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Public company info - Digital China Holdings Ltd. , 00861.HK
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Digital China Holdings Ltd., 00861.HK - Company Profile
Chairman Guo Wei
Share Issued (share) 1,673,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry System Applications & IT Consulting
Corporate Profile Business Summary: The Group were involved in the following principal activities: Provision of information technology (“IT”) services, including systems integration, technical service, application software development, agricultural informatisation, sale of financial specified equipment, etc. Provision of supply chain services, including e-commerce supply chain services, logistics services,etc. Provision of all-encompassing Sm@rt City services (including internet based integrated IT platform construction and operation) and institutional financial services (including micro-credit loan, leasing, factoring, etc.) Performance for the year: During the reporting period, the Group’s overall revenue was HK$19.820 billion, representing an increase of 11.8% over the same period of the last financial year. The profit attributable to the equity holders of the parent was approximately HK$613.0 million, representing an increase of 103.1% over the same period of the last financial year. Business Review: 1) City Big Data Usage Model (Sm@rt City Business): leveraging “Yan Cloud DaaS” to tap “City CTO” opportunities with a deep engagement approach; segment results grew 149.4% versus last year The city is where people gather and live, and it is the largest data source available with the most applicable usage models. Under the new infrastructure plan in China, smart cities are to become the centerpiece of the entire implementation plan. According to “2020 Digital Twin Paper” published by the Ministry of Industry and Information Technology of the P.R.C., the market size of the smart city sector in China will likely exceed RMB1.3 trillion by 2023. Based on over a decade of innovation in the smart city space and deployment of numerous solutions across 200 cities in China, the Group understand the pain points faced by city managers such as difficulty in data extraction/storage across isolated databases. The Group was able to leverage its proprietary “Yan Cloud DaaS” technology to address city managers’ initial data issues by first connecting previously isolated databases to create a consolidated and uniform central database for the city and its community, allowing for efficient and accurate data access. Over time, by continuously refining the Group’s big data software products and services, the Group look to adopt a “City CTO” manager role within each city. During the reporting period, revenue from this sector was approximately HK$477 million, representing an increase of 46% over the same period of the last financial year; segment result was approximately HK$28.66 million, representing an increase of 149.4% over the same period of the last financial year. The improvement in accuracy and speed of data integration for its application to citizens, government and industries is a crucial task in the “new infrastructure plan” behind smart city development. This so happens to be the focal point behind DC Holdings’ overall strategy. As data is continuously generated across a vast number of platforms, APIs, devices, systems and formats, the data consolidation and integration process represents a massive challenge for the industry. Through “Yan Cloud DaaS”, the Group’s proprietary big data solution which won the First Prize for National Science and Technology Invention Award in China, the Group is able to navigate and integrate isolated databases across a wide variety of data sources. By deploying “Yan Cloud DaaS”, a user could save over 90% of communication time and shorten the overall process timeline by more than 50%. With the unique integration and consolidation abilities of “Yan Cloud DaaS” combined with the Group’s position as the “City CTO”, the Group has successfully implemented numerous large-scale projects across provinces and cities throughout China, thereby accelerating the new infrastructure plan in China, providing society with better quality of life, and developing the overall digital economy in China. Through the Group’s unique data center and data hub integration services, the Group’s usage models have continuously expanded and encompassed end users such as citizens, enterprises, and city managers in the city. With more practical applications coming to light, the Group see cooperation with cities and their managers becoming increasing integrated with the Group’s core business. DC Holdings has long been involved in the infrastructure development of Jilin province. With the Group’s proprietary technology “Yan Cloud DaaS” and solid experience in data infrastructure development and management, the Group were selected to lead two other major infrastructure projects in the year which were for the development of a “Digital City Brain” in Changchun City and creating a foreign trading service platform throughout Jilin province, both of which will further enable data integration and development of trading businesses in the province. Furthermore, to spur further innovation in the technology sector and capture a larger share of the growing digital economy, the Group spearheaded a new alliance amongst enterprises and the Jilin government with the aim to drive further innovation of new industry ecosystems and develop new software solutions which are industry specific, technologically advanced and scalable. Together with enterprises which represent core industries in Jilin province , the alliance expects to utilize synergies amongst themselves and create a billion-dollar data ecosystem in Jilin. DC Holdings is also currently participating in the infrastructure project “Smart Tangshan” in Tangshan City. With the support of “Yan Cloud DaaS,” the Group was first able to efficiently consolidate the various applications and databases across Tangshan city under the “1+N” framework. The city will then establish a cloud computing platform across government departments and functions, to achieve a smart city deployment characterized by strong economy, operating efficiency, improved public services and better quality of living. The Group was also involved in first and second phases of infrastructure development for a big data platform project in Suzhou City of Wujiang district. The Group’s technological expertise and advice were extremely well received by the Group’s clients, and therefore they had extended the Group’s services to the third phase of the infrastructure development, driving the city one step closer to full digitalization. In addition, although the COVID-19 pandemic has brought hardship upon us, it also represented a litmus test of the Group’s smart city execution capabilities. During the pandemic, the Group had uncovered a larger number of technical issues in some existing client systems such as inconsistent data sources, resulting in the failure of key civil services such as healthcare. The Group thus had the opportunity to deploy “Yan Cloud DaaS” and leverage its technology to remedy such issues for the Group’s clients. DC Holdings has constantly improved and enhanced the quality and functions of its software products and solutions to provide the best quality and most comprehensive product and service suite to the Group’s clients. 2) Industry Big Data Model (Smart Industry Chain Business): Value enhancement for products and services across the supply chain; significant segment results increase of 88.9% versus last year 5G, big data, Internet of Things, artificial intelligence, and other new technologies keep evolving every day. With the arrival of a new era of digital infrastructure and Internet of Things, the world is becoming flatter, which provides more possibilities for us to deal with the two core elements of "people" and "goods". A new pattern of industry, city and human integration is gradually forming through smart city construction with data as the production factor and through the smart supply chain service which is also driven by big data. In addition to expanding its city big data capabilities, DC Holdings can leverage its industry expertise of over 20 years in the supply chain business to help its expansion in big data services to the whole industry value chain. Through horizontal and vertical integration, DC Holdings can create relatively comprehensive databases and advanced usage models, and thereby constantly advance its big data service ability. The Group’s deep customer engagement approach to service their needs across the entire industry value chain will also support the Group’s continued and rapid income growth. During the reporting period, this segment achieved revenues of approximately HK$7.411 billion, representing an increase of approximately 37.7% over the same period of the last financial year; segment results was approximately HK$200 million, representing an increase of approximately 88.9% over the same period of the last financial year. In 2020, the COVID-19 pandemic led to the transformation of people's lifestyles, increased demand for online shopping and spurred rapid development of e-commerce and online education. However, many other businesses were financially struggling and had to shut down. Despite the challenge from COVID-19 pandemic, DC Holdings remained resilient throughout the pandemic. By leveraging the Group’s supply chain management system, deploying a “supply chain + big data + AIoT” approach and utilizing the Group’s proprietary supply chain big data platform “KingKooData” for big data analysis, the Group were able to create a comprehensive data center to service a wide range of e-commerce clients and provide big data services. By leveraging technology to reduce the distribution cost and improve operating efficiency, the Group were able to service the leading players in e-commerce and the online education sector. The rapid growth in e-commerce logistics, together with the Group’s enhanced operating efficiencies were key drivers behind the Group’s strong performance. By leveraging the Group’s technological expertise, the industry big data model successfully turned crises into opportunities, and solved various client needs across the supply chain while also achieving better performance and expanded industry coverage. The Group was able to capture revenue growth and market share in many types of consumer products such as electronics, fast moving consumer goods, maternal products, and cosmetics. In the online education space, DC Holdings had superior coverage where more than half of the top ten players in the sector were its clients, giving DC Holdings the largest big data services market share for this sector. In addition, it has successfully made new inroads into heavy infrastructure and industrial production sectors, wining contracts with customers such as Sany Heavy Industry, TELD and State Grid’s Xuji Group Corporation. The Group’s scale and scope of services continue to expand and going forward, the Group will continue to have a deep engagement with the Group’s clients and solve a variety of needs for them. The Group’s efforts over the past few decades have paid off as the Group had broken yet another new industry record during “Double-11” event, reaching 4.5 million total single warehouse deliveries. In addition, the Group had become one of rare few asset-light operators who are certified with the “5A” logistics enterprise qualification, the highest grade available in this industry. Against the backdrop of the “One Belt One Road” policy, the Group will provide the relevant services to the Group’s clients in order to assist their expansion into the international market and thereby also accelerate the Group’s own international business growth. 3) Fintech Model (DCITS): strengthen the fintech ecosystem by collaboration and create a new engine of growth Within DC Holdings’ big data strategy, DCITS (a subsidiary under DC Holdings) has focused on the financial services and fintech vertical and over the years, has refined its value proposition within the fintech space by deploying the right channels for data acquisition, improving its computing and data modelling capabilities and enhancing its overall core capability in big data management and application of various usage models in order to better serve its clients. This approach has led to DCITS obtaining top industry positions across fintech innovation, fintech usage and intelligent financing solutions. As one of DC Holdings’ core ecosystem components, DCITS is highly complementary to the various key verticals under DC Holdings such as fintech and agriculture; the Group is also able to cultivate a mutually beneficial situation with the Group’s clients through ecosystem collaboration, deep client engagement and business linkage. During the reporting period, this segment achieved revenues of approximately HK$11.457 billion; segment result of approximately HK$615 million which represented an increase of 104.0% over the same period of the last financial year. During the reporting period, the Group’s proprietary innovative fintech solutions and services categorized under "seven major solutions + consulting services" grew steadily, while the overall performance of the distributed application platform “Sm@rtGalaxy3.0” was enhanced, and the Group’s banking core system offering won tenders with 15 financial institutions and achieved its first overseas deployment. In the sector of digital currency, the Group is in the lead to release the Group’s blockchain platform “Sm@rtGAS” as well as digital currency (DCEP) solutions. The Group won tenders for system integration and software projects which included state-owned major banks, policy banks and joint-stock banks, allowing us to amplify and innovate the Group’s fintech innovation value chain. 4) Incubation Model (Investing Business): Strategically incubate and optimize the Group’s big data ecosystem Focusing on the core strategy of DC Holdings, the incubation model aims to improve DC Holdings’ core products, services and capabilities and build the Group’s sustainable development through continuous innovation and incubation through investment. On one hand, this will continue to expand the big data ecosystem of DC Holdings and enhance the digital industry value chain, forming greater synergies between the Group’s core business and the wider industry; on the other hand, investment returns can be re-invested in the Group’s core businesses to maximize the return on investment of the Group. During the reporting period, the Group sold part of its equity in Digital China Health for RMB500 million (approximately HK$550 million). The Group also received proceeds of HK$220 million from the partial sale of Digital China Health during 2019. The combined total proceeds of approximately HK$770 million will be used for further investment in the field of big data. After the completion of the disposal, the Group will still retain approximately 3.99% stake in Digital China Health. Digital China Health is primarily engaged in medical big data, medical cloud services and medical records digitalization. As part of the big data ecosystem of DC Holdings, both companies will continue to explore different synergies together. As a leading industrial internet platform operator, iSESOL (an affiliate of DC Holdings) continues to refine its product which is based on the innovative model of connecting intelligent business terminals across industries and cloud services, as well as “cloud-smart manufacturing”. The industrial internet platform promotes the development of China's smart manufacturing through data empowerment and open-source sharing. During the reporting period, iSESOL was selected as the “Big Data Industry Development Pilot Demonstration Project” in 2020 by the Ministry of Industry and Information Technology. 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. Going forward with further development, this vertical may also generate considerable investment returns for the Group. 5) Business Outlook: Leading the development of a trillion-dollar big data industry, rewarding the Group’s shareholders and society According to the "2020 China's Big Data Industry Map and China's Big Data Industry Development White Paper", the scale of China's big data industry reached RMB539.7 billion in 2019, representing a year-on-year increase of 23.1%. With the development of 5G and Internet of Things, the industry’s demand for more efficient and environmentally friendly data centers as well as cloud computing infrastructure continues to grow together with the underlying big data infrastructure. It is expected that the overall market will reach RMB667.02 billion in 2020. By 2022, the industry could exceed RMB1 trillion driven by continued transformation and upgrades of traditional industries and overall economic growth, both which will accelerate the construction of new smart cities and drive the development of China’s digital economy, all of which demonstrate vast potential for industry development. 6) Update on the settlement plans regarding certain wealth management products purchased by the Group (the “WMP”) As at 31 December 2020, the outstanding unpaid principal of the WMP was approximately HK$1,933 million (RMB1,634 million). The Group has obtained the right to proactively dispose of the ultimate underlying assets involved in the WMP and has set up disposal plans and specific action plans. In 2020, despite the significant impacts brought by the outbreak of COVID-19 pandemic on all aspects of work, the Group pushed forward with the disposal of the real estate residential project (the amount of the principal and interest involved is approximately HK$228 million (RMB193 million) and achieved results in accordance with the action plans. The asset restructuring procedure for the real estate residential project has been substantially completed and other creditors’ interference on the asset realisation has been eliminated. Based on the market price of the project assets, it could fully cover the Group’s creditor’s rights in the project. In accordance with the realisation and repayment plans, the Group would be able to recover with priority the amount due to the Group from the sale proceeds. If the realisation and repayment plans are carried out in accordance with relevant laws and regulations, the Group will recover a total amount of approximately HK$228 million (RMB193 million) involved in the real estate residential project which is one of the underlying assets. The remaining ultimate underlying assets is approximately HK$1,705 million (RMB1,441 million). In accordance with the realisation and repayment plans, certain supporting facilities in the properties are being upgraded with a view to improve valuation in the subsequent sales. At the same time, the Group is also actively negotiating the sale with interested parties. The Group will continue to pursue execution according to the action plans. Further announcement will be made by the Company as and when appropriate in the event of any material development on the action plans. Based on the management's judgment of the recoverable amount of the relevant underlying assets and its understanding of the assets disposal progress, together with the valuation report issued by the valuer on the relevant underlying assets, the management is of the view that the corresponding amount of the WMP as set out in the financial statements of the Group for the end of year 2020 is reasonable and appropriate. Prospects: The big data sector was also recognized by the capital markets in 2020. During the reporting period, InternetWare, a subsidiary of the Group, had obtained a new funding round commitment from investors, with amount RMB700 million (equivalent of HK$830 million), achieving a post-money valuation of RMB6.2 billion (equivalent to HK$7.34 billion). Going forward, the Group will continue to capitalize on development opportunities to build data infrastructure in other cities and to drive business growth. Looking forward, DC Holdings will be able to provide a fully integrated supply chain service by establishing China's largest network of cloud ecosystem warehousing services which is based on the global supply chain warehouse distribution network model. The service relies on the Group’s proprietary logistics management solution and logistic big data platform “KingKooData”, which integrates artificial intelligence and Internet of Things (AIoT) technologies. Engaging various supply chain service usage models, DC Holdings can build an end-to-end supply chain software product through continuous refinement of data and algorithms in the Group’s core data infrastructure. Meanwhile, DC Holdings will also improve service capabilities and customer experiences by using advanced methods such AIoT technologies to act as a source of data for further refinement of the Group’s products and services. The Group’s fintech model adopts a "data + technology + scenario" approach to innovate and integrate cross-industry data to open up financial services to more industries and use fintech as a means to serve the economy and create a fintech ecosystem. Innovative services such as financial-agricultural linkage, big data assisted financing, “bank-tax” interaction, and data-driven corporate credit risk assessment were launched to solve financing issues for agriculture, rural areas, and micro/small/medium/enterprises. During the reporting period, the Group won a variety of tenders for integration of credit data as well as overall software solution development projects for customers such as Industrial and Commercial Bank of China, China Development Bank, Bank of Communications, and the Shenzhen Stock Exchange, all of which contribute to the Group’s fintech innovation value chain development. In addition, the digitalization of the financial industry has grown steadily. During the reporting period, the Group have undertaken several big data projects at both the national and municipal level, and implemented a full-stack data application system with data collection, analysis, publication, and fulfilment within the agricultural sector. As applications for big data solutions continue to increase, the Group continue to win a variety of new contracts for enterprise clients as well as government clients within the agriculture space (rubber, oilseeds). In terms of quantum communications, the Group won the tender for the construction of a nation-wide quantum secured communication backbone network project (connecting Beijing with Wuhan, and Wuhan with Guangzhou), and also won work for new connections between Beijing and Hangzhou, Chengdu and Yuhan, Jinan and Qingdao, laying the foundation for subsequent new core infrastructure network projects. The Group’s technology real estate business also developed rapidly during the reporting period. Based on the digitalization of technology real estate property management in the ecosystem, DC Holdings will build a smart property big data integrated management platform to incubate smart property management businesses. At the same time, the Group will also utilize the smart property management sector as an entry point for the Group’s “Digital Twin” products and solutions and expand that to the entire urban ecosystem, developing the Group’s city digital twin business. Looking forward and in the face of major changes not seen in the last century, DC Holdings will become a big data service provider who empowers a variety of verticals, focusing on core usage models in city big data, industry big data, fintech, and ecosystem. Through “industry-academia-research”-driven incubation, the Group continue to build core products around the Group’s supply chain offering, expand the Group’s data processing products and accelerate the Group’s growth within the data industry. This will form a robust software ecosystem for us to provide the Group’s customers with an all-encompassing software and services product suite, allowing us to lead ahead in the market, ahead in the Group’s technology and ahead in the Group’s results. The Group will continue to empower the development of smart cities in China, spearhead the digital transformation of industries and implement DC Holdings’ corporate values, creating value for the Group’s shareholders and for society.

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