Lianlian Digital Technology Co., Ltd. (Stock Code:2598.HK) on2024year3month28The company successfully listed on the main board of the Hong Kong capital market. It is a leading enterprise in the digital payment sector, with global payment capabilities serving customers worldwide. It mainly provides digital payment services and value-added services to empower global trade activities, improve the efficiency of capital and information flow. It is the largest independent digital payment solution provider in China and the seventh largest provider in terms of digital payment solutions. Frost & SullivanFrost & Sullivan,Frost & Sullivan, referred to below as 'Frost & Sullivan', provides exclusive industry advisory services for Lianlian Digital Technology Co., Ltd.'s listing. We hereby extend our warmest congratulations on its successful listing.
Lianlian Digital Technology Co., Ltd. (hereinafter referred to as 'Lianlian Digital') was established on2024year3month28The company plans to go public on the 1st of July55,920,000shareHstocks, among which90%For international distribution. The final issue price is HK$10.00 per share.10.22Hong Kong dollar, net proceeds from global offering5.48HK$10 billion.
During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the writing of relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.
Investment highlights
The company is a leading provider of digital payment solutions, with global payment capabilities serving customers worldwide;
company One of the digital technology companies that pioneered the provision of extensive payment solutions globally;
company It has the broadest global business footprint and license coverage, and is the only company holding currency transfer licenses in all states of the United States;
company Established a connection with American Express' affiliated company, becoming the first Sino-foreign joint venture bank card clearing institution in China;
company Possesses a proprietary technology platform designed to address the complexities of global trade;
company We have a rapidly growing and loyal customer base, as well as an international professional management team.
According to a report by Frost & Sullivan, by2022yearTPVcount, consecutive numbers:
It is the largest independent digital payment solution provider in China;
It is the seventh-largest digital payment solution provider in China.
Overview of China's Digital Payment Solutions Market
Digital payment solutions include digital payment services and value-added services provided for merchants and enterprises. Digital payment services refer to online payment services provided by non-bank payment service providers, enabling merchants and enterprises to receive or distribute funds through the internet or mobile internet. Since banks highly rely on physical branches to provide services to merchants and enterprises, they are not considered digital payment service providers. For example, banks generally require customers to submit application materials and original documents in person. Value-added services are integrated with payment services and can be accessed through an integrated digital platform. These services can help merchants and enterprises digitize their businesses in sales, marketing, transactions, and internal operations. Based on the nature of the customer's business, digital payment solutions can also be divided into cross-border digital payment solutions and domestic digital payment solutions.
Given the growing demand for digital payments among merchants and enterprises' businesses, the digital payment service market in ChinaTPVfrom2018Renminbi in [year]99.6trillion yuan to2022Renminbi in [year]181.2trillion yuan2018Year-end2022The compound average annual growth rate for the year is16.1%Looking ahead, the digital payment service market in China is expected toTPVwill be2027Year-on-year growth to RMB353.6trillion yuan2022Year-end2027The compound average annual growth rate for the year is14.3%.
Source: Frost & Sullivan report
As merchants and enterprises continue to expand their businesses, their demand for value-added services also continues to grow. According to Frost & Sullivan's data, the revenue from value-added services of digital payment solution providers in China has been2018Renminbi in [year]147RMB billion increased2022Renminbi in [year]339yuan,2018Year-end2022The compound average annual growth rate for the year is23.2%, is expected to arrive2027The annual amount will increase to RMB883yuan,2022Year-end2027The compound average annual growth rate for the year is21.1%.
Source: Frost & Sullivan report
Overview of China's Cross-border Digital Payment Solutions Market
In recent years, driven by strong overseas market demand, as well as increasingly improved digital infrastructure and global logistics networks, the scale of China's cross-border e-commerce market has continued to grow. Compared with offline cross-border trade, cross-border e-commerce is less restricted by geographical environment and trade protection measures. The transaction process of cross-border e-commerce is simpler and has gradually become one of the key industries driving China's economic growth in recent years. According to Frost & Sullivan's data, the scale of China's cross-border e-commerce market has grown from2018Renminbi in [year]1.6trillion yuan increased to2022Renminbi of the year4.0trillion yuan2018Year-end2022The compound average annual growth rate for the year is25.7%.
In the future, the scale of China's cross-border e-commerce market is expected to embrace new development opportunities and achieve new growth. According to Frost & Sullivan, as cross-border offline trade activities gradually shift online, the proportion of cross-border e-commerce in China's total export trade volume is also expected to rise. According to Frost & Sullivan, the market scale of China's cross-border e-commerce market is expected to be2027RMB reached13.0trillion yuan2022Year-end2027The compound average annual growth rate for the year is26.6%It is expected that the contribution of China's cross-border e-commerce market to China's total exports will also2022year14.3%increased to2027year27.7%.
With the rapid development of global trade, more and more Chinese cross-border merchants and enterprises are entering the cross-border e-commerce market, leading to an increasing demand for efficient and low-cost digital payment methods. Cross-border digital payment solution providers can offer secure, efficient, and low-cost payment products and services to address the pain points of customers during cross-border transactions. With their rich industry experience and technical capabilities, cross-border digital payment solution providers can also provide further digital transformation services for customers, covering more activities of cross-border business operations such as procurement, production, operational management, and marketing, to solve various difficulties in the development process of merchants' and enterprises' businesses.
According to Frost & Sullivan's data, the market for cross-border digital payment services in ChinaTPVfrom2018Renminbi in [year]1.8trillion yuan increased to2022Renminbi in [year]4.6trillion yuan2018Year-end2022The compound average annual growth rate for the year is26.4%estimated2027RMB will reach14.1trillion yuan2022Year-end2027The average annual growth rate for the year25.2%.
With the continuous expansion of cross-border merchant and enterprise businesses, their demand for marketing, customer acquisition, data analysis, tax management, and financial management services continues to grow. The revenue from cross-border value-added services of Chinese cross-border digital payment solution providers has been2018Renminbi in [year]16RMB billion increased2022Renminbi in [year]59yuan2018Year-end2022The compound average annual growth rate for the year is38.6%, and is expected to be launched2027RMB reached235yuan2022Year-end2027The compound average annual growth rate for the year is31.8%.
China Cross-border Digital Payment Solution market of
Market Drivers and Future Trends
driving factors
· Growth in global trade
As the global manufacturing center and the world's largest exporter, China is expected to continue playing a key role as a major supplier of global goods. Driven by various favorable factors such as the development of the digital economy, multilateral cooperation, and policy support, China's total exports are expected to2027The annual increase amounts to RMB46.9trillion yuan2022Year-end2027The compound average annual growth rate for the year is10.9%In addition, with the continuous improvement of domestic personal income, China will not only continue to play a significant role in supply but also gradually become a major demand side in the global trade market, especially in business services, including overseas education, tourism, and entertainment services. The growing cross-border trade indicates a huge potential market for digital payment solution providers to develop upon.
· The development of digital infrastructure and the progress of digital technology
The development of digital infrastructure (including the internet and mobile internet) has laid a solid foundation for the growth of global digital commerce. Chinese merchants and enterprises can conduct global sales through global markets or their own e-commerce platforms. In addition,AIDigital technologies such as cloud services and big data have also made significant progress in recent years. These advancements enable merchants and enterprises to conveniently obtain digital services and digitize their operations in a cost-effective manner. For example, by adoptingAIAnd big data technology, leveragingOCR technologyDigital tools such as dialogue robots and knowledge graphs canKYCThe time for compliance processes has been significantly reduced from several days to a few hours.
· Digital Transformation of Traditional Offline Trade
Traditional offline trade is embracing digitization and online operations, which will accelerate the digital penetration of cross-border payments among enterprises. As a result, the demand for cross-border payment solutions among suppliers, manufacturers, wholesalers, and retailers will increase significantly. Cross-border digital payment solution providers are actively prioritizing and developing solutions to meet the growing digital transformation needs of the offline trade market.
Future trends
· The demand for comprehensive solutions is on the rise
As the market expands and competition intensifies, more and more cross-border digital payment solution providers will address customer pain points and enhance customer loyalty by offering comprehensive value-added services. For example, they assist in establishing digital account systems and provide integrated account and e-wallet services. This customer-centric approach enables cross-border digital payment solution providers to gain a competitive advantage by growing with their customers.
·Overseas expansion is the next development direction.
With the rapid development of cross-border e-commerce in emerging markets such as Southeast Asia and the Middle East, domestic merchants and enterprises are actively expanding overseas markets. In the future, more and more cross-border digital payment solution providers will seek overseas payment licenses to support their customers' overseas business development, improve payment convenience in emerging markets to expand their customer base, and establish strong global payment brands.
Overview of the Digital Payment Solutions Market in China
Domestic digital payment solutions refer to digital payment services and value-added services provided for merchants and enterprises to support their domestic transactions and operations.
According to Frost & Sullivan's data, the digital payment service market in ChinaTPVfrom2018Renminbi in [year]97.8trillion yuan increase to2022Renminbi in [year]176.6trillion yuan2018Year-end2022The compound average annual growth rate for the year is15.9%, is expected to be launched in2027RMB will reach339.5trillion yuan2022Year-end2027The compound average annual growth rate for the year is14.0%.
The digital transformation of enterprises has brought opportunities to digital payment solution providers. With the development of industrial Internet, the integration of digital technology with the real economy has become an industry consensus. The urgent need for traditional enterprises to transform and upgrade their operations, supply chains, and distribution channels through digitization creates huge development space for digital payment solution providers. Since digital payment solution providers can develop solutions for specific industries and establish digital payment and fund management infrastructure for enterprises, they are becoming an essential choice for more and more businesses.
The revenue from domestic value-added services of domestic digital payment solution providers in China was2018Renminbi of the year131RMB billion increased2022Renminbi in [year]280yuan,2018Year-end2022The compound average annual growth rate for the year is20.9%, and is expected to be launched2027RMB reached648yuan,2022Year-end2027The compound average annual growth rate for the year is18.3%.
Competitive landscape of the digital payment solution market in China
According to Frost & Sullivan's data, there are two types of digital payment solution providers in China: independent and non-independent providers. Independent digital payment solution providers refer to those that do not belong to or are not controlled by financial institutions and do not rely heavily on contributions from related parties (such as large e-commerce platforms).
2022China's digital payment service market inTPVFor Renminbi181.2trillion yuan, among which the top ten digital payment solution providers accounted for the total market share of87.4%press2022yearTPVJieliang Digital is China's seventh-largest digital payment solution provider, with a market share of0.6%.
Source: Frost & Sullivan report
2022In 2021, the independent digital payment solution provider contributed to the digital payment service market withTPVFor Renminbi12.7trillion yuan, accounting for China's overall digital payment service marketTVPapproximate7.0%press2022yearTPVcalculate Recurring numbers It is the largest independent digital payment solution provider in China, with a market share of9.1%.
Source: Frost & Sullivan report
Overview of China's Bank Card Clearing Market
According to the credit limit and the different services provided to customers, credit cards in China are divided into two categories: high-end cards and ordinary cards.
A high-end card refers to a card with a credit limit of RMB50,000A credit card with a balance of RMB 10 or above. An ordinary card refers to a card with a credit limit of less than RMB 10,000.50,000Yuan Credit Card. Ordinary cards have lower credit limits and are typically used for daily consumption and payments. High-end cards not only offer higher credit limits but also provide cardholders with various benefits and personalized services. Most cardholders of high-end cards have a higher income level and substantial assets and investments.
In recent years, the market scale of credit card transactions in China has shown a steady growth trend. According to data from Frost & Sullivan, the transaction volume of credit cards in China has been2018Renminbi in [year]38.3trillion yuan increased to2022Renminbi in [year]41.1trillion yuan2018Year-end2022The compound average annual growth rate for the year is1.8%estimated2027RMB will reach56.5trillion yuan2022Year-end2027The compound average annual growth rate for the year is6.6%.
Source: Frost & Sullivan report
With the increase in the number of wealthy people in China, the transaction volume of high-end credit cards is also on the rise. According to Frost & Sullivan the data, the transaction volume of high-end cards in China has risen from2018Renminbi in [year]5.7trillion yuan increase2022Renminbi in [year]7.0trillion yuan2018Year-end2022The compound average annual growth rate for the year is5.3%The market share of high-end cards has decreased from2018year15.0%increased to2022year17.0%reach2027In [year], the transaction volume of high-end cards is expected to further reach RMB11.0trillion yuan2022Year-end2027The compound average annual growth rate for the year is9.5%, occupy2027Total annual credit card transaction volume19.5%High-end card clearing and settlement are important components of connected business operations. With the expansion of the potential market scale for high-end cards, connected high-end card-related businesses are expected to achieve synchronous growth.
As the demand for credit card usage among China's affluent population continues to grow both domestically and internationally, the transaction amounts supported by card organizations for high-end cards are expected to continue increasing. While driving further growth in China's high-end card transactions, this will also contribute to the international development of China's bank card clearing market.
