(Original title: Lingxiong Technology, the first Hong Kong stock listed in the domestic DaaS industry, resists the economic cycle and expands against the trend)
Lingxiong Technology (02436.HK), which started from the recycling of second-hand computers, has experienced 18 years of development. The company’s flagship “Xiong U Rent” has become the leading brand of equipment life cycle management solution providers. On November 24, 2022, Lingxiong Technology was listed on the main board of the Hong Kong Stock Exchange, becoming the first Hong Kong stock in China’s DaaS (device as a service) industry.
At the listing media exchange meeting, the executives of Lingxiong Technology told the media reporters such as Securities Times and e Company that the company will further expand its business scale in the future, deepen digital transformation, and consider further opening up its own enterprise credit risk control evaluation model to expand Credit data track.
Expansion against the trend
Compared with the markets in developed countries, China’s equipment life cycle management market is highly fragmented and small in scale. Among the industry giants with revenue exceeding 500 million yuan and providing equipment exceeding 300,000 yuan, Xiaoxiong Uzu and Edianyun are currently the only leaders . According to the statistics of China Insights Consulting, Bear Uzure ranks first in the equipment life cycle management revenue accounting for 3.9% of the market. In comparison, Easy Point Cloud ranks first in the equipment subscription segment.
In recent years, Lingxiong Technology‘s business has covered full-stack services including equipment recycling services, equipment subscription services, IT technology subscription services, and equipment management SaaS. Even in the face of the new crown epidemic, the company’s revenue has maintained rapid growth. From 2019 to 2021, the compound annual growth rate of the company is 63.1%; the compound annual growth rate of adjusted EBITDA (earnings before interest, tax, depreciation and amortization) is 146.6% during the same period. In the first half of this year, the company achieved revenue of 854 million yuan, an increase of nearly 60% year-on-year, and the number of subscription devices reached nearly 500,000 units.
“With the obvious downward trend of the economy this year, enterprises have become more and more cautious in investing in fixed assets, but in the first half of the year, the number of new customers of the company has increased by more than 50% year-on-year.” Hua Baocheng, partner of Lingxiong Technology Introduced to reporters at the listed media exchange meeting that through IT leasing equipment, the company’s one-time investment in fixed assets can be reduced, thereby reducing corporate costs; referring to the US IT equipment leasing industry’s penetration rate of over 50%, the domestic market is still less than 5%, the industry It has huge room for development.
However, financial data show that the company’s gross profit rate in the first half of this year was 11.67%, which was lower than the 14.53% gross profit rate at the end of last year, and the company still lost money; will continue to lose money.
In this regard, Lingxiong Technology CFO and Vice President Jiang Zeli told reporters that the fluctuation in the first half of this year was mainly due to the fluctuation of the gross profit rate of equipment recycling services. This part of the business will be affected by the category, configuration, and market supply and demand of recycled IT equipment. In the future, the company’s management will review the prices of the IT equipment market to ensure a sufficient price difference between equipment purchases and sales to cope with overall market fluctuations. In addition, the company’s executives introduced that the measurement of changes in fair value under international accounting standards led to losses, but the company basically broke even after adjustments at the operating level.
Hu Zuoxiong, the founder and chairman of the board of directors of Lingxiong Technology, said in his speech at the bell-ringing ceremony that Lingxiong Technology has developed into the first domestic company with a closed-loop business model of digitalization, multi-scenario and IT equipment’s full life cycle and full industrial chain; “In the next 10 years , the company also needs to serve 1 million companies and provide 10 million employees with high-quality equipment.”
digital transformation
Lingxiong Technology has acquired strategic shareholders such as JD.com, Tencent, and Lenovo to invest in shares, and cooperates in supply chain, finance, warehousing, logistics, distribution, etc., and improves the efficiency of customer acquisition.
According to company executives, currently Lingxiong Technology mainly focuses on acquiring customers in core cities and core areas to increase the density of customers and equipment, thereby reducing the cost of acquiring customers and improving the efficiency of acquiring customers. The above-mentioned three strategic investment shareholder channels play an important role in the company’s customer acquisition channels, and the proportion of new transaction customers brought by them has reached 30%. The cycle is only one-fifth of the company’s current cycle; even at the Jingdong headquarters, the teams of both parties jointly develop an online platform based on the Jingdong end.
Before the listing, Lingxiong Technology reduced its registered capital by 52.45 million yuan in February, repurchased JD.com, Tencent, Lenovo and other shareholders to inject capital, and then issued 48.6 million preferred shares to relevant shareholders, and introduced Fu Gan investment.
“Investors are very optimistic about the company’s business,” Huabaocheng told reporters. The above-mentioned changes are mainly for the transfer of domestic shareholders to overseas, so as to realize the company’s red-chip restructuring and listing arrangements; Financial institutions, foreign investment banks and other resources provided financial support and guarantee in the process of the company’s listing and reorganization.
At present, Lingxiong Technology‘s customer structure and revenue contribution present the characteristics of a “twenty-eight” distribution. It is understood that the general survival period of domestic start-ups is about three years, 80% of the company’s customers are small and medium-sized enterprises, and large enterprises account for about 20%, contributing 80% of the source of income; among them, the current main business of the company is equipment recycling and equipment subscription services , positioned as the first Hong Kong stock in China’s DaaS (device as a service) industry, and continues to carry out digital transformation.
Hu Zuoxiong said that the company is heavy on assets, capital, and operations. Since its financing in 2018, the company has continued to start digital transformation, realize precise management of equipment, control various costs, and empower customer asset management to clearly grasp the structure of IT equipment expenditures. , to achieve cost control and throttling.
With the expansion of business scale, Lingxiong Technology has more personnel and equipment data, and has launched a proprietary software Bear U Butler to provide equipment management SaaS services. Under the digital transformation, the company’s own business risks are also under control.
Huabaocheng introduced to the reporter that the company is also constantly building and polishing its own credit system and risk control system. In the past three years, the company’s overall risk control bad debt impairment loss has been reduced year by year. In 2021, it will account for less than one-thousandth of the revenue. It is also far below the industry average bad debt rate of 4%. In the future, the company will consider further opening up its own corporate credit risk control assessment model to the outside world.
In recent years, Bear UZase has been actively promoting and deeply participating in the construction of the credit system of governments at all levels, and participated in the construction of the national credit system of the Development and Reform Commission of the State Council. According to the future plan, Xiaoxiong Uzuo will integrate third-party value-added services into the company’s platform to improve operating efficiency and optimize service and operation processes.