上市捷报丨沙利文助力汇通达网络股份有限公司成功赴港上市(9878.HK)

Huitongda Network Co., Ltd. (Stock Code: 09878.HK) successfully listed on the Hong Kong Main Board on February 18, 2022. The company serves as a trading and service platform for enterprise customers in China's retail industry, providing high-quality goods and services to China's underserved markets. According to a report by Frost & Sullivan (hereinafter referred to as "Frost & Sullivan"), the retail industry in China, both overall and in the underserved markets, is highly fragmented with a low digital penetration rate. Huitongda ranked first and third in terms of business scale in the underserved market and overall Chinese market in 2020 respectively. Frost & Sullivan provides exclusive industry advisory services for Huitongda's listing on Hong Kong, and hereby warmly congratulate it on its successful listing.

Huitongda Network Co., Ltd. (hereinafter referred to as "Huitongda") was officially listed on February 18, 2022, with a global issuance of 51,606,200 shares at an issue price of HK$43 per share, raising approximately HK$2.1 billion.

During the process of listing in Hong Kong, Frost & Sullivan mainly undertook the following tasks: helping the company accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the company's competitive advantages, assisting the company, 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 sections), helping the company communicate with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the company in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.

Industry Overview of China's Under-Served Retail Market

The underserved markets in China refer to vast areas outside the urban areas of first- and second-tier cities. Compared with the underserved markets, first- and second-tier markets (i.e., urban areas of first- and second-tier cities) have a more developed overall economy, better infrastructure, more hub transportation, and more concentrated commercial resources. However, at the same time, the retail industry in non-underserved markets has also developed more maturely, with limited growth potential. In contrast, the large population base and vast regional coverage are the foundation for the characteristics of China's underserved retail market. Benefiting from the combined promotion of a large population base, rising income levels, and policy incentives, the underserved retail market contributes more to the scale growth of China's overall retail market and is expected to continue maintaining steady growth in the future, demonstrating great development potential.

China Retail Market Scale (divided by underserved and non-underserved markets)

2015 - 2025 (estimated)

Source: Frost & Sullivan report

The scale of China's retail market grew from 12.6 trillion yuan in 2015 to 19.0 trillion yuan in 2020, with an annual compound growth rate of 8.6%; the scale of China's underserved retail market reached 15.1 trillion yuan in 2020, and it is expected that the scale of the underserved retail market will further grow to 20.6 trillion yuan by 2025, achieving a compound annual growth rate of 6.5%. The overall growth rate of the underserved market is faster than that of non-underserved markets and the overall retail market, and it may become the market with the largest population base, area, and potential in China in the future.

Scale of China's Under-Served Retail Market (divided by online and offline segments)

2015 - 2025 (estimated)

Source: Frost & Sullivan report

With the rapid development of information technology in China, online markets in China's underserved retail market have continued to grow at a compound annual growth rate of 30.4% in the past five years, with their market scale growing from 1.2 trillion yuan in 2015 to 4.4 trillion yuan in 2020. It is expected that the scale of China's online underserved retail market will reach 8.1 trillion yuan by 2025, achieving a compound annual growth rate of 13.2%.

The scale of China's offline underserved retail market grew from 8.7 trillion yuan in 2015 to 10.7 trillion yuan in 2020, achieving a compound annual growth rate of 4.2%. It is expected that the scale of China's offline underserved retail market will reach 12.5 trillion yuan by 2025, achieving a compound annual growth rate of 3.2%.

Industry Overview of China's Under-Served Retail Market Trading and Service Platforms

The trading and services in China's under-served retail market mainly target retailers within the market, as well as various levels of channel distributors/sellers/agents within the retail industry chain. Around each link in the retail industry chain, corresponding digital services are provided, excluding raw material supply chain enterprises for processing enterprises. According to different business models, they are mainly divided into trading services and service services. Among them, trading services mainly include enterprise customer trading and service platforms, while service services mainly include SaaS service providers.

Benefiting from the overall growth of China's underserved retail market, the continuous improvement of consumers' demand for consumption quality, and the shift of industry centers towards operational efficiency optimization, the industry's demand for digital transformation and upgrading continues to rise. In addition, the development of China's information technology infrastructure and the emergence of new technologies such as big data, cloud computing, and 5G have laid a solid foundation for the development and continuous iteration of China's underserved retail market trading and service industries. At the same time, the government's continuous efforts to promote the digitization of the retail industry chain in the underserved market and improve Internet and logistics facilities have further promoted the development of the entire industry.

Industry Scale of China's Under-Served Retail Market Trading and Service Industries

(divided by business model and trading scale)

2015 - 2025 (estimated)

Source: Frost & Sullivan report

Benefiting from the growth of the underserved retail market scale and the strong demand of the industry for operational efficiency optimization, the demand for digital transformation in China's underserved retail market continues to rise. According to Frost & Sullivan research, the overall scale of China's underserved retail market trading and service industries grew from 2.9 trillion yuan in 2015 to 4.5 trillion yuan in 2020, with an annual compound growth rate of 9%; it is expected that the scale will reach 5.8 trillion yuan by 2025; the scale of SaaS and other value-added services grew from 18.5 billion yuan in 2015 to 1035 billion yuan in 2020, with a compound annual growth rate of 41.1%.

Frost & Sullivan has rich research experience in the TMT industry, assisting well-known enterprises to successfully list on the capital market. Successful listing cases include: iFlytek (2121.HK), SenseTime (0020.HK), Qianhuai Data (NASDAQ: CD), Mingyuan Cloud (0909.HK), WeCom Group (2013.HK), Wankala Union (1762.HK), AsiaInfo Technology (1675.HK), FaceID (8342.HK), Aurora Mobile (NASDAQ: JG), Kingdom Holdings (8606.HK), WeBank (2003.HK), Tenpay (1806.HK), Atlinks (8043.HK), Zion.com (8287.HK), ISP Global (8487.HK), Vobile (3738.HK), iFlytek (NASDAQ: ICLK), Shengye Capital (6069.HK), Anlink International (8410.HK), Ancom Systems (8353.HK), Junlink International (8062.HK), Future Data (8229.HK), and Asia Backup (8290.HK).

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