Core Insights - The approval of Guotai Junan International to provide virtual asset trading services in Hong Kong has led to a significant stock price increase, reaching a maximum gain of 198% on June 25, marking a record for fintech stocks [2] - The concept of stablecoins is gaining traction in the capital markets, with 51 brokerage firms publishing over 158 reports related to stablecoins in June alone, indicating a surge in interest and activity [3][4] - Regulatory developments, substantial corporate investments, and the market performance of Circle, the first stablecoin company to go public, are key catalysts driving this trend [2][6] Market Performance - The stablecoin sector has shown strong momentum, with stocks like Hengbao Co. and Sifang Jingchuang seeing cumulative gains exceeding 80% in June [2] - Multiple stablecoin-related stocks have demonstrated robust upward trends, with specific stocks like Sifang Jingchuang and Hengbao Co. achieving monthly gains of 84% and 88%, respectively [5] Regulatory Environment - Recent regulatory frameworks for stablecoins have been established, including the U.S. Senate's passage of the GENIUS Act and the EU's MiCA regulation, which will take effect in December 2024 [6] - The Hong Kong Stablecoin Regulation is set to be implemented on August 1, further enhancing market enthusiasm [6] Institutional Interest - There has been a notable increase in institutional research and engagement, with companies like Jingbeifang and Yuxin Technology receiving significant attention from over 100 institutions in June [6][7] - Various companies are actively exploring stablecoin applications, with some disclosing their technological capabilities and business plans related to stablecoins [7] Industry Dynamics - The stablecoin market is characterized by competition among traditional financial institutions, cryptocurrency-native companies, and technology firms, each bringing unique strengths to the table [7] - The stablecoin ecosystem is still in its early stages, with significant potential for growth and development across various segments of the industry [5][6]

Investment Rating - Maintain "Outperform" rating with a target price of RMB 23.21 per share, representing a potential upside of 28% [4][8]. Core Insights - The company focuses on core business and strategic clients, leading in banking IT sectors such as credit and credit card services, while also advancing in AI and internationalization as growth engines [1][8]. - Revenue for 2024 is projected at RMB 1.77 billion, a decrease of 8.76% year-on-year, with net profit attributable to shareholders expected to be RMB 78 million, down 33.60% year-on-year [4][8]. - The company has strengthened its core business barriers, ranking in the top 3 in credit card, loan management, and risk management segments, with a market share in credit cards that has been first for five consecutive years [4][8]. Financial Summary - Revenue and profit forecasts show a recovery trend post-2024, with expected revenues of RMB 2.03 billion in 2025 and RMB 2.39 billion in 2026, reflecting growth rates of 15.4% and 17.1% respectively [3][4]. - The net profit attributable to shareholders is expected to rise to RMB 93 million in 2025 and RMB 122 million in 2026, indicating a rebound from the 2024 decline [3][4]. - R&D investment for 2024 is projected at RMB 327 million, representing an R&D investment rate of 18.53%, highlighting the company's commitment to innovation in digital finance [4][8]. Business Development - The company has launched over 20 new loan-related projects in 2024, generating nearly RMB 500 million in related revenue [4][8]. - AI-related revenue is expected to reach nearly RMB 70 million in 2024, with significant product developments in collaboration with Hunan University [4][8]. - The company is exploring international opportunities, having established strategic partnerships with three multinational banks and leading in the stablecoin market by launching credit card products that allow stablecoin recharge [4][8].

Core Viewpoint - The recent volatility in the stock prices of companies like Lianlian Digital is linked to the Hong Kong government's enactment of the Stablecoin Regulation, which establishes a regulatory framework for stablecoin issuers [3][5]. Company Insights - Lianlian Digital experienced a stock price surge of 64.27% on June 2, reaching HKD 16.46 per share, followed by a drop of 39.25% on June 3, falling to HKD 10 per share [3]. - The company holds a significant position in Hong Kong's virtual asset ecosystem, with its subsidiary DFX Labs having obtained a Virtual Asset Trading Platform license from the Hong Kong Securities and Futures Commission [5]. - Lianlian Digital reported a total payment volume of RMB 3.30 trillion in its digital payment business for the fiscal year 2024, marking a year-on-year increase of 64.7%, and total revenue of RMB 1.315 billion, up 27.9% [5]. Industry Trends - The Hong Kong Legislative Council passed the Stablecoin Regulation on May 21, which includes a licensing system for stablecoin issuers linked to fiat currencies [5]. - Several A-share listed companies are also engaging in stablecoin-related activities, with Zhongke Jincai establishing a Hong Kong subsidiary to explore stablecoin and financial innovation [6]. - Tianyang Technology is promoting a credit card product that allows for top-ups using stablecoins, indicating a growing demand for stablecoins in cross-border e-commerce and trade [6]. Market Analysis - Major securities firms, including CITIC Securities and Guotai Junan, are actively analyzing the implications of stablecoins, highlighting their potential to enhance market liquidity and facilitate cross-border payments [7]. - Stablecoins are expected to reduce transaction costs and time in cross-border payments, with the potential to bypass traditional systems like SWIFT [7]. - CITIC Jiantou suggests that compliant stablecoins could activate liquidity in traditional assets such as real estate and bonds, creating a new market worth trillions [8].