On August 29, 2024, Linklogis Inc. (09959.HK, “Linklogis”) released its 2024 interim results. In the first half of 2024, the total transaction volume processed by the technology solutions of Linklogis reached RMB165.9 billion, a year-over-year increase of 17%. The total revenue and income from principal activities amounted to RMB410 million, up 5.6% from the previous year, with a gross profit margin of 70.9%, showing significant improvement compared to the same period last year. By the end of June, Linklogis has empowered over 290,000 SMEs to access efficient and convenient digital inclusive financial services.
Linklogis maintains a stable financial position with cash reserves of RMB5.1 billion. Linklogis continues to enhance shareholder returns through cash dividends and share repurchases. So far this year, Linklogis has distributed HK$215 million in cash dividends and repurchased shares totaling HK$278 million.
Additionally, Linklogis has signed a letter of intent for acquisition with Shenzhen Bytter Technology Co., Ltd. (“Bytter”)’s shareholder. Upon completion of the acquisition, Linklogis will become the controlling shareholder of Bytter. By integrating the core strengths of both parties in treasury management and supply chain finance technology, the two sides will jointly help customers build world-class financial management platforms and facilitate the construction of intelligent treasury management systems for state-owned enterprises and large-and-medium-sized private enterprise customers.
Market Share Remains Top with Continued Growth in Transaction Volume and Customer Numbers
In the first half of 2024, the total transaction volume of supply chain assets processed by Linklogis’ technology solutions reached RMB156 billion, representing a year-over-year growth of 15%, mainly benefiting from a comprehensive focus and targeted investment in strategically prioritized businesses. The total volume of supply chain assets processed by Anchor Cloud reached RMB123.7 billion, a year-over-year increase of 40%. The total volume of supply chain assets processed by FI Cloud were RMB32.3 billion. The Multi-tier Transfer Cloud within the Anchor Cloud continued to show robust growth, processing a total volume of supply chain assets of RMB86.3 billion, a year-over-year increase of 57%, and maintaining a high customer retention rate of 99%.
In the first half of the year, Linklogis continued to acquire a broad and diverse range of business partners. The total number of anchor enterprises and financial institution customers for its supply chain finance technology solutions increased by 152, up 16%, to 856 compared with 2023. Linklogis’ anchor enterprise customers cover all 31 industries listed in the SWS Industry Classification, among which 13 industries contributed more than RMB2 billion in supply chain asset transactions in the first half of 2024. According to China Insights Consultancy, Linklogis held 20.9% market share, ranking No.1 in the third-party supply chain finance technology solutions providers in China for four consecutive years.
On the anchor enterprise side, Linklogis continued to promote deep-diving in the regions and industries, further expanding its coverage of state-owned enterprise customers, with 78 new state-owned enterprise customers added in the first half of the year. On the financial institution side, Linklogis continued to expand its cooperation with financial institutions and accelerate the coverage of bank branches. In the first half of 2024, Linklogis served 336 financial institutions, including banks, trust companies, insurance asset management companies, securities companies, and asset management companies.
In terms of product and scenario innovation, centering on the expansion of product categories and innovative scenarios in the upstream and downstream of supply chains, Linklogis has continuously explored the innovative practice of the “de-anchored” business model for supply chain finance. Linklogis has offered and landed comprehensive supply chain finance technology solutions including order financing and distributor financing, and assisted 17 state-owned enterprises and leading private enterprises in building supply chain finance technology platforms.
As for the overseas market, the volume of supply chain assets processed by Linklogis’ Cross-border Cloud amounted to RMB9.3 billion, marking a 63% year-over-year increase. Linklogis has been actively exploring development opportunities for various innovative scenarios to serve financial institutions outside China mainland, and continues to explore innovative business models in cross-border and international supply chain finance, assisting multiple Chinese enterprises in expanding their global supply chain industry-finance systems.
Strategic Acquisition of Bytter to Advance Intelligent Treasury System Construction
To further enrich its product portfolio and establish a comprehensive digital service capability for the corporate industry-finance system, Linklogis has signed a letter of intent for acquisition with Bytter’s shareholder on August 29. Upon completion of the acquisition, Linklogis will become the controlling shareholder of Bytter.
Bytter is a leading provider of treasury management solutions in China, possessing the technical implementation capabilities for all 11 treasury function modules required by the State-owned Assets Supervision and Administration Commission of the State Council. With over 20 years of industry experience, it has a comprehensive treasury management product system, a rich anchor enterprise and financial institution customer base, a professional implementation and delivery team, as well as a favorable reputation in the industry. This acquisition aims to maximize synergies of the two sides, enhance operational efficiency through resources integration, and improve Linklogis’ overall product capabilities and core competitiveness.
Linklogis will further enrich its product portfolio based on the strategic direction of building modern intelligent industry-finance treasury products, extending from anchor enterprises upstream and downstream supply chain financing solutions to group treasury management solutions, providing complete services from treasury management to supply chain finance system construction for state-owned enterprises and large-and-middle-sized private enterprise customers to upgrade their intelligent treasury management platforms, and helping customers accelerate the construction of world-class financial management systems.
Driving Industry Transformation through Innovation and Accelerating Full-Stack AI LLM Development
As a leader and pioneer in the supply chain finance technology industry, Linklogis continues to invest heavily in cutting-edge technologies such as AI, aiming to achieve a deep integration of “technology-industry-finance”. By driving industry transformation through technological innovation, Linklogis creates tangible and effective value for all parties in the chain-affiliated ecosystem of industry chains.
In the first half of 2024, Linklogis’ R&D expenses reached RMB178 million. As of June 30, 2024, the company’s R&D employees numbered 536, accounting for 59% of total employees. Linklogis has successfully developed “AI Agent”, the first AI-based platform of the industry for supply chain document verification, which significantly enhanced the automation and accuracy of document processing through the application of deep learning and natural language processing. The platform has been successfully delivered and applied in many financial institutions and won the “Best AI Technology” award from The Asian Banker in 2024.
Furthermore, Linklogis accelerated the full-stack technological construction of the vertical domain large language model (“LLM”), LDP-GPT, establishing a distributed training and inference framework covering LLM pre-training, fine-tuning to deployment. In addition, the company explored the application of technologies such as RAG-based vertical knowledge base Q&A and intelligent writing in multiple scenarios including operations, risk control, and customer acquisition of financial institutions, thereby promoting the implementation of more LLM commercial applications in financial institutions.
Technology Inclusiveness Drives the Development of Sustainable Supply Chain
Linklogis actively fulfills its social responsibility, upholding the mission of “technology empowers the development of sustainable supply chain finance.” Linklogis is committed to building a high-quality inclusive financial system and contributing to both the growth of the real economy and the progression of the digital economy.
In the first half of the year, the assets of transactions that Linklogis served related to sustainable supply chains (including renewable energy, rural revitalization, environmental protection, intellectual property, etc.) reached RMB15 billion, up 241% compared to the same period last year. Linklogis further accelerated the effective penetration of its chain-affiliated ecosystem, cumulatively assisting more than 290,000 SMEs throughout the upstream and downstream ecosystem of the supply chain in accessing efficient and convenient digital inclusive finance services.
Linklogis’ outstanding performance in ESG was widely recognized. Linklogis’ ESG solution “SCeChain”, developed in collaboration with Standard Chartered Bank, won the “Best China ESG Solution Award” from The Asset, alongside the Excellent Corporate in ESG Innovation and Practice, among other awards.
In terms of ESG ratings, Linklogis was graded as “Low Risk” by Sustainalytics, an authoritative ESG rating agency under Morningstar, ranking in the top 5% of the global software and services industry. Linklogis was awarded an “A” rating by Wind Information in its ESG evaluation, ranking No.5 among 181 software service companies assessed. In the first half of 2024, Linklogis was selected for inclusion in S&P Global’s The Sustainability Yearbook (China Edition) 2024.
Charles Song, the founder, chairman and CEO of Linklogis, said, “Looking ahead to the second half of the year, we will focus on core businesses that generate sustainable revenue growth and profitability, while expediting the replacement of old growth drivers with new ones. We will continue to deepen customer engagement, embrace AI-driven technological breakthroughs that herald a new era in technological revolution, and enhance customer value through innovative product applications. We plan to optimize internal resource allocation, improve operational efficiency, and implement technology-driven cost reduction and efficiency measures to regain profitability. Additionally, we will remain committed to enhancing shareholder returns and creating sustainable value for our shareholders.”