In 2022, Huitongda Network (9878. HK) is one of the most eye-catching new stocks, regarded by the market as a "new retail species" and "the first share in the sinking market" scarce target, and at the same time, backed by a number of star shareholders such as Alibaba, the introduction of Skyworth Group, SenseTime-W, Jinglin Asset Management and other cornerstone investors.
Time to come recently, with the release of Huitongda Network's 2021 results, providing an updated financial perspective for the market to look at its development direction and potential: Huitongda Network has passed the 60 billion revenue mark, the number of customers has grown rapidly, and it has obviously shown a momentum of accelerated development.
Also in 2021, the retail industry as a whole suffered weak demand, supply shocks, etc., traditional retail stores, Internet e-commerce giants and community group buying and other new formats have come under pressure, phenomenon-level industry events such as double 11 have also gone flat. It can be seen that the acceleration of the development of huitongda network is not universal, but more from endogenous growth.
At this time, it is advisable to combine this financial report and re-examine the long-term development logic of Huitongda Network.
The model of number endowment + superiority is effectively leveraged to sink the market potential
According to the financial report, in the whole year of 2021, Huitongda Network recorded revenue of 65.76 billion yuan, an increase of 32.5% year-on-year, of which the transaction business income was 65.22 billion yuan, an increase of 32.3% year-on-year; the service business revenue was 440 million yuan, an increase of 80.4% year-on-year. On the profit side, profitability improved significantly, with Huitongda Network recording a gross profit of RMB1.87 billion during the period, an increase of 38.9% year-on-year, and adjusted (non-IFRS measured) attributable net profit to RMB330 million, an increase of 66.4% year-on-year.
(Source: Company Financial Report)
As mentioned in the opening paragraph, huitongda network has obviously shown a momentum of accelerating development. Combined with its previous financial reports, from 2018 to 2020, the compound annual growth rates of Huitongda network revenue and adjusted net profit attributable to the mother were 29% and 61%, respectively, opening up the growth rate on a high base.
Further, the high growth of Huitongda Network fundamentally comes from its business positioning, that is, "enriching reality with numbers", combining the digital economy and the real economy of townships and townships to transform kinetic energy and build barriers to competition; specifically, it provides one-stop empowerment of transactions + services, and brings supply chain support, digital empowerment ("SaaS + supply chain services"), online and offline marketing support and other comprehensive services for township stores.
Under the superposition of policy inclination and consumption dividends, the consumption potential of sinking cities has been continuously released in recent years, becoming an increasingly non-negligible incremental market. According to Frost & Sullivan, the size of the sinking retail market will reach 15.1 trillion yuan in 2020, with a compound annual growth rate of 8.8% in 2015-2020 (8.6% of China's overall retail market), and is expected to reach 20.6 trillion yuan in 2025.
Of course, the sinking market has become the consensus of the industry, and the value background of Huitongda Network depends on two levels on this basis.
The entire retail industry is shifting from price logic to value logic, or more accurately, value co-construction logic, including the integration of commercial value and social value, and the win-win situation between merchants and consumers. At the same time, with the development of new digital infrastructure, the industrial Internet platform has accelerated its rise and continued to deepen the logic of value co-construction.
At the level of social value, the state has successively issued relevant policies to encourage the development of the rural digital economy, and in February 2022, the No. 1 document of the Central Committee also highlighted the vigorous promotion of digital village construction. The development path of Huitongda Network is in line with the macro development direction in multiple dimensions, especially the strategic significance of promoting digital villages and the real economy.
At the level of industrial value, Huitongda Network provides one-stop empowerment, integrates localization characteristics on the basis of general SaaS products, and forms a localization service network of nearly 3,000 people across the country (account manager, iron army) to help township stores form digital thinking and capabilities, empower the B-end and give profit to the C-end, and help achieve cost reduction and efficiency of the whole link.
It is also conceivable that as merchants, suppliers and other industry chain participants gradually "access" the Huitongda network, they will rapidly increase their business scale in terms of multiplier effect. Huitongda Network has truly moved towards the invisible Giant on the road of value co-construction.
The second is the target group, on the one hand, to form a dislocation competition with the traditional e-commerce giants, on the other hand, it also determines the height of its ceiling.
Huitongda network is mainly for township retail stores and related participants in the retail industry chain, namely small B groups and township husband and wife stores. Such groups constitute the largest channel in China's retail industry and are regarded as the "capillaries" of Chinese commerce. According to the data of the State Administration of Market Regulation, the number of various small and micro enterprises in China has reached 43.1725 million, and the number of individual industrial and commercial households is 102 million (accounting for about two-thirds of the total number of various market entities); it is also at the end of the supply chain, lacking full-link coordination, weak digital capabilities, and low anti-risk ability.
At the same time, with the issuance of the "14th Five-Year Plan for the Development of the Digital Economy" and other issues to accelerate the transformation of the mainland's digital economy to a new stage of deepening application, standardized development, and inclusive sharing, it is becoming more and more important for enterprises to build the bottom layer of digital development, and small and medium-sized enterprises and individual households especially need to use the platform to achieve relevant layouts. The development of industrial Internet platforms such as Huitongda Network, which is based on numbers and has superior models, may also continue to accelerate.
Continue to deepen cultivation and promote the growth of "trading + service" flywheel with refinement
Specific to the business line, the model of Huitongda Network also has significant characteristics, its transaction and service two major businesses actually constitute a "centralized + decentralized" dual engine, and achieve organic unification, mutual promotion, the formation of a unique flywheel effect, that is, through the expansion of trading business to optimize the customer base, for the service business to drain; through the service business to create more monetization contacts, strengthen customer stickiness, feed back the transaction business. This is also why we can see that the two major business lines of Huitongda Network are "unified" and show rapid growth.
In addition, it is believed that more refined operation and exploration have become the booster of Huitongda network growth flywheel, making it turn faster and faster, which deserves attention.
In terms of transaction categories, in 2021, Huitongda Network will continue to deepen strategic cooperation with upstream brand owners, expanding to six major industries of consumer electronics, agricultural production materials, household appliances, transportation, home building materials and alcoholic beverages, gradually covering the core categories of consumption in the sinking market, and further laying a high-quality business foundation for the growth of multiple categories. Among them, the revenue growth of consumer electronics, transportation and travel goods and alcoholic beverages during the period was particularly rapid, higher than the overall revenue growth rate.
At the same time, in terms of supply chain infrastructure, Huitongda Network actively develops industry customization systems, launches exclusive industry channels, and can provide warehousing and logistics solutions including 500+ leased warehouses and 10,000+ social cooperation vehicles, realizing "direct delivery of manufacturers + three-stage logistics + warehouse self-pickup", which is applied to differentiated sinking market trading scenarios and provides stable and efficient commodity trading solutions for member retail stores.
For the service business, Huitongda Network continues to deepen the implementation of SaaS+ business strategy, carry out hierarchical and hierarchical management of products and customer needs, and strengthen full staff collaboration to consolidate the operation of member retail stores, improve service efficiency and experience, realize the expansion of incremental users, and improve the retention rate of existing users. During the period, there were nearly 18,000 SaaS+ users in paid stores in the service business line, and the revenue of the store SaaS+ subscription business increased by 133.8% year-on-year, and the number of customers and performance increased significantly.
In addition, from the perspective of the "total traffic pool", as of the end of the reporting period, the total number of registered member retail stores in Huitongda Network was 169,000, an increase of 20.6% year-on-year; the number of active member retail stores was 62,000, an increase of 90.1% year-on-year; and the total number of SaaS+ subscribers was 102,000, an increase of 64.4% year-on-year. It more directly reflects the rapid growth of the "unified" transaction and service business, especially the rapid growth of the number of active members and SaaS+ service customers, and the potential of existing customers has indeed been effectively stimulated.
Similar logic, with the deepening of huitongda network's member retail store network, the customer base of transaction business and SaaS+ services will be optimized; at the same time, there is still room for conversion between the two, and synergy may be achieved through cross-empowerment. SaaS+ supply chain service capability improvement is also digital empowerment, in line with the core development logic of digital empowerment, the development of Huitongda network is accelerated by external and endogenous dual drive.
Moreover, the two major business charging models of transactions and services are not the same, forming a more diversified and stable revenue structure combined with platform sales and subscription payment, which lays a solid foundation for the subsequent long-term development of Huitongda Network; service business SaaS+ solutions often have ultra-high gross profit margins, and with the scale of this business, it is bound to increase the imagination space of revenue and profit at the same time.
Write at the end
In 2021, Huitongda Network will hand over an eye-catching report card, make a double leap forward in financial performance and operating data, and consolidate its own digital underlying construction, ushering in a turning point in the acceleration of development and accelerating the realization of the potential energy of ten years of hard work.
In 2022, Huitongda Network entered the capital market with a steady and steady attitude, opening a new era of development. Business outlook, will accelerate the improvement of supply chain capabilities, from distributed supply chain to headquarters supply chain transformation; accelerate the layout of member retail store outlets and improve operational capabilities; accelerate digital construction, further reduce costs and improve efficiency; accelerate the construction of warehouse allocation system, to provide customers with standardized, professional and efficient logistics and distribution experience.
A number of "acceleration" may further accelerate the development of Huitongda network, and also confirm the development stage of Huitongda network, from the scale leadership to the efficiency leading stage.
In terms of capital markets, entering the capital market in 2022 can be described as turbulent, the complexity of the internal and external environment and overseas short-selling forces have covered the market with a thick haze, and the recent high-level voice has boosted market confidence, market sentiment has picked up, and Hong Kong stocks have ushered in an oversold rebound.
At the same time, in recent years, Hong Kong stocks have shown obvious characteristics of structural transformation, and the proportion of the new economy represented by science and technology and consumption has increased significantly, becoming the largest industry in the Hong Kong stock market, with more active transactions and abundant liquidity. Huitongda Network empowers the retail industry with digitalization as the underlying layer, spanning technology and consumer fields, and the investment attractiveness can be seen.
Just before the release of the financial report, since the end of March, the stock price of Huitongda Network has continued to rise by more than 13%, the latest stock price is 46.0 Hong Kong dollars, and the 49 Hong Kong dollars that has been set a new high in the earlier stage is only 5% of the space, and may soon be about to create a new record, which is worth paying close attention to.