Huifu Payment Announces 2020 Interim Results:

Comprehensive Coverage Across Digitalized Business Scenarios

Strong Growth from Emerging Business Segments Against the General Downward Trend

 

The leading payment technology company in the PRC - Huifu Payment Limited ("Huifu" or the "Company"; Stock Code: 1806.HK) announces its 2020 interim results in the evening of 25 August 2020. In 1H20, the Group's transaction volume reached RMB 979.6 billion, leading to a revenue of RMB1.7 billion, and an adjusted net profit of RMB 84.6 million. The Group has led the way in digitalized transformation in the industry, empowering merchants to expand services to online scenarios, which effectively reduces the adverse impact of the pandemic on traditional businesses. During the period, emerging businesses lines such as SaaS business and Cross-border and International business grew rapidly against the general downward trend, exhibiting a "V"-shaped rebound in business scale.

Digitalization Entered the "Golden Age" with Emerging Business Lines Realizing Rapid Growth Against the Trend

The outbreak and the global spread of COVID-19 during the period brought significant impact to the economy. Yet at the same time it has also created new market demands and promoted the rapid digitalized transformation across businesses, fully reflecting the resilience and vitality of the Chinese economy.

As the pioneer payment company which initiates the digitalized transformation in the industry, Huifu has the first-mover advantage. The pandemic created new market demands, while fast-tracking the digitalization of various scenarios and businesses, providing new opportunities to the Company to achieve its strategic goals.

The Group positioned itself as a digitalized solution service provider based on omni-channel payment, transforming from "SaaS + Payment" to "Payment + SaaS" business model. In addition to the collaboration with well-known SaaS organizations, the Group has leveraged its payment service as the portal, and by improving its technological, data and platform capabilities and integrating its self-developed SaaS products with external SaaS products, to establish end-to-end, fast, efficient and customized servicing capabilities for different merchants and scenarios.

According to the interim results, the transaction volume of SaaS Service reached RMB 110.8 billion in 1H2020, representing a YoY growth of 45%. This has led to a 51% YoY increase in revenue to RMB 300.3 million, along with a 59% YoY increase in gross profit to RMB 48.1 million.

In addition to the growth of performance against the general trend, penetration of the Group's SaaS business has also been further expanded. In 1H20, the Group has cooperated with a total of 457 SaaS organizations. On August 20, the Group also announced a strategic investment in Acewill, a well-known domestic catering SaaS company. Leveraging the respective resource advantages, the two parties will look to promote strategic cooperation and jointly accelerate the digital upgrade of the catering industry with digitalized solutions.

With respect to its SaaS business, the Group has also launched self-developed mini SaaS products for education, medical beauty, catering and other industries, helping merchants to go online.

For small and micro merchants, the Group has launched the offline omni-channel payment brand "Huilaimi", and its daily number of transactions has exceeded two million. Meanwhile, the online omni-channel payment brand "Adapay", which provides payment, e-wallet, fund disbursement, online mall services and other SaaS payment functions, has recorded a rapid growth in transaction volume after launch.

For the Integrated Merchants Acquiring business, the transaction volume reached RMB 739.9 billion in 1H20, achieving a revenue of RMB1.3 billion. The revenue of value-added services reached RMB 54.5 million in 1H20, representing a YoY growth of 241%.

The development of Industry Solution business remains steady. The transaction volume of air travel business has continued to grow since the pandemic. The Group continued to strengthen its collaboration with large airlines, actively promoting digitalized marketing products such as mileage rewards, mini program ticketing, and airline flagship stores, in order to help airlines achieving their respective digital upgrades. At the same time, the Company has deepened its cooperation along the value chain with suppliers and distribution platforms, having engaged 34 clients in 1H20.

Cross-border and International business continued to enjoy strong growth in business scale. The transaction volume of Cross-border and International business reached RMB 30.4 billion in 1H20, representing a YoY growth of 46%. This has led to a 20% YoY increase in revenue to RMB 20.8 million, along with a 15% YoY increase in gross profit to RMB 11.3 million.

In March 2020, the Group has officially completed the directory registration and obtained the first batch of cross-border payment foreign exchange licenses, and has since obtained the MasterCard PF (Payment Facilitator) qualification certification. Meanwhile, the Group has also obtained the US MSB (Money Services Business) filing and is now qualified to collect payments on US e-commerce platforms. On August 18, the Company launched a new cross-border payment solution "uPrimer", providing Chinese merchants with a full range of high-quality services in cross-border payment, technical support, financial products and other value chain services, setting the new standard in the industry with one-stop export e-commerce payment collection experience.

 

Cloud-native Technologies Drive Innovation, Leading Digitalized Transformation in the Industry

While focusing on emerging digitalized scenarios, Huifu continues to accelerate its technological development. The Group invested RMB 145.7 million in R&D in 1H20, accounting for 8.5% of total revenue, representing a growth of 18% YOY. Through continuous investment in R&D, the Group has achieved admirable results in digitalized technology innovation.

The Company has actively promoted the application of cloud-native technologies. Leveraging the improvement in R&D efficiency through the use of digitalized tools, more than 80% of the development projects can be delivered within two weeks. The Group has already made a breakthrough in R&D of cutting-edge technologies, and has fully adapted to the needs of online and mobile business scenarios during the pandemic through the use of self-developed mini program development platform.

The Company built a unified product operation platform, which has reconstructed the operation process and promoted business automation and flexible configuration, leading to the reduction in risk default rate to 0.007BP, way ahead of industry average.

Meanwhile, the Company established an all-domain data index system, covering from front-end and back-end indicators of the Group in real time, providing a measurable and visualized monitoring system for management decisions.

Focusing on Digitalized Scenario and Developing Rapid Customization Capabilities for Any Merchants

The outbreak of global pandemic has accelerated the digitalized transformation of various industries, such as food and beverage, retail and industry chain platforms. Stores have swiftly expanded from offline to online settings. With rapid development of emerging settings, including live-streaming e-commerce, telecommuting, online games and cloud services, there will be huge room for growth in the digitalized enterprise servicing market. In order to provide comprehensive digitalized solutions for merchants, payment institutions must speed up their own digitalized transformation.

Huifu will further expand its scenario payment and self-developed SaaS products. By connecting its platform with external SaaS, the Company will develop the capabilities of rapid customized solutions in the business merchants servicing market, and thus, building a busines model that can acquire merchants, empower digitalized management and provide marketing services.

The Group will build a one-stop digitalized operation system that will serve its partners, channel providers and customers while strengthening the R&D and application of cloud-native and front-end technologies. The Group will continue to optimize its global data management and closed-loop monitoring system, and is looking to fully launch digitalized workplace tools to enhance collaboration and management efficiencies.

Going forward, Huifu will continue to execute its digitalization strategy. Leveraging its digitalized solution capabilities, application of innovative technologies, unified and efficient product platform as well as operational capabilities, the Group is dedicated in promoting the transformation of merchants and channels into the new digital era.