digital china holdings limited (00861.hk)
TRANSCRIPT
FY2020 Annual Results
March, 2021
Digital China Holdings Limited (00861.HK)
DisclaimerThis presentation may contain certain projection and forward looking statements that involve risks, uncertainties andassumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of DigitalChina Holdings may differ materially from those expressed or implied by such forward looking statements andassumptions. All statements other than statements of historical fact are statements that could be deemed forwardlooking statement, including but not limited to any projections of revenue, margins, expenses, charges, earnings orother financial items; any statements of the plans, strategies, and objectives of management for future operations,including execution of any restructuring plans; any statements concerning the expected development, performanceor market share relating to products or services; any statements of expectation or belief; and any statements ofassumptions underlying any of the foregoing. Risks, uncertainties and assumptions include macroeconomic andgeopolitical trends and events; execution and performance of contracts by suppliers, customers and partners;employee management issues; the challenge of managing asset levels, including inventory; the difficulty of aligningexpense levels with revenue changes; expectations and assumptions relating to the execution and timing of workforcerestructuring programs. In addition, statistical and other information relating to the PRC and the technology industrycontained in this presentation have been compiled from various publicly available official or unofficial sourcesgenerally believed to be reliable. However, the quality of such source materials cannot be guaranteed. Moreover,statistics derived from multiple sources may not be prepared on a comparable basis.
1/23
150
302
613
FY2018 FY2019 FY2020
in MillionsHK$
15,254
17,727
19,820
2,909 3,155 3,359
FY2018 FY2019 FY2020Revenue Gross Profit
Revenue & Gross Profit –FY2018 to FY2020
+11.8% +103.1%
FY2020 Revenue Performance as Group
in MillionsHK$
Net profit Attribute to Equity Holders of the Parent
2/23
Revenue(HK$ billion)
Net profit(1)
(HK$ billion)
Operating Cash Flow
(HK$ billion)
Big Data Revenue(HK$ billion)
Dividend per Share(2)
(cents HK$)Registered
Intellectual Patents
19.82 0.61 0.23
1.13 13.6 cents HK$ 1,846
+11.8% +103.1% +124.5%
+14.5% +112.5% +16.1%
FY2020 – Performance Indicators
(1) Attributable to equity holders of the parent(2) Includes interim dividend of HK$3.6 cents 3/23
Content
1. FY20 Business Overview
FY20 Results Highlights2.
3. FY21 Business Outlook
4/23
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FY20 Business Overview
Vision & Big Data StrategyCity Big Data Usage Model | Industry Big Data Model
Fintech Model | Incubation Model
5/23
Big Data
Mission: Empower the digital
development of cities and
industries by leveraging our
independent innovation
capabilities and providing our
customers with a full range of big
data software, solutions and
services
Vision: Digitalizing China
Technologically Advanced & Leading Big Data Group
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10011
Industry Big Data Model
Fintech Model
City Big Data Usage Model
Incubation Model
6/23
Smart City – Service Cloud Platform
Telecommunications(Internet、4G、5G)
Applications for Cities
Bureau of Agriculture
Bureau of Information
Bureau of Commerce
Social Security
Tax IoT
Applications for Government
Enterprises Internet Social Media
Application
Digital Twin Supply Chain Brain
Middle Layer Base Layer
Open Data SharingData Intelligence
Data SecurityData ManagementData Infrastructure
City Model Display EngineData Space AnalysisFull City Data ModelData Spatialization
Data Model Conversion
Hub
Sysnet
YanCloudDaaS-PremiumYanCloudDaaS-BasicYanCloudDaaS-Lite
Ecosystem co-operation
Platform & Core Technology
Usage Models
Partners
City Brain
“Yan Cloud DaaS” allows data to traverse seamlessly across different databases and systems in
cities and ecosystems. It allows us to play a “City CTO” role to progress on digitalization for cities
to connect cities, enterprises and its civilians, and also allows set up of data centers without barriers
to build a solid digital infrastructure for our future digital twin and city brain applications.
City Big Data Usage Model Strategy
7/23
Jilin
Tangshan
Fujian
Xuzhou\Suzhou
Spear-headed new alliance amongst enterprises and the Jilingovernment with the aim to drive further innovation of new industryecosystems and develop new software solutions; the alliance expectsto utilize synergies amongst themselves and create a billion-dollardata business.
Engaged as main operator for project “Smart Tangshan” and actedas “City CTO”; create support for the infrastructure of smart city inorder to improve the city management and social welfare functionand promote industrial innovation.
>10 years of experience accumulation
>10 industry standards set
>10 engagement with central government
>200 cities covered
>500 IPs
>2,000 executed projects
>10,000 isolated databases managed
… …
Build up multiple intelligent anti-epidemic platforms through “YanCloud DaaS”, and support Beijing, Wuhan, Tianjin, Changchun,Tangshan, Weihai, Xuzhou, Longyan, Sanming and more throughoutthe battle of COVID-19 pandemic in result of resumption of work andproduction.
Support Wujiang District Suzhou City to set up the big data platformand data security system for data integration, management andservices.
City CTO – success cases
Smart application & Data analysis
Proven“City CTO”- Deep Engagement Approach
8/23
R&D/Design
PDM
SCM
Developer Platform
Budgeting
ERP
MRP
ASP
Device Access Layer
Procurement
Asset Mgt
Labor Mgt
Supplier Mgt
Production Process MES
Integrated Automation
Sales
Portal
Customer Complaints
CRM
Robot Control System
Warehouse/Fulfilment
OWTB
Capacity Mgt
Financial Mgt
WES
Machines
Signing
Turnover Mgt
E-signature
DMS
IoT
Full Product Lifecycle
Application Layer
System Layer
Cross-Border
Overseas Warehouse Mgt
Device Layer
Logistics
Warehouse
Financing
Import/Export
E-commerce
Software for the full product lifecycle - continuously refine our flagship big data and create a technological edge
One Stop Supply Chain Services – increasing share of wallet with existing whilst acquiring new clients
Key:Green:Self-ownedGrey:Third Party
Top 1 FMCG、Food
Top 3 Parent goods、
Cosmetics、Fashion
Top Industry Players
Communications、3C-Electronics
Trending BrandsExisting New
SoftwareUpgrades
Core products OMS、WMS、TMS、BMS、
Asset management、supply chain management
for 3 new systems, “KingKoo Manager”online
migration
One Stop Services across the Product Lifecycle
Ecosystempartner
Smart services based on“KingKoo Data”big data
platform, “Man-Machine”A.I. enabled robotic solutions,
IoT products
9/23
Providing intelligent data services to reduce warehouse costs
Providing intelligent data services to optimize purchasing and selling for e-commerce
Provide data services for various clients upstream and downstream of the industry value chain
Rich data pool through “supply chain brain” usage model
Signed contracts for Sany
Heavy Industry’s Internet
Platform; Shell’s refined
oil digital platform; Kuntai
and XGIMI for full supply
chain management
Operator certified with the “5A” logistics enterprise qualification
Industry Big Data Capabilities
Algo-rithims
Data Applications
Big Data Product Suite
Data Collection Across the Value Chain based on Real Operational Scenarios
10/23
Revenue/Capita HK$2m 54%
Profit/Capita HK$63k 153%
UPH Metric 8.8%
Output per storage area 5.2%
New record for “Double-11”:
1 warehouse over 4.5m orders;
3 warehouses over 3m orders;
2 warehouses over 2m orders;
5 warehouses over 1m orders.
Total costs 21%
Warehouse cost 14%
Delivery costs 38%
Labor cost 7%
Packaging costs 3%
Operating Cost
Technology empowerment continues to improve efficiencies and open new development prospects
Technology-driven Supply Chain Efficiencies
Production efficiency
11/23
Fintech Model has been deeply engaged in cross-industry integration, covering more than 1000 banks in total
Won numerous accolades including IDC's 2020 Global Financial Technology Awards coming 39th in the FinTech Rankings Top 100 List
and ranked 1st among China's listed companies.
The distributed application platform and core banking system ranked 1st in market share for 8 consecutive years
场景金融
Innovation is a key part of overall fintech strategy. In 2020, we won bids for innovative infrastructure design or innovative software projects of a large state-owned bank, a policy bank, various joint-stock banks, and a number of top city commercial banks.
Technology-driven fintech products and solutions are growing steadily
Self-innovatedDistributed application platform and core business system won bids for 15 customers; a series of new products such as data governance and control, intelligent service platforms, and modeling platforms have been released to help financial institutions improve their data application capabilities
Built "bank-agricultural" data platform for dozens of banks; signed contracts covering 21 provinces and cities, and 300 districts and counties; “bank+tax” platform has connected with >100 banks and financial institutions across 8 provinces under the Central Government; first to release blockchain platform “Sm@rtGAS” and digital wallet solutions
Fintech Model
Financial Usage Model
Financial Innovation
“Data+Technology+Usage”: innovative way to build a fintech ecosystem
Capitalizing early on fintech applications and usage models
12/23
Investing and incubating companies around the core strategy of DC Holdings with an aim to refine our core products, services and capabilities
2. Re-deployment of proceeds back into our core business
1. Expansion in our core segments
- Industrial IoT - - Smart Medical - - Technology Real Estate -
iSESOL not only complements the big data business of DC Holdings, but also integrates with the supply chain solutions, enriches upstream and downstream of the supply chain, expands the scope of big data services and improves overall service offering. And also was selected by the city government as an illustration case for public.
During the reporting period, thesmart medical in the incubationmodel had generated a investmentincome before tax of HK$338M.DC Holdings retained substantialshares in the sectors after thedisposal.
We will build a smartproperty big data integratedmanagement platform toincubate smart propertymanagement businesses. Atthe same time, we will alsoutilize the smart propertymanagement sector as anentry point for our “DigitalTwin” products
Incubation Model
13/23
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FY2020 Results Overview
Performance Summary | Segment Performance
14/23
75
130
FY2019 FY2020
327
477
FY2019 FY2020
11
29
FY2019 FY2020
Growth was mainly derived from the deep engagement approach applied to various cities and scenarios, together with our
proprietary technology“Yan Cloud DaaS”as the core component behind such applications
+73.4%+46.0%
in MillionsHK$
Gross ProfitRevenue Segment Results
+149.4%
City Big Data Usage Model (Sm@rt City Business)
15/23
5,382
7,411
FY2019 FY2020
690
875
FY2019 FY2020
106
200
FY2019 FY2020
Despite COVID-19 impact, growth was mainly driven by 1) increased market share and 2) improvement on operational
efficiency. We broke an industry record of 4.5 million total single warehouse deliveries during “Double-11”, and have also
expanded our coverage to education, medical and automobile sectors
+26.8% +88.9%
Gross ProfitRevenue Segment Results
Industry Big Data Model (Smart Industry Chain Business)
in MillionsHK$
+37.7%
16/23
Improvements to key technology capabilities of fintech
such as big data, A.I. and blockchain drove profit margins
Fintech Model (DCITS) & Incubation Model (Investing Business)
221
397
FY2019 FY2020
301
615
FY2019 FY2020
Fintech ModelSegment Results
Incubation ModelSegment Results
+104.0% +79.7%
During the reporting period, investment in the healthcare
big data sector generated healthy returns, and the real
estate technology business also developed rapidly
in MillionsHK$
17/23
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FY2021 Business Outlook
Market Potential | Growth Strategy
18/23
Source:1) White paper on Digital Twin Application in 2020, Ministry of Industry and Information Technology;2) Qianzhan Industry Institute ; 3)CCIDWISE; 4) Bloomberg; 5) PWC; 6) Businesswire; 7) Company information
Proprietary technology “Yan Cloud DaaS”
Capacity to integrate ecosystem resources, >30,000
enterprises upstream and downstream of the
industry value chain
Over 10 years experience in smart city, 20 years in
smart industry chain and more than 30 years of
industry accumulation in industry information
technology
Market Size
Big data industry: HK$2 trillion in 2022
Smart City: HK$20 trillion in 2025
Smart Industry Chain: HK$300 billion in 2025
Growth Potential
Growth rate of big data industry, smart city and smart
industry chain are 27%, 21% and 11% respectively.
DC Holdings’ relevant big data, smart city and smart
industry chain growth saw 125%, 46% and 38%, far
outpacing that of the market
Core strengths
Development Opportunities
Technology leadership means corporate leadership
in the digital era
The first year of China’s 14th Five-Year Plan
represents benefits from the new national
infrastructure policies. Opportunities in big data,
smart city, smart industry chain and other industrial
opportunities are unprecedented
Growth Momentum under Big Data Strategy
19/23
Investing in a new business ecosystem
Build a comprehensive management platformfor smart property big data and nurture smartproperty management business models.Using intelligent property management usagemodel as the digital twin product entry point,expand to the entire city ecosystem and developthe city’s digital twin.
Help cities build city data hubsand data centers, open up citydigital ecosystem networks, andrapidly promote the constructionof new smart cities with “citybrain” and digital twin products asour core
City Brain & Digital Twin
Drive rapid growth in proprietary andinnovative applications and cloud-based digitalinfrastructure businesses.Promote “bank-tax” and direct bank-agriculture connectivity, with big datacapabilities.Create innovative applications of blockchain indigital wallets, supply chain finance and otherusage models.
Scenarios Finance & Innovative Applications of IT
Supply chain software products & supply chain one-stop service
Establishing the largest warehousingservice ecosystem network in China.Creating a supply chain data center;tapping into FMCG, consumer andbeauty sectors.Laying out a global e-commerceplatform and actively promoting cross-border trade.
FY2021 Growth Strategies
20/23
{HK$ 000) 2020 2019 Change in %
Fintech Model (DCITS) 11,456,629 11,505,579 -0.43%
Industry Big Data Model (Smart Industry Chain Business) 7,411,268 5,382,311 37.7%
City Big Data Usage Model (Sm@rt City Business) 477,096 326,693 46.04%
Other 702,995 634,484 10.80%
Eliminations (228,461) (121,638) N/A
Total revenue 19,819,527 17,727,429 11.80%
Fintech Model (DCITS) 2,059,221 2,101,791 -2.03%
Industry Big Data Model (Smart Industry Chain Business) 875,016 689,845 26.84%
City Big Data Usage Model (Sm@rt City Business) 129,509 74,689 73.40%
Other 295,090 288,458 2.30%
Total gross profit 3,358,836 3,154,783 6.47%
Gross margin 16.95% 17.80% -0.85%
Profit for the year attributable to equity holders of the parent 612,970 301,844 103.08%
Appendix: FY2020 Financial Summary
21/23
Appendix: Major events for 2020IT Logistics, a subsidiary of Digital China Holdings, launched
two new strategic products Supply Chain + Big Data + AIoT -
Logistics Tracker and Electronic Signing Cloud Platform
under Jieyun Express Signing, and launched the eco-
partnership program was launched.
Digital China Holdings announcedthe launch of the Eco-Alliance tobattle against the COVID-19pandemic, joining with eco-partners to send various materialsto the frontline.
DCITS, a subsidiary of Digital China Holdings, developed a digital wallet system and participated in the testing of DCEP of major national banks.
Digital China Holdings establishedthe Jilin Province IT ApplicationInnovation Industry Alliance. Digital China Holdings won the tender for the
first phase of the Smart Tangshan construction
and operation project, with a project value of
RMB 83.4 million.
DCITS, a subsidiary of Digital China Holdings, entered the Beijing Economic Development Zone.
Digital China Holdings 19th
anniversary of listing
IT Logistics, signed a Memorandum of Understanding on StrategicCooperation with LINE CLEAR, a Malaysian logistics company, tostrengthen its ecosystem capabilities and further improve itsinternational business footprint.
A subsidiary of Digital
China Holdings signed an
Agreement on Strategic
Cooperation with the Yanji
Municipal Government to
cooperate in the digital
industrialization of Yanji
and the construction of an
digital ecosystem, helping
Yanji to build a digital
economy industrial
plateau.
Digital China Holdings won thetender for Jilin Province's foreigntrade comprehensive serviceplatform construction project,developing Jilin's billion-dollarimport and export business.
InternetWare, a subsidiary of DC Holdingsengaged in the smart city business, receivedRMB700 million funding commitment(equivalent of HK$830 million) during its SeriesB funding round, achieving a post-moneyvaluation of RMB6.2 billion
Digital China Holdings and Tianjin University have setup a joint laboratory to conduct in-depth research onTrusted Computing + Blockchain in smart city,industrial internet and smart supply chain.
TECH Digital China 2020 Technology Conference: Digital China Holdings' big data strategy is upgraded again
IT Logistics, has achieved a record-breaking performance with 4.5 million shipments from a single warehouse in Double-11
01.07 04.07
07.06
07.28
11.25
01.26 01
06.01
09.08 09.15 10 11
04.30
05.08
22/23
2019-2020 Big Data Industry Innovation Top 100 Ranked 1st in the 2020 Digital Infrastructure Top 100
2019-2020 Big Data Outstanding Application Solution Award
2020 Best Service Provider for Big Data Infrastructure
National 5A Level Logistics Enterprise Ranked 4th in 2020 Technology Company Top 100
Ranked 7th in 2020 Innovative Applications of Information Technology Top 500
2020 Excellent Cases of Big Data, Cloud Services, and Block Chain Innovation Applications
2020 New Infrastructure Leading Enterprise 2020 Excellent Case of Digital Anti-Epidemic
Outstanding Listed Company Award Ranked 50th in 2020 China Leading Fintech
2020 Outstanding Enterprise in the Big Data Field of China's Software and Information Service
Industry
2020 Corporate Social Responsibility Model Award 2020 Most Investment Value Award
8th Hong Kong Stocks Best Investment Value Award
2019 Golden Hong Kong Stock-Best New Economy Stock Company Award
Appendix: Industry and Market Recognition in 2020
23/23
Thank You