Shulou(Shulou.com)11/24 Report--

On August 24, China's leading payment-based technology platform, Mobile Card Co., Ltd. (hereinafter referred to as "Mobile Card" or "Company", stock code: 09923.HK) issued an interim results announcement for 2023. Compared with the same period last year, mobile card revenue in the first half of 2023 increased 25.6% year-on-year to 2.062 billion yuan; adjusted EBITDA (profit before interest, tax, depreciation and amortization), which reflects core operating results and financial performance, increased 317.4% year-on-year to 291 million yuan.

The good performance of the mobile card in the first half of 2023 is due to the joint growth of the three major business sectors. Judging from the performance of all business sectors, one-stop payment services continued to maintain a steady growth momentum, with revenue growing by 44.3% year-on-year to 1.835 billion yuan; GMV, an e-commerce service to stores, increased by 78.9% year-on-year to RMB 2.4 billion; and merchant conversion rates of merchant solutions further improved, with revenue up 65.7% over the second half of 2022.

Looking at the overall performance of card transfer in the first half of 2023, the remarkable expansion of core basic one-stop payment services has laid the overall growth tone, coupled with the strong growth of total merchant transaction volume and technological innovation in e-commerce services to stores, as well as the improvement of merchant conversion efficiency brought about by the steady recovery of merchant solutions, jointly promote the growth and improvement of the card transfer business digital ecosystem. On the other hand, the effectiveness of ESG has played a more "lubricant" role, helping the commercial digital ecosystem of mobile cards to operate more efficiently. There is reason to believe that the commercial digital ecosystem of mobile cards will glow with stronger growth vitality.

Liu Yingqi, chairman and CEO of the mobile card board, said that to promote sustained growth, the mobile card is deploying cross-marketing programs throughout the digital ecosystem and strengthening the promotion of international business. In addition, the mobile card is investing in AI-based applications to explore the possibilities that the technology brings to the payment technology platform, and it is expected that AI can effectively optimize the cost structure and improve operational efficiency, so that the mobile card can provide better services to users and partners.

The expansion of one-stop payment service has achieved remarkable results. The total payment transaction volume and the number of active merchants have both increased.

According to data released earlier by the National Bureau of Statistics, retail sales of consumer goods increased by 8.2% in the first half of 2023 compared with the same period last year. As the core foundation of the mobile card business digital ecosystem, the performance of one-stop payment service is closely related to the macro environment. In the first half of 2023, the mobile card fully grasped the opportunity brought by the continuous recovery of domestic offline consumption, actively carried out strategic expansion, carried out effective marketing and channel strategies, and achieved remarkable results.

Horizontally, the mobile card actively expands marketing and regional coverage network. As of the first half of 2023, the mobile card has nearly 19000 independent sales agents and more than 4000 cloud payment partners. At the same time, it has expanded the range of large and medium-sized merchants in more than 300 cities across the country and expanded the coverage of vertical brand leaders.

Vertically, the mobile card actively ploughs the demand of the vertical industry. In the first half of 2023, Mobile Card developed merchant solutions for KA customers in vertical industries such as retail, tourism and entertainment, and extended one-stop payment services to thousands of brand franchised stores and chain stores, providing account management, separate account settlement, customized cash withdrawal, operational support and other services. This effectively meets the diversified needs of customers in the vertical industry.

As a result, in the first half of 2023, revenue from mobile card one-stop payment services increased by 44.3% year-on-year to 1.835 billion yuan, and total payment transaction volume (GPV) increased by 33.5% year-on-year to 1.42 trillion yuan, of which 70.5% were application-based payment services. At the same time, the number of active payment service providers using one-stop payment services increased by 20.7% year-on-year to 9.2 million, another all-time high.

In order to further support business development, mobile card has carried out joint order collection with more than 100 commercial banks in the first half of 2023 and worked with partners to develop a unified solution for digital currency and RMB settlement, so that digital RMB payments do not have to be settled separately in the digital currency wallet, which helps the card transfer to attract new customers and consolidate its competitive advantage.

In terms of cross-border payment business, more and more enterprises are looking overseas in an effort to create a twin engine for the common growth of domestic and foreign business. With the tide of domestic enterprises going out to sea, mobile cards are also actively laying out the international business territory. At present, in overseas markets, mobile cards have launched operations in Singapore and Hong Kong, China, and set up teams in Indonesia to gradually promote cooperation with e-wallets, card issuing banks and clearing organizations. provide cross-border and local payment services, including bank card and QR code collection and remittance.

With regard to the future development of one-stop payment services, the mobile card emphasizes that the next step is to expand the business by fostering customer relationships and strengthening domestic distribution channels, while seeking new business opportunities around the world to extend domestic payment technology and experience to overseas markets; at the same time, it will continue to innovate products, services and business models to expand its customer base and build long-term merchant loyalty.

Based on the remarkable results of the expansion of one-stop payment services in the first half of 2023 and the steady progress of the established strategy, the card transfer card reaffirmed the earlier GPV guidelines of RMB 2.7 trillion to RMB 2.9 trillion for the whole year of 2023. This is a rational and practical goal.

Total merchant transaction volume of to-store e-commerce service exceeds 2.4 billion AIGC technological innovation improves operational efficiency

Arrival e-commerce service is a new force in the mobile card business digital ecosystem, which has maintained a strong growth momentum since it was launched at the end of 2020. The card-to-store e-commerce service is played in a differentiated way, with the local life service aggregation platform as the positioning. Mobile cards continue to expand diversified flow partners, including Douyin, Kuaishou, Amap, pinduoduo, etc., to more effectively assist merchants in marketing and brand promotion. In addition, the mobile card also makes full use of the huge merchant base of one-stop payment service 9.2 million to provide content services through short video, picture and text display and live broadcast.

In the first half of 2023, under the premise of breaking even, the total merchant transaction volume (GMV) of card-to-store e-commerce services reached a new high, exceeding 2.4 billion yuan, an increase of 78.9% over the same period last year, continuing a good growth momentum. At the same time, through an effective self-site strategy, the mobile card can achieve architecture improvement and cost control, and effectively narrow the loss. The gross profit margin of incoming e-commerce services increased to 76.9% from 57.1% in the first half of 2022, while the net loss continued to shrink sharply by 83.8% year-on-year to 25.9 million yuan, reflecting the scale effect.

In order to further promote the growth of incoming e-commerce services, reduce costs and improve business efficiency, mobile cards are using artificial intelligence to generate content (AIGC) to comprehensively strengthen the operation strategy. More than 10 AI tools, such as AI content generation tools and AI cloud editing tools, have been developed, which can automatically generate marketing materials and short videos. At the same time, the mobile card also further reduces the cost of KOL (key opinion Leader) by introducing AI interactive virtual anchors into live streaming scenarios. These measures save more than 90% of editing and production costs and increase the efficiency of content creation by 70%.

According to the forecast of iResearch Consulting, the size of China's local life service market will reach 35 trillion yuan by 2025, with a compound annual growth rate of 12.6% in 2025 and an online penetration rate of only 30.8% in 2025. The large scale of the local life service market, coupled with the penetration potential online and offline, gives the local life service a huge profit margin.

With the further development of the market, relying on the accumulated merchant resources, service capabilities, innovation capabilities and cooperation with diversified traffic platforms, card transfer is confident that e-commerce services will contribute more revenue and provide more cross-selling opportunities to other business lines.

Merchant solutions steadily restore the number of merchants to 1.5 million

In the business digital ecosystem of card transfer, merchant solutions help small and medium-sized merchants to realize the digital operation of offline business, which is an effective extension of one-stop payment services. Card transfer integrates a range of merchant solutions in the payment application to create an one-stop experience for merchants. One-stop payment service merchants can be seamlessly transformed into merchant solutions, thus reducing customer acquisition costs and effectively improving the retention and transformation of merchants.

In the first half of 2023, benefiting from a robust recovery in consumption and cross-sector synergies, merchant solutions for mobile cards emerged from the brief downturn during the epidemic and regained their vitality: the number of active merchant solutions increased significantly, from 1.2 million in the second half of 2022 to 1.5 million in the first half of 2023; income increased by 65.7 per cent over the second half of 2022.

It is worth noting that mobile cards continue to cultivate merchants' habits through easy-to-use tools, such as scanning code to order food, so as to empower small and medium-sized businesses with science and technology. This will not only help merchants effectively reduce costs and increase efficiency, but also continue to benefit from card transfer. The huge 920 payment service based on active payment service brings a sufficient customer base for merchant solutions and will effectively support the further growth of merchant solutions.

At present, more and more enterprises are committed to establishing a more scientific enterprise value system. They not only pay attention to the internal factors of business operation and financial performance, but also pay more attention to the impact and role of ESG (environment, society and corporate governance) on enterprise value. ESG shifts its focus on enterprise value from simple shareholders to a wider range of stakeholders, promoting the enterprise to pursue the unity of economic value and social value, which is very important to the long-term development of the enterprise.

In order to meet the sustainable development of the business, the mobile card continues to strengthen ESG management, determined to create more long-term social value. The mobile card first participated in the evaluation of the Standard & Poor's Global ESG score and the Hang Seng Sustainability Enterprise Index in 2022, with scores of 48 and A-(54.02) respectively. In the first half of 2023, the mobile card was successfully selected into the Standard & Poor's Yearbook of Sustainable Development (China version) 2023 and became a pioneer in the industry.

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