Core Viewpoint - Shenzhen Xinguodu Co., Ltd. has submitted an application for H-share listing on the Hong Kong Stock Exchange amidst declining performance and significant workforce reductions, raising questions about the necessity of this fundraising move [1] Financial Performance - The company's operating revenue has been declining since 2022, with a net profit of 234 million yuan in 2024, a significant drop of 68.98% year-on-year, and a further decrease of 38.61% in the first half of 2025 [2] - Employee count has decreased from 2821 at the end of 2021 to 1571 by the end of 2024, indicating a 45% reduction, which is seen as a sign of deteriorating business conditions [2] - Despite the declining profits, the company has over 4.3 billion yuan in cash and cash equivalents, representing more than 70% of total assets, indicating a strong liquidity position [2] Acquisition Issues - The significant drop in profits is linked to high-premium acquisitions that have resulted in substantial goodwill impairments, including a projected impact of 325 million yuan from tax adjustments related to acquired company Jialian Payment [3] - Historical high-premium acquisitions have led to significant losses, such as a 490 million yuan loss from the disposal of Gongxin Chengfeng, acquired for 500 million yuan at a premium of 1287.68% [3] Investment Strategy - In March 2025, the company announced plans to invest up to 3 billion yuan of idle funds in financial products and securities, which exceeds 50% of its total assets as of the end of 2024 [4] - This investment strategy has raised concerns about the company's focus on its core payment business, especially given the ongoing layoffs and stagnant growth in its primary operations [4] Global Strategy and Market Position - The company aims to use the funds raised from the Hong Kong listing to support long-term strategic development, including global expansion and enhancing independent R&D capabilities [5] - The dual listing strategy (A+H) is intended to improve global resource allocation capabilities, but the company faces challenges such as regulatory pressures and competition in the domestic payment industry [5]

Core Viewpoint - The company, New Guodu, has submitted an application for an H-share listing on the Hong Kong Stock Exchange, marking a significant step in its global expansion strategy [1][2]. Group 1: Company Overview - New Guodu was listed on the Shenzhen Stock Exchange in 2010 and is the second A-share listed payment institution to pursue an IPO in Hong Kong, following Lakala [1]. - The company aims to enhance its global strategy, accelerate overseas business expansion, and improve its international market competitiveness through this listing [1][2]. Group 2: Financial Performance - New Guodu's revenue sources are primarily from acquiring and value-added services, accounting for over 60% of total revenue. The company reported revenues of RMB 43.15 billion, RMB 38.00 billion, RMB 31.46 billion, and RMB 15.27 billion for the years 2022, 2023, 2024, and the first half of 2025, respectively [2]. - The net profits for the same periods were RMB 0.45 billion, RMB 7.54 billion, RMB 2.31 billion, and RMB 2.74 billion, indicating a significant decline in revenue and net profit for 2024 and the first half of 2025 [2]. Group 3: Market Challenges - The payment industry is facing intensified competition, regulatory tightening, and declining fee rates, which have pressured New Guodu's main business profitability [3][4]. - The company is also encountering challenges in its overseas market expansion due to local competition and regulatory barriers, which have not yet translated into stable profit support [3][4]. Group 4: Future Outlook - The application for a Hong Kong listing is just the first step in a lengthy process that includes several critical stages such as review, hearing, and regulatory approval, all of which carry uncertainties [4]. - The company needs to optimize its revenue structure and enhance information disclosure to address market concerns and meet regulatory requirements [4].

Summary of the Conference Call Company Overview - **Company Name**: 新国都 (Newland) - **Industry**: Payment Technology - **Founded**: 2001 - **Public Listing**: 2010 on Shenzhen Stock Exchange's Growth Enterprise Market - **Core Business Areas**: - Card acquiring - Payment hardware - Cross-border payments - Artificial intelligence applications [2][3] Key Financial Highlights - **Q3 2023 Total Revenue**: 2.343 billion RMB, a year-on-year decrease of 4.15% primarily due to a decline in average transaction fees in card acquiring [3] - **Net Profit**: 408 million RMB, a year-on-year increase of 37.1% with a net profit margin of 17.439%, up by 5.2 percentage points [3] - **Transaction Volume in Card Acquiring**: Approximately 1.08 trillion RMB for the first three quarters, stable compared to the previous year [3] - **Revenue from Payment Hardware**: Grew by 11.9% year-on-year, driven by overseas market expansion [4] Business Segment Performance - **Card Acquiring**: - Q3 transaction volume was around 360 billion RMB, a slight year-on-year decline of 2.5% but an increase of 1.6% compared to Q2 [7] - Fee rates have seen a gradual recovery since June 2023 [8][9] - **Cross-Border Payments**: - Significant growth with transaction volumes increasing over 200% quarter-on-quarter [4] - Services include B2C e-commerce collection, B2B foreign trade collection, independent site collection, and local collection in foreign markets [18] - Expected revenue contribution from cross-border payments for 2023 is between 2 to 3 billion RMB [25] Market Trends and Future Outlook - **Market Dynamics**: - The payment industry is experiencing consolidation with fewer licenses available, leading to increased concentration among leading players [13] - Future growth is contingent on macroeconomic improvements and consumer spending recovery [14] - **Cross-Border Payment Strategy**: - The company has obtained licenses in the EU, the US, and Hong Kong, enhancing its ability to serve international clients [21][24] - The total import and export volume in China exceeds 40 trillion RMB, indicating a large market potential for cross-border services [19] AI and Technological Integration - **AI Applications**: - The company has developed AI digital employee products that have been commercialized in various sectors [3] - Revenue from AI-related ventures is expected to grow, with a target of achieving around 10 million RMB in revenue for the year [31] - **Integration with Payment Solutions**: - AI is being utilized for customer service, transaction verification, and marketing tools [40] Strategic Initiatives - **H-Share Listing**: - The company is preparing for an H-share listing to support its international expansion strategy and enhance brand recognition [62][63] - **Focus on Overseas Markets**: - The company is actively expanding its presence in overseas markets, particularly in Europe and Japan, where it has seen significant growth [53][54] Additional Insights - **Stablecoin and Cryptocurrency**: - The company maintains a cautious stance on stablecoins and cryptocurrencies, aligning with regulatory perspectives [15][16] - **Future Revenue Projections**: - The company aims to achieve breakeven in its cross-border payment segment within three years, targeting transaction volumes in the hundreds of billions RMB [27][50] This summary encapsulates the key points discussed during the conference call, highlighting the company's performance, market dynamics, and strategic direction.