Core Viewpoint - CICC maintains a "outperform industry" rating for Lianlian Digital (02598.HK) and raises the target price by 3.3% to HKD 15.8 due to improved market sentiment [1] Financial Performance - Lianlian Digital's 1H25 performance met expectations, with revenue increasing by 27% year-on-year to CNY 780 million, and net profit turning positive to CNY 1.51 billion [1] - Total Payment Volume (TPV) rose by 32% year-on-year to CNY 2.1 trillion, outpacing the revenue growth of 27% [1] - Gross profit increased by 25% year-on-year to CNY 410 million, maintaining a high gross margin of 52% [1] Future Projections - CICC has adjusted revenue forecasts for 2025 and 2026 upwards by 2% each to CNY 1.65 billion and CNY 2.02 billion respectively, anticipating steady growth in TPV and payment revenue [1] - The company is expected to achieve a recurring operating profit of nearly CNY 70 million in 2025 [1] Competitive Advantages - Lianlian Digital has significant advantages in licensing compliance, having recently obtained SFC Type 3 license for regulated leveraged foreign exchange trading, as well as in technological innovation and global network [1] - The company is continuously enhancing its global licensing layout and local service capabilities overseas [1] - As a leading cross-border payment service provider, Lianlian Digital is poised to benefit from Web3 payments and VATP licenses, which open up growth opportunities [1]

Core Viewpoint - The company is well-positioned to benefit from the growing interest in stablecoins and has a strong foundation for growth in its payment business, supported by its licenses, compliance, technology, partnerships, and customer resources [1][2]. Group 1: Business Model and Market Position - The company focuses on providing payment services to B2B merchants, differentiating itself from consumer-focused e-wallets and third-party payment processors [1]. - In 2024, the company's digital payment revenue is expected to contribute 88% from TPV fees, with cross-border payments accounting for 61% and domestic payments for 26% [1]. - The company has a unique competitive advantage with its self-built licensing system and an open cooperation ecosystem, supported by 65 global payment licenses [1]. Group 2: Growth Expectations and Future Drivers - The company is expected to maintain a stable growth trajectory with a projected payment revenue growth rate of over 20% in the coming years, driven by a low dependency on any single market [1]. - The company plans to enhance its global licensing and local service capabilities while expanding its value-added services to support comprehensive business operations [1]. - The company has begun exploring opportunities in the Web3 space, which aligns with the application of stablecoins in cross-border payments, potentially improving global payment efficiency [2]. Group 3: Profitability and Valuation - The company maintains its profit forecast, currently trading at 7x/5x P/S for 2025/2026, with a target price increase of 6% to HKD 15.3, reflecting a 45% upside potential [3].