Boview Intelligence Technology Co., Ltd. (referred to as 'Boview Intelligence') successfully went public on July 15, 2022, at a share price of HK$1.08 per share, raising approximately HK$94.1 million.
During the Hong Kong listing process, 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, sponsor, and other professional intermediary institutions in completing the writing of relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), assisting the issuer in communicating with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on industry-related issues from the Hong Kong Stock Exchange, etc.
Overview of IT Solutions Market in Macau and the Greater Bay Area
IT solutions involve the design, supply, integration, operation, and maintenance of IT systems. IT solutions can be mainly divided into two segments: (i) enterprise IT solutions and (ii) distribution of hardware and software. Enterprise IT solutions can be further categorized as (i) professional IT services, (ii) hosting services, and (iii) IT maintenance and consulting services.
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Professional IT services
IT infrastructure and systems cover the design, supply, construction, integration, and optimization of backbone networks and IT systems. This includes the provision and integration of hardware and software with different platforms, storage systems, security systems, software, network equipment, and backup solutions.
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Managed Service
Managed services refer to IT operational managed services, including cloud services, monitoring of customer's network security environment, and system network connectivity. According to the engagement with related managed services, IT solution providers will resolve any incidents or issues arising from threats to network security environments or IT system network connectivity.
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IT Maintenance and Consulting Services
IT maintenance and consulting services generally refer to providing round-the-clock hotlines and service desks for hardware, software, systems, and applications to keep IT systems operational, identify, and resolve errors and defects.
The revenue of the information industry in the Greater Bay Area has witnessed strong growth, increasing from RMB 546.5 billion in 2016 to RMB 1,257.6 billion in 2021, with a compound annual growth rate of 18.1%. With the support of continuous growth in demand for IT solutions and expected investment over the next five years, the revenue of the information industry in the Greater Bay Area is expected to increase at a compound annual rate of about 15.4%, from RMB 1,446.2 billion in 2022 to RMB 2,562.3 billion in 2026.
Growth of Information Industry Earnings in the Greater Bay Area, 2016-2026E
Source: Frost & Sullivan report
IT solutions involve the design, supply, integration, operation, and maintenance of IT systems. Driven by the increasing application of information technology and digitization across all industries in Macau, the IT solutions market increased from 16.366 million Macau dollars in 2016 to 19.508 million Macau dollars in 2019. The decline in 2020 was due to the economic slowdown caused by the outbreak of the COVID-19 pandemic. With increased government spending on information and communication technology, the public sector increased from 5.691 million Macau dollars in 2016 to 6.135 million Macau dollars in 2019. The private sector also grew rapidly from 10.675 million Macau dollars in 2016 to 13.373 million Macau dollars in 2019.
In 2020, the IT solutions market in Macau was negatively impacted by the outbreak of COVID-19, with several projects suspended or delayed. However, as Macau continues to accelerate business innovation and digital transformation, the market is expected to recover thereafter. It is projected that the market size of the IT solutions market will grow from MOP 19.311 billion in 2022 at a compound annual growth rate of about 8.3% to MOP 26.532 billion by 2026. It is predicted that the public and private sectors will grow at a compound annual growth rate of about 7.9% and 8.5%, respectively, from 2022 to 2026.
Market Size of IT Solutions (Macau)
By sector, 2016 - 2026E
Source: Frost & Sullivan report
In preparing for the growth of the information industry market from 2022 to 2026 and the recovery of the IT solutions market after 2020, in addition to the foreseeable impact of the COVID-19 outbreak, Frost & Sullivan believes that Macau's IT solutions industry and gaming and hospitality industries are still optimistic in the long run for the following reasons:
1) The Macau IT solution project currently under preparation is unlikely to be affected in the coming years, as the demand for IT system upgrades, replacements, and maintenance remains stable.
2) The Macau IT solutions industry will benefit from the COVID-19 pandemic as people spend more time online. Due to border controls and other preventive measures, the demand for remote working tools and online teaching platforms (especially video conferencing software) has increased significantly. Online demand for streaming services and mobile gaming platforms has also reached new highs. The increasing prevalence of online applications will accelerate enterprise digitization, creating more growth opportunities for IT solutions service providers.
3) Although some construction sites in Macau were suspended for about two weeks in February 2020 in accordance with the initial policy of the Macau government to combat the COVID-19 outbreak, and despite the current poor economic conditions, there have been no major delays or postponements in the project schedules of several large-scale construction projects (such as the expansion of the Golden Bauhinia Centre and Londoners Macau, as well as the third and fourth phases of the Galaxy Macau expansion). For example, the only self-operated entertainment venue in Coloane, the Aotea Grand Theatre, with an investment of about HK$36 billion, opened in 2021.
In the long run, as Macau gradually relaxes border controls and resumes commercial activities, the impact of the COVID-19 pandemic has gradually subsided, and it is expected that the impact of the COVID-19 pandemic on Macau's gaming and hospitality industries will be limited. According to the Census and Statistics Department, the total gaming revenue in Macau increased from MOP 33.17 million in the second quarter of 2020 to MOP 50.77 million in the third quarter of 2020. The continuous growth in total gaming revenue was due to an increase in the number of visitors during the same period, from MOP 218.36 million in the fourth quarter of 2020 to MOP 253.81 million in the second quarter of 2021. Although total gaming revenue decreased to MOP 187.65 million in the third quarter of 2021, it recovered to MOP 190.76 million in the fourth quarter of 2021 due to the gradual relaxation of several travel restrictions, which led to a continuous increase in the number of inbound visitors and had a positive impact on total gaming revenue and other visitor spending.
The COVID-19 pandemic in Macau has gradually subsided, and border controls have been relaxed accordingly. China is resuming issuing tourist visas to Macau visitors, while Zhuhai has started issuing tourist visas to Chinese residents since August 12, 2020, including both individual and group travel to Macau. The number of visitors increased from 49,740 in the second quarter of 2020 to 750,204 in the third quarter of 2020, reaching 1,738,428 in the first quarter of 2021. With the relaxation of border controls, the number of visitors to Macau increased from 1,738,428 in the first quarter of 2021 to 1,827,699 in the third quarter of 2021, a 143.6% increase compared to the same period last year. The average occupancy rate of rooms in Macau rose from 44.9% in the first quarter of 2021 to 50.5% in the third quarter of 2021, an increase of 50.5% compared to the same period last year. The rise in the average occupancy rate of visitors and rooms indicates the recovery of the Macau tourism industry, with the recovery of the gaming and hospitality industries driving growth in the IT solutions sector in Macau.
5) Macau's gambling license renewal is imminent, and the Macau Legislative Council has published a draft amendment to the Gaming Law to clarify several major issues. These include confirming that at the next gambling license renewal, the maximum number of licenses issued will be six, with a term not exceeding 10 years, and there is an opportunity to extend it by up to three years under exceptional circumstances. The draft amendment also includes further details such as prohibiting gaming intermediaries from contracting VIP lounges operated by them, and not allowing gaming intermediaries to share income with licensed companies. Since the upper limit on the number of licenses issued remains unchanged, it is expected that the demand for IT solutions in Macau's gambling and hospitality industries will continue in the foreseeable future due to (i) the steady demand for IT infrastructure, which is directly related to the facilities of the gambling and hospitality industries rather than gambling revenue; (ii) the economic diversification mentioned in the draft will further promote the development of other hospitality industries, thereby driving the overall demand for IT solutions.
Market-driven factors
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Integrating intelligent technology into the gaming and hospitality industries
Market participants in the gaming and hospitality industries in Macau are constantly seeking new service features and value-added services due to intensified competition and changing customer needs. In particular, casinos use advanced surveillance technology and video analysis to monitor their entertainment venues, including more than a hundred gaming tables and thousands of slot machines. Surveillance cameras, facial recognition technology, digitally operated poker chips, and blackjack tables track customer demographic statistics, and algorithms are used to process customers' behavior at the tables to determine their risk levels. On the other hand, hotels are using smart home devices (such as audio-visual systems, custom-designed mobile applications) to update guest facilities. To implement these functions, IT solutions are required, such as IT infrastructure integration and implementation. The use of smart technology will lead to upgrades in IT infrastructure, other IT systems, and IT services. Therefore, integrating smart technology into the gaming and hospitality industries in Macau is expected to drive demand for IT solutions.
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Outsourced IT Solutions
To improve operational efficiency, institutions tend to adopt cloud technology to store data that all employees can access. The deployment of IoT services generates an increasing amount of data daily, leading to demand for data storage and cloud-based data storage. Cloud service solution providers offer institutions professional data protection and network security as well as other value-added services. In addition, the reduction in physical size and performance improvement of servers allow more servers to be placed within the same space. Therefore, compared to institutions that operate their own cloud servers, third-party service providers can enjoy economies of scale and provide higher-performance cloud services at lower costs. As a result, outsourcing IT solution services has become the mainstream in the industry, supporting the growth of IT solutions.
Frost & Sullivan has extensive research experience in the digital new media industry, assisting well-known enterprises in successfully listing on capital markets. Successful listings include: De Ying Holdings (2250.HK), Qingci Games (6633.HK), Caoxiao Xiong Entertainment (2125.HK), Kuake Music (NYSE. KUKE), Changxin Media (SGX XJB), Glorious Tomorrow (1351.HK), Yala Technology (NAYSE YALA), and Lexiang Interactive (6988.HK).
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