Core Viewpoint - The company reported strong financial performance in 1H25, with significant revenue growth and a return to profitability, driven by strategic asset sales and robust payment processing activity [1][2]. Financial Performance - 1H25 revenue increased by 27% year-on-year to 780 million yuan, with net profit turning positive at 151 million yuan compared to a net loss of 35 million yuan in 1H24, largely due to over 1.6 billion yuan in gains from the sale of a stake in a subsidiary [1][2]. - Adjusted recurring operating profit was 6.258 million yuan, a significant improvement from a loss of 8.88 million yuan in 1H24, indicating enhanced core business profitability [2]. Business Trends - Total Payment Volume (TPV) for 1H25 grew by 32% year-on-year to 2.1 trillion yuan, outpacing revenue growth of 27% [1]. - Global payment TPV surged by 94% to 198.5 billion yuan, while domestic payment TPV rose by 28% to 1.9 trillion yuan, with stable fee rates contributing to revenue growth [1]. - Value-added services revenue increased by 34% to 90 million yuan, driven by virtual card offerings and the expansion of digital products [1]. Profitability Metrics - Gross profit for 1H25 rose by 25% to 410 million yuan, maintaining a high gross margin of 52% [2]. - The gross margin for global payments was 72.7%, while domestic payments stood at 19.9%, with a slight decline in value-added services margin attributed to lower profitability in virtual card operations [2]. Strategic Outlook - The company anticipates steady growth in payment business, projecting TPV to continue increasing and revenue growth to exceed 20% in the coming years, with a target recurring operating profit of nearly 70 million yuan in 2025 [3]. - The company plans to allocate 30% of its fundraising to enhance global licensing and local service capabilities, while 50% will focus on blockchain technology innovations in cross-border payments [3]. Market Position - As a leading cross-border payment service provider, the company is well-positioned to benefit from Web3 payment innovations and has obtained a VATP license, which opens new growth avenues [3]. Valuation and Forecast - Revenue forecasts for 2025 and 2026 have been raised by 2% to 1.65 billion yuan and 2.02 billion yuan, respectively, while maintaining adjusted profit estimates [4]. - The target price has been increased by 3.3% to 15.8 HKD, reflecting a potential upside of 39% based on a price-to-sales ratio of 9x for 2025 and 8x for 2026 [4].

Core Viewpoint - The report from CICC indicates a significant increase in the Total Payment Volume (TPV) for Lianlian Digital, leading to an upward revision of revenue forecasts for 2025 and 2026 by 2% to 1.65 billion and 2.02 billion HKD respectively, while maintaining adjusted profit estimates unchanged [1] Group 1: Financial Performance - In 1H25, Lianlian Digital's revenue increased by 27% year-on-year to 780 million HKD, with net profit turning positive at 151 million HKD compared to a net loss of 350 million HKD in 1H24, largely due to over 1.6 billion HKD in gains from the sale of part of its stake in LianTong [2] - The TPV for 1H25 rose by 32% year-on-year to 2.1 trillion HKD, outpacing the revenue growth of 27% [3] - Gross profit for 1H25 increased by 25% year-on-year to 410 million HKD, maintaining a high gross margin of 52% [4] Group 2: Business Segments - Global payment TPV surged by 94% year-on-year to 198.5 billion HKD, although the overall fee rate declined to 24 basis points due to higher growth in lower-fee service trade and B2B sectors [3] - Domestic payment TPV grew by 28% year-on-year to 1.9 trillion HKD, with a stable fee rate of 1.1 basis points [3] - Value-added services revenue increased by 34% year-on-year to 90 million HKD, primarily driven by contributions from virtual card services [3] Group 3: Strategic Initiatives - The company plans to allocate 50% of the funds raised from placements to enhance blockchain technology applications in cross-border payments, aiming to improve efficiency and security [7] - The company has received approval for the VATP virtual asset trading platform license, which is expected to expand its service capabilities in cross-border payments [7] - The company anticipates steady growth in TPV and payment revenue, projecting a near 700 million HKD in regular operating profit for 2025 [6]

Core Viewpoint - The report from CICC indicates a strong performance for Lianlian Digital, with an upward revision of revenue forecasts for 2025 and 2026 by 2% to 1.65 billion and 2.02 billion HKD respectively, while maintaining adjusted profit estimates unchanged [1] Group 1: Financial Performance - In 1H25, Lianlian Digital's revenue increased by 27% year-on-year to 780 million HKD, with net profit turning positive at 1.51 billion HKD compared to a net loss of 350 million HKD in 1H24, largely due to over 1.6 billion HKD in gains from the sale of part of its stake in LianTong [2] - The total payment volume (TPV) for 1H25 rose by 32% year-on-year to 2.1 trillion HKD, outpacing the revenue growth of 27% [3] - Gross profit for 1H25 increased by 25% year-on-year to 410 million HKD, maintaining a high gross margin of 52% [4] Group 2: Business Segments - Global payment TPV surged by 94% year-on-year to 198.5 billion HKD, with a decline in overall fee rates to 24 basis points due to higher growth in lower-fee service trade and B2B sectors [3] - Domestic payment TPV grew by 28% year-on-year to 1.9 trillion HKD, with stable fee rates at 1.1 basis points [3] - Value-added services revenue increased by 34% year-on-year to 90 million HKD, contributing 11% to total revenue, driven by virtual card services and the expansion of digital products [3] Group 3: Strategic Outlook - The company expects steady growth in payment business, with TPV projected to increase and payment revenue maintaining a growth rate of over 20% in the next 2-3 years [6] - The company plans to allocate 50% of its fundraising to enhance blockchain technology in cross-border payments, aiming to improve efficiency and security [7] - The recent approval of the VATP license opens up new growth opportunities in the Web3 payment sector, allowing the company to explore additional revenue streams [7]

Summary of the Conference Call for Lianlian Digital Technology Co., Ltd. Company Overview - **Company**: Lianlian Digital Technology Co., Ltd. - **Industry**: Digital Payment and Financial Technology Key Financial Metrics - **Total Revenue**: 780 million RMB in H1 2025, up 26.8% YoY, a historical high [2][4] - **Global Payment Volume (GPV)**: 198.5 billion RMB, up 94% YoY [2][4] - **Global Payment Revenue**: 470 million RMB, up 27% YoY, with a gross margin of 72.7% [2][7] - **Domestic Payment Revenue**: 210 million RMB, up 24.6% YoY, with a gross margin of 19% [2][7] - **Value-Added Services Revenue**: 89.59 million RMB, up 30.2% YoY [2][5] - **Core Operating Profit**: 63 million RMB, up 85% YoY [2][10] - **Cash Reserves**: 1.56 billion RMB [12] Business Performance Highlights - **Global Payment Strategy**: Significant growth in global payment services, with a focus on Southeast Asia, the Middle East, and Latin America [4][5] - **Cost Control**: Effective cost management with costs increasing at a lower rate than TPV growth, indicating scale effects and profitability [2][7] - **Innovation in Services**: Introduction of new products such as digital rights products and wallet services contributing to revenue growth [2][5] Future Projections - **TPV Growth**: Expected to exceed 50% for the full year [3][18] - **Revenue Growth**: Anticipated to maintain a growth rate of 20%-25% [3][25] - **Gross Margin**: Expected to remain above 50% [3][25] - **Take Rate**: Projected to stabilize around 24 basis points, down from over 30 basis points [3][17] Strategic Initiatives - **Licensing**: Obtained Hong Kong SFC Type 3 license to enhance cross-border multi-currency trade management [2][5] - **Virtual Asset Trading Platform (VTP)**: Actively exploring opportunities in the VTP space and the implications of Hong Kong's stablecoin policies [2][16][19] - **Partnerships**: Continued collaboration with strategic partners like American Express to leverage global financial networks [26][27] Market Recognition - **MSCI Inclusion**: Recently included in MSCI Global and China Small Cap Index, enhancing visibility to investors [13] - **Awards**: Recognized as the best cross-border payment solution by Corporate Treasurer magazine [13] Cost Management and Efficiency - **Operating Expenses**: Sales and marketing expenses increased by 18% to 130 million RMB [6][11] - **Strategic Investments**: Focused on global expansion and Web3 innovations while controlling costs effectively [9][21] Tax and Financial Management - **Effective Tax Rate**: Increased due to gains from the sale of shares in a joint venture, with a long-term expectation below 15% [20] - **Cash Flow**: Positive cash flow from operating activities, with significant net inflows from investment activities [12] Conclusion - **Growth Strategy**: A balanced approach of organic growth and potential acquisitions to enhance shareholder value [8][21] - **Market Adaptation**: Proactive measures to adapt to market changes and leverage new technologies for competitive advantage [30][31]