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Public company info - Changyou Alliance Group Limited , 01039.HK
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Changyou Alliance Group Limited, 01039.HK - Company Profile
Chairman Cheng Jerome
Share Issued (share) 1,811,000,000
Par Currency U.S. Dollar
Par Value 0.01
Industry E-Commerce & Internet Services
Corporate Profile Business Summary: Upon the cessation of the e-commerce business in 2018, the principal activities of the Group are the development and operation of an electronic trading platform to promote and facilitate awards earned by customers of loyalty programmes of other companies to be exchanged globally in the form of virtual assets and credits for consumption of merchandises, games, services and other commercial transactions. Performance for the year: The Group recorded a consolidated revenue of approximately RMB204.1 million (2018: approximately RMB51.0 million), representing an increase of approximately 300.2% as compared to 2018. Gross profit for the year ended 31 December 2019 amounted to approximately RMB0.8 million, as compared with the gross loss of approximately RMB8.1 million for the year ended 31 December 2018. Business Review The Group has capitalised on its years of experience in the e-commerce business, which has enabled the Group to grasp market opportunities and enter the digital points business segment and industry. In the second half of 2017, the Group formed the Changyou digital point business ecosystem alliance (the “Changyou Alliance”) with CCB International (Holdings) Limited (“CCB International”), China UnionPay Merchant Services Company Limited (“UnionPay Merchant”), Bank of China Group Investment Limited (“Bank of China”), China Mobile (Hong Kong) Group Limited (“China Mobile”) and China Eastern Airlines Corporation Limited (“China Eastern Airlines”). With an aim to integrate the digital membership points, resources and strategic advantages of the business partners in the Changyou Alliance, the Group has developed an electronic trading platform, the Changyou platform. The Group strives to develop the Changyou platform as an integrative and secured platform, so as to preserve and maximise the value of digital points as virtual assets for the platform users. With the development of blockchain technology, digital assets have received increasing attention from the industry. By leveraging advanced technologies such as blockchain and big data, the Changyou Alliance aims to develop a global financial platform for the issuance, circulation, trading, storage and payment settlement of blockchain tokenisation of assets. Since the launch of the Changyou platform, the platform has undergone rapid development, with an increasing number of users, more diversified products and services, as well as optimised business models and consumption scenarios. The total revenue from the business operations of the Changyou Alliance and the Changyou platform (collectively, the “Digital Point” business) increased to approximately RMB204.1 million for the year ended 31 December 2019 (2018: approximately RMB51.0 million), representing an increase of approximately 300.2% as compared to 2018. The gross merchandise volume of the Digital Point business amounted to approximately RMB330.0 million for the year ended 31 December 2019 (2018: approximately RMB174.0 million), representing an increase of approximately RMB156.0 million (approximately 89.7%) over the same period of last year. The Group is currently negotiating with a number of potential business partners to further enhance the Changyou platform and expand its business scope into other sectors. The sectors covered by the Changyou platform became further diversified in 2019. Based on the Company’s business conditions and future plans, the management changed the business diversification from by sector to by actual business scenarios, with a focus on clear delineation of principal activities as its business model. The Company’s business covers four major segments, being its (i) digital points payment system, (ii) financial cooperation business, (iii) business circle segment, and (iv) digital points mall business. Each business segment is operated according to the characteristics of the respective business scenarios in order to improve operational efficiency. BUSINESS SEGMENTS (i) Digital points payment system The Group offers points consumption services and points cashier output services. The Group further optimised offline QR code payment self-operation model business system and front and back office functions to ensure the effectiveness of its income model and the stability and operational efficiency of its business functions. We expanded offline QR code payment cooperation channels to enrich the variety of consumer products. We also expanded the range of key online point payment merchant pilots to improve the Changyou digital point output capacity and to enable more connections to a number of merchants. Certain merchants including Ruixiang Shopping (瑞祥福利購) and Jiangsu One Card (江蘇一卡通) have commenced operations on the platform. The business proposals and product logistics for the digital point exchange and integration with the digital points of Crlife Club (華潤通) and Family Mart (全家) have been determined, and the number of active users have increased. The Group completed the research and development and pilot operation of the digital point payment system under the cooperation with UnionPay Merchant, and assisted UnionPay Merchant in completing the operational marketing training for UnionPay Merchant’s subsidiaries across China. The Changyou Pay WeChat applet was launched, which solved the problem that a customer must download an APP to enable QR code payment to UnionPay Merchants, and the Changyou Pay authentic name verification process was optimised. (ii) Financial cooperation business With the improvement of China’s financial market and the rapid development of information technology, the “pan-financial” era has gradually moved on track with numerous emerging internet financial models. Users can monetise Changyou points via Changyou Pay (暢由付) on the Changyou platform. Changyou Pay also enhances the standardised, low-cost and efficient Changyou points services for small and medium enterprises. The Group optimised direct accessibility to its loan products and explored user profiles, and increased the connections on the Changyou platform to a total of 35 institutions including banks and consumer financial institutions. The Group further enriched brand resources by introducing brands including Huawei, Xiaomi, and Vivo, and also strengthened the development of its B2B and B2B2C installment payments business, and a diversified business model incorporating direct sales, enterprise sourcing and third-party introductions was formed. Asset management business The Group selected suitable financial products and services ranging from insurance, funds and wealth management to smart investment advisory services. Promotion of credit cards and insurance products was strengthened to ensure complete product coverage. Upon filing with the China Insurance Regulatory Commission, the Group adopted an innovative model of Insurance Purchase with Points (全積分 購保險), which is the first in the industry. The Group entered into agreements with several renowned licensed financial institutions in respect of its cooperation on business promotions, including 12 partnering banks for credit card cooperation and four institutions for promotion. Big data marketing business The Group conducted targeted big data marketing through pilot cooperation with Bank of China, and provided customers with consumer credit tools such as payment by instalment. (iii) Business circle segment With continuous growth of consumer demand and accelerated upgrading of consumer spending structure, China’s economy is entering a new stage of consumptiondriven development. To cater for the current consumption trends and improving quality of life, Changyou’s digital points mall has introduced various differentiated and highquality products to the Changyou platform via a cooperation model of “introducing and connecting new merchants” (招 商入駐+對接) with popular social e-commerce platforms in China within the platform’s vertical business model, such as JD, NetEase Yeation, NetEase Kaola, Pinduoduo, Xiaoxiangyoupin and Xiaohongshu. In the digital points mall, users can make purchases with digital points as if they were real money. Changyou will then make online rebate settlements with such cooperation platforms after calculation of the customers’ consumption of the products and services, which will improve the profits of both the Group and such cooperation platforms. The business circle segment serves as the basic function of the Changyou platform with a focus on increasing the variety of goods, offering more necessities and improving the value of goods and services available on the platform. In 2019, the Group recorded satisfactory results in its selfoperated digital points mall business, cooperation with third parties and expansion of marketing tools. (iv) Self-operated digital points mall business Electronic coupons: 200 contracted card brands, involving shopping malls, supermarkets, department stores, food and beverage, video entertainment, online consumption and travelling service industries, reputable brands of which include: Family Mart, Walmart, Carrefour, Starbucks, KFC, Suning.com, Tmall, JD, Tencent Video, Ximalaya, Iqiyi, Maoyan Movie, Didi, Haagen-Dazs, Sinopec, PetroChina and Godiva. Physical goods: As at the end of December 2019, the stock keeping unit of the digital points mall reached 12,000, covering ten categories including kitchen supplies, maternal and infant supplies and toys, food and liquor, digital products, textiles, home appliances, gifts and bags, cosmetics and personal skin care products, automotive supplies, outdoor and sports goods of 752 brands. A flash sale section was held to attract users with discounted goods packages, which recorded growing sales since its launch in March 2019. Cost per sales cooperation platforms including Pinduoduo, JD, Taobao Alliance and Aikucun were also introduced to leverage existing channel resources for traffic conversion and user reception, with goods covering clothings, shoes and hats, fruit, fresh products and household products. Building on the foundation of the digital points mall’s B2C sales, vertical sales of telephone call credits, BesTV membership cards and other benefits to merchants, the Group successfully made profit in the year in which it commenced operation. The Group completed the introduction of 25 downstream customers and six upstream suppliers, which ensured the provision of stable and highquality mobile topping-up services at competitive prices and established a solid foothold in the industry. The basic framework of Changyou’s B2B direct sales platform was established. With the mobile topping-up business, the initial phase of system building and optimisation was completed, and basic service rules and process have been established. Prospects: In 2020, the Group will vigorously develop its Changyou Alliance user base and acquire customers through targeted sales based on its own channels and payment scenarios. It will focus on the value of digital points by using games, payment and instalment products to significantly stimulate the activity of the Changyou platform. It will leverage big data and artificial intelligence to support the merchants introduced into the Changyou platform with the S2B2C model and eventually realise the growth of user size and platform income. The Group’s digital asset platform is available for the issuance, circulation, payment and settlement of global assets able to be tokenised and serves as the entry point for point realisation. Under the intelligent business environment, the Group will make full use of Changyou’s channels and customer resources to capture the needs of users and attain new network collaboration. In 2020, the Group will focus on the operation of the main platform network, supported by two wings. The operation centre will be responsible for games, digital points mall and marketing of equity products; the financial division will be mainly responsible for payment and instalment business; and the retail division will be mainly responsible for the open platform for B2B services and internet accelerator business. Points payment system and financial corporation business The Group will vigorously develop business with offline QR code point payment merchants, high-quality online cooperation platform merchants and equity asset trading merchants, and further optimise offline QR code payment merchant channel resources and trading scenarios. The Group will strengthen cooperation with high-quality online platforms and expand the range of exchange for online equity products. The Group will also recommend more reliable and intelligent financial products and convenient consumer financial services and continue to provide companies with reliable, safe and diversified payment products and channels. Business circle segment The business circle segment will strive to expand the cooperation with brand owners, quickly beef up mall product offering, strengthen the unique characteristics of the product categories and channels of the mall, increase consumer loyalty through the points + sales pattern enhancement model, and continue to enrich the digital point and cash consumption scenarios, so as to increase the income of all consumption scenarios of the business circle division in 2020. Digital points mall business Retail The Group is committed to providing users with high-quality products and will further enrich its product types through brand tours/outlets. In 2020, the Group will continue to expand customer base and strengthen the position of Changyou digital points in the industry while continuing to generate income. Entertainment The Group will put light interactive games into special channels for shareholders, self-owned channels and related merchant channels, which will be embedded with Changyou platform product attributes in order to quickly and efficiently build up its customer base. The Group will provide added benefits to frequent purchases with low-unit price customers to retain users of the entertainment division and stimulate users consumption. The Group will further introduce diversified video, music and game coupons, and give favour to users holding leftover points to create an impression of discounts and encourage users to exchange their digital points and guide them to target scenarios, while conducting in-depth cooperation with target scenarios to obtain substantial benefits including discounted purchase price and rebates through efficient digital points referral, so as to increase the total income of the three major consumption scenarios, being games, videos and music coupons, of the entertainment business. The acquisition of customers through applet/mini games is also an important goal of the entertainment division. The Changyou platform was officially launched in September 2017. With less than three years’ development, it has received strong recognition from users and the market. The Group will continue to strive to build a digital-points ecosystem with the largest global presence, create a future-oriented business and financial platform and lead the business society to an age of intelligent interconnection.

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