" aimed at enhancing domestic and foreign trade in lower-tier markets [1][4]. Group 1: Supply Chain Strategy - The launch of the "Orange Easy Procurement" mall is part of Huitongda's innovative supply chain projects, which include "Brand Express," "Self-owned Brand Ecosystem," and "Smart Supply Chain" [4]. - Huitongda's strategy focuses on creating a dual-driven industrial internet version 2.0, leveraging digital technology and smart supply chains to serve lower-tier market member stores and industry partners [4][5]. - The company emphasizes three characteristics of its platform: openness, short-chain logistics, and intelligence, aiming to reduce costs and improve efficiency in the supply chain [4][5]. Group 2: Market Expansion Initiatives - In response to challenges in foreign trade, Huitongda is promoting the "Foreign Trade Quality Products Online" initiative and the "Township Market Shopping Festival" to facilitate the transition of exports to domestic sales [6]. - The company aims to build a commercial ecosystem in lower-tier markets that can withstand cyclical shocks, fostering collaboration among producers, distributors, and retail stores [6]. Group 3: AI Integration - The "Orange Easy Procurement" platform provides a one-stop procurement solution for nearly 250,000 member stores and offers a smart distribution platform for upstream factories [9]. - Huitongda plans to utilize AI capabilities to enhance procurement efficiency and supply chain turnover, aiming to provide a richer and more cost-effective product offering to retail stores across the country [9].

Investment Rating - The report maintains a "Recommended" rating for Huitongda Network (09878.HK) with a target price of HKD 13.3 per share [2][7]. Core Views - The company's performance is under short-term pressure, with a significant decline in revenue and net profit for 2024, but the long-term trend of supply chain upgrades remains intact [2][3]. - The company reported a total revenue of HKD 60.06 billion for 2024, a year-on-year decrease of 27.1%, and a net profit attributable to shareholders of HKD 270 million, down 39.8% year-on-year [2][4]. Financial Summary - Revenue projections for 2025-2027 are estimated at HKD 66.14 billion, HKD 71.45 billion, and HKD 77.18 billion, respectively, with expected growth rates of 10.1%, 8.0%, and 8.0% [4][8]. - Net profit forecasts for the same period are HKD 349 million, HKD 481 million, and HKD 658 million, reflecting growth rates of 29.5%, 37.7%, and 36.8% [4][8]. - The company’s gross profit for 2024 was HKD 2.31 billion, with a gross margin of 3.8%, an increase of 0.52 percentage points year-on-year [7][8]. Business Segment Performance - The trading business segment generated revenue of HKD 59.27 billion, down 27.4% year-on-year, with notable declines in various product categories such as consumer electronics and home appliances [7][8]. - The service business segment reported revenue of HKD 610 million, a decrease of 7% year-on-year, with the SaaS+ subscription model contributing HKD 510 million, down 9.1% [7][8]. Strategic Initiatives - The company is actively adjusting its development strategy, focusing on upgrading product lines and optimizing low-margin businesses to enhance overall profitability [7][8]. - Investments in digital transformation and AI applications are being accelerated to improve customer experience and operational efficiency [7][8].

Investment Rating - The investment rating for the company is "Buy" [4] Core Views - The company is entering a new development phase with optimized business structure, aiming to return to a growth trajectory [1] - The company is a leader in the B2B e-commerce sector targeting lower-tier markets, focusing on supply chain and SaaS+ services [2][3] - Revenue and net profit are projected to grow steadily from 2025 to 2027, with a forecasted revenue of 658 billion, 723 billion, and 795 billion respectively, and net profit of 3.5 billion, 4.6 billion, and 5.9 billion, reflecting growth rates of 10% and 31% respectively [2][3] Financial Summary - For 2024, the company expects a revenue of 600.6 billion, a decrease of 27% year-on-year, and a net profit of 270 million, down 40% year-on-year [3][8] - The company’s gross margin for 2024 is projected at 3.8%, an increase of 0.5 percentage points, while the net margin is expected to be 0.77%, up 0.1 percentage points [3][8] - The company’s total assets are estimated to be 28.5 billion in 2024, with total liabilities of 18.9 billion, resulting in a debt-to-equity ratio of 66.27% [8]

Core Viewpoint - Huitongda Network (9878) launched its "AI+ Strategy" and the "Suqing Small Shop" cultivation plan, focusing on enhancing efficiency in member stores through over 50 AI solutions and a comprehensive AI ecosystem [1][7][9] Group 1: AI+ Strategy Overview - The "AI+ Strategy" includes a cloud-based model called "Qiancheng Cloud AI" and three major projects aimed at improving efficiency in urban and rural supply chains [3][9] - The three major projects are: 1. "AI+ Industry Platform Project" to connect upstream brand factories with member stores for better supply chain management 2. "AI+ SaaS Service Project" to enhance procurement efficiency and transaction volume for member stores 3. "AI+ Smart Terminal Project" to provide customized AI applications through partnerships with hardware manufacturers [3][5][9] Group 2: AI Solutions and Tools - The "Qiancheng AI Super Store Manager" app was developed to assist member stores in eight operational areas, offering over 15 versatile AI assistant tools [4] - New edge computing devices named "Xuanwu" and "Zhongshan" were introduced to provide one-stop AI solutions for upstream and downstream clients [4][5] Group 3: Strategic Partnerships and Initiatives - Huitongda partnered with the Communist Youth League of Jiangsu Province to launch the "Suqing Small Shop" cultivation plan, aiming to empower over 10,000 youth-led small shops with AI technology and digital marketing [7] - The company also formed strategic alliances with various chip and hardware manufacturers to create an AI service ecosystem for member stores [7] Group 4: Market Position and Future Outlook - Huitongda has established a strong presence in the lower-tier market, serving 250,000 member stores across 21 provinces, leveraging digital and intelligent technologies to drive transformation [9] - The integration of AI with existing supply chain initiatives is expected to enhance consumer demand and contribute to rural revitalization efforts [9]

近期，提振消费被摆到更加突出的位置，继跃居2025年政府工作报告任务之首后，再迎政策的全面性升 级——中办、国办印发《提振消费专项行动方案》，要求"发挥财政政策引导带动作用"，将促消费同惠 民生、补短板结合起来。 数字化能力加码，构建更具潜力的商业生态 汇通达网络的数字化战略中，AIaaS(AI即服务)的提前布局与"1+3"策略的推进，正逐步推动其业态升 级，有助于更好地释放数字资产价值，实现客户赋能和共赢。 AIaaS方向来看，汇通达网络加速推进AI+战略落地，未来将提高AI Agent服务收入占比，加速智能终端 与AI机器人业务增长等。 这样一来，汇通达网络可以通过AIaaS平台向下沉零售市场大量小B商家输出智能化工具，大大降低其 使用AI技术的门槛，赋能其降本增效。同时，汇通达网络一方面能够在服务过程中持续沉淀用户行 为、交易链路、库存周转等数据，实现算法模型优化等，另一方面也能通过AI直接提升服务精准度和 辐射力，反哺业务生态。 且值得注意的是，汇通达网络即将召开"AI+战略产品"发布活动，集中展示千橙云AI行业大模型、千橙 AI超级店长千橙A大模型一体机等产品，并启动"千橙AI生态合作伙伴计划"。可 ...

Core Viewpoint - The company is expected to experience rapid business recovery starting in 2025, driven by AI-enabled upgrades from "digitalization" to "intelligence" [1] Group 1: Company Performance - As of the end of 2024, the company has 249,000 registered member stores, a year-on-year increase of 4.8%, and 95,000 active member stores, up 4.9% year-on-year, indicating strong customer engagement [2] - The company achieved an operating profit of 600 million yuan in 2024, with an operating profit margin of 1.00%, reflecting a year-on-year increase of 0.03 percentage points [2] - The net profit for 2024 was 462 million yuan, showcasing improved profitability [2] Group 2: Strategic Focus - The company plans to focus on AI strategy over the next three years, aiming to implement the "AI + Smart Supply Chain," "AI + SaaS," and "AI + Smart Terminals and Robots" initiatives, with a target for AI-related service revenue to exceed 1.2 billion yuan [2][3] - The customer strategy aims to increase the number of member stores to 300,000, with improvements in store density and customer loyalty by over 20% [3] - The supply chain strategy focuses on reducing the procurement ratio of subsidiary companies while increasing the procurement ratio of top brands to 60%, with proprietary brands accounting for 5% of total revenue and new categories exceeding 10% [3]

Core Viewpoint - Huitongda Network is transforming traditional rural retail networks into intelligent business operating systems by leveraging "data + supply chain + AI" to create a new growth cycle while revolutionizing the commercial infrastructure in rural areas [1][7]. Group 1: Policy, Technology, and Consumer Upgrade - Huitongda is positioned at the intersection of policy support, technological advancement, and consumer upgrade, which drives its growth momentum [2]. - The company's business model aligns with national policies promoting rural economic digital transformation, utilizing a decade's worth of rural consumer behavior data to establish an efficient circulation system [2][3]. - Huitongda's early investment in AI technology has enabled it to implement AI-driven solutions across various management scenarios, enhancing operational efficiency and enabling traditional stores to transition into the digital age [2][3]. Group 2: Capital Value Reconstruction - Huitongda is undergoing a strategic upgrade in 2024, focusing on "profit + cash flow" and implementing systematic changes across five key areas, resulting in improved profitability [4]. - The company's gross margin increased by 0.5 percentage points to 3.8%, with a net profit of 460 million yuan, and it has achieved positive operating cash flow for six consecutive years [4]. - Huitongda's intelligent supply chain initiatives have led to a 44.3% procurement share from top brands, while high-margin products now account for over 20% of its revenue [4][5]. Group 3: Digital Transformation and Business Model Restructuring - The digital upgrade at Huitongda represents not only a technological breakthrough but also a significant reshaping of its business model, opening new profit growth opportunities [6]. - The company is transitioning from a tool-based approach to an ecosystem-driven strategy centered around "AI + SaaS," aiming to create a leading smart supply chain platform [5][6]. Group 4: Market Dynamics and Future Outlook - Huitongda's efforts are breaking down barriers between urban and rural markets, capitalizing on the faster income growth in rural areas and the substantial offline network of 248,000 member stores [7]. - The company's database, which provides real consumer data for AI model training, is becoming a valuable asset in the new economy, positioning Huitongda for significant value release in the future [7].

Core Insights - Huitongda Network Co., Ltd. reported a total revenue of 60.06 billion yuan and a net profit of 460 million yuan for the year 2024, with a gross margin increase of 0.5 percentage points to 3.8% [1] - The company has shifted its operational strategy from a scale-oriented approach to one focused on profit and cash flow, emphasizing five strategic directions: adjusting operational orientation, optimizing supply chain structure, developing omnichannel operations, promoting digital intelligence upgrades, and implementing organizational changes [1][2] - By the end of 2024, Huitongda Network had expanded its coverage to 25,000 towns, with 248,000 registered member stores and over 95,000 active member stores, while enhancing online, community, and overseas channels [1] Supply Chain Optimization - In 2024, the company deepened partnerships with leading brands, developed its own brand business, and expanded into new categories, channels, and models, resulting in over 44% of purchases coming from top brands and a gross margin of over 20% for its own brands [1] - The average gross margin for new categories exceeded 15%, indicating a positive trend in the proportion of high-margin businesses within the supply chain [1] Online and New Channels - The company launched a social e-commerce platform called "Yundou Pai" and engaged in strategic collaborations for private domain and community channels, achieving sales of 3.6 billion yuan through new channels in 2024 [2] - Huitongda Network plans to maintain a profit and cash flow-oriented approach in 2025, focusing on four core strategies, including AI empowerment, to enhance member store density and loyalty [2]