Investment Rating - The investment rating for the industry is "Outperform the Market" (maintained) [1] Core Insights - The report focuses on the competitive landscape and case studies of cross-border payment services, highlighting the growth and challenges in the industry [1][3][4] Summary by Sections Understanding Payment and Cross-Border Payment - Payment can be simply understood as the activity of transferring currency, which consists of three stages: transaction, clearing, and settlement [10][11] - Consumers typically only perceive the transaction stage, often referring to it as "payment" [10] Payment Industry from the Perspective of Payment Service Organizations - The payment system comprises payment service organizations, payment systems, payment tools, and payment regulation [19] - In 2024, non-cash payment transactions in China reached 576.3 billion, amounting to 54.43 trillion yuan, with bank cards accounting for 98% of transaction volume [24][25] Cross-Border Payment Case Study: Ant International - Ant International, part of Ant Group, offers a comprehensive cross-border payment service system, including products like Alipay+ and WorldFirst [101][120] - Alipay+ connects acquiring service providers and mobile payment providers, facilitating seamless transactions across various markets [110][111] Cross-Border Payment Case Study: LianLian Digital - LianLian Digital is a leading digital payment solution provider in China, focusing on cross-border payment services and has expanded its global presence [130][131] - In 2024, LianLian Digital achieved a total revenue of 1.315 billion yuan, a year-on-year increase of 27.9% [134]

Summary of the Conference Call Records Company Overview - **Company Name**: Lianlian Digital - **Industry**: Cross-border payment solutions - **Market Position**: Leading independent digital payment solution provider in China with a market share of approximately 10% [6][1] Key Points and Arguments Business Model and Services - Lianlian Digital focuses on providing cross-border payment services and related value-added services to merchants on cross-border e-commerce platforms [2][1] - The company aims to enhance global trade activities by improving the efficiency of capital and information flow [2][1] - It offers a comprehensive suite of services including payment collection, reconciliation, and trade declaration, alongside marketing and logistics support [2][1] Financial Performance - In 2024, the company's total TPV (Total Payment Volume) grew by over 60%, with revenue increasing by 27.9% [3][1] - Digital payment service revenue accounted for 61.4% of total revenue, while value-added services contributed 11.1% [3][1] - Overall gross margin stood at 51.9%, with global payment gross margin exceeding 70% [3][1] Market Dynamics - The growth of cross-border e-commerce is a significant driver for the company, with an expected import and export growth rate of approximately 10.8% in China for 2024 [7][1] - The demand for comprehensive one-stop solutions is increasing as traditional small and micro enterprises seek to digitize their supply chains [7][1] Strategic Initiatives - The company plans to expand its global licensing footprint and activate the use of licenses in various countries [11][1] - Lianlian Digital is exploring the Web3 space and aims to issue a stablecoin to enhance trade settlement efficiency and reduce costs [1][5] Regulatory and Compliance Framework - Lianlian Digital holds 65 global payment licenses and has established a compliance, risk control, and anti-money laundering system [1][2] - The company is actively working to integrate Web3 capabilities into its existing payment systems [5][1] Competitive Landscape - The payment industry is categorized into three main players: card organizations, consumer-focused companies, and merchant-focused companies [6][1] - Lianlian Digital positions itself in the ToB (business-to-business) sector, providing third-party payment solutions [6][1] Future Outlook - The company anticipates that 2025 will be a pivotal year for profitability, with strategic adjustments expected to yield significant returns [15][1][24][1] - The introduction of stablecoin payments is expected to enhance transaction efficiency, particularly for non-mainstream currencies [17][1][26][1] Additional Important Insights - The company has a history of two major business transformations, evolving from mobile top-up services to domestic and then cross-border payment services [4][1] - The partnership with American Express and the sale of shares in a joint venture are part of a strategic realignment to focus on global licensing and Web3 initiatives [15][1][24][1] - The company is not planning to expand into the consumer market (C-end) and will continue to focus on serving merchants and small to medium enterprises [23][1] Conclusion Lianlian Digital is positioned as a key player in the cross-border payment industry, leveraging its extensive licensing, compliance framework, and strategic initiatives to capitalize on the growing demand for digital payment solutions in the e-commerce sector. The company's focus on innovation, particularly in the Web3 space and stablecoin issuance, is expected to drive future growth and profitability.