Net Profit Doubles for Second Consecutive Year Remarkable Achievements in City and Industry Big Data Usage Models

Net Profit Doubles for Second Consecutive Year

Remarkable Achievements in City and Industry Big Data Usage Models

(30 March 2021, Hong Kong) Digital China Holdings Limited (“DC Holdings” or the “Group”; Stock Code: 00861.HK) is pleased to announce its annual results for the year ended 31 December 2020 (the “Reporting Period”).

In 2020, the unexpected COVID-19 pandemic had triggered significant behavioral changes and business transformation among industries, and the global economy was forced to accelerate its digitalization. With the help of the nation’s vigorous development of new digital infrastructure, DC Holdings’ core businesses are empowered by new big data technologies and generating significant business opportunities for the Group. Meanwhile, its strategies, “City Deep Engagement”, “Industry Deep Engagement” and “Customer Deep Engagement”, have achieved remarkable results, marking an important step for consolidating its role as a digital economy operator in the big data era.

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. Big data related revenue was approximately HK$231 million representing an increase of 124.5% over the same period of the last financial year; services related revenue was approximately HK$6.024 billion; solution related revenue was approximately HK$7.849 billion. This follows the release of DC Holdings' 2019 financial results, which showed a profit attributable to shareholders of approximately HK$302 million, representing an increase of approximately 101.78% year-on-year, thereby enabling DC Holdings to double its profit for the second consecutive year.

With the leading technologies and big data solutions, the Group was ranked first place in the list of “2020 Top 100 Digital Infrastructure” by “Internet Weekly” magazine published by the Chinese Academy of Sciences. The group was awarded for multiple industry awards, including “2020 Best Service Provider for Big Data Infrastructure”, “2020 Best New Economy Company”, “2020 Best Enterprises for Investment Value”.

City Big Data Usage Model: Remarkable result from “City CTO” with deep engagement approach; achieving an increase of approximately 149.4% year-on-year

Given over a decade of its innovation development in the smart city segment and the prior numerous experiences of large-scale city projects across 200 cities in China, the Group was able to leverage its proprietary “Yan Cloud DaaS” technology to seize opportunity of smart city and big data development. "City CTO" plays a role in cities’ digitalization development and digital transformation of industries as it builds the data infrastructure for cities connecting cities, enterprises and citizens, opening up the city digital network and rapidly expands construction of smart cities with “Digital City Brain” and “Digital Twin” while continuously improves big data software products and services. 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. 

During the reporting period, Beijing Internetware Limited Corporation (“InternetWare”), a subsidiary of DC Holdings, had obtained a new funding round commitment from investors, with amount RMB700 million (equivalent of HK$830 million), achieving a post-investment 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.

Industry Big Data Model: 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. Through horizontal and vertical integration, DC Holdings expanded its big data service to the whole industrial value chain, created relatively comprehensive database and advanced application usage models, and thereby constantly advancing it big data service ability. Continued and rapid growth of income will also be further enhanced through “Customer Deep Engagement” across the entire industry value chain. 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.

The Group has the leading market share in many types of consumer products such as electronics, fast moving consumer goods, maternal products and cosmetics. In addition, DC Holdings successfully achieved top ranking in the online education market share during the reporting period. Among the top ten players in the online education sector, five of them are DC Holdings’ clients, making DC Holdings the largest big data service provider in this segment. Moreover, it has successfully tapped into heavy infrastructure and industrial production sectors, wining contracts with customers such as Sany Heavy Industry, TELD and State Grid’s Xuji Group Corporation. In future, by its continuous “Customer DeepEngagement” and all round solution, its scale and scope of this segment will continue to expand. 

The Group had broken another new industry record during “Doube-11”, reaching 4.5 million total single warehouse deliveries in 2020. In addition, the Group is certified with the “5A” logistics enterprise qualification, the highest qualification in this industry. Only very few asset-light operators can obtain this certification, showing that its strong technological edge is also highly recognized by the industry. Driven by “Belt and Road”, the Group will accompany its clients to the international market and thereby accelerate its own international business growth.

Fintech Model: Strengthen the fintech ecosystem by collaboration and create a new growth engine

With DC Holdings’ big data strategy, after focusing on the financial services and fintech vertical and over the years, DCITS, a subsidiary of DC Holdings, has deployed its core technical competence in data acquisition, improving its computing and data modelling and big data management as well as the application of various models in order to better serve citizens. This approach has led to DCITS obtaining top industry positions across fintech innovation, fintech usage and intelligent financing solutions. 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.

In the sector of digital currency, the Group is leading the market to release its blockchain platform “Sm@rtGAS” as well as digital currency (DCEP) solutions. In terms of quantum communications, the Group won the tender for the construction of nation-wide quantum secured communication backbone network project (connecting Beijing with Wuhan, and Wuhan with Guangzhou), and also the project of new connections between Beijing and Hangzhou, Chengdu and Yuhan, Jinan and Qingdao, laying the foundation for the subsequent network projects. 

Incubation Model: Strategically incubate and optimize its big data ecosystem

Focusing on the core strategy of DC Holdings, the Incubation Model segment aims to improve DC Holdings’ core products, services and capabilities of its supply chain offering, 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 cultivate the digital industry value chain, forming greater synergies between its business and the overall industry; on the other hand, investment returns can be re-invested in its core businesses to maximize the return on investment of the entire DC Holdings, forming a positive feedback loop.

During the reporting period, investment in medical big data model, which is under Incubation Model, generated profitable returns. This income will be used for further investment in the field of big data. After the completion of the disposal, the Group will still retain part of all issued shares of DC Health. DC 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, 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 models 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 segment may also generate considerable investment returns for the Group.

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, DC Holdings will also take the smart property management model as the entry point for its “Digital Twin” products and solutions and expand that to the entire urban ecosystem, developing its city digital twin business.

Business Outlook: Leading the development of a trillion-dollar big data industry, rewarding its shareholders and society

Mr. Guo Wei, Chairman of the Board and CEO of DC Holdings, being asked for his views on future development, remarked: “Looking forward and in the face of unprecedented changes, DC Holdings will become a big data service company that empowers a variety of models, facing core sectors such as urban big data, industry big data, fintech, and incubation models. Through innovation incubation driven by the cooperation of “industry-academia-research”, we continue to build core products around our supply chain and accelerate our growth in the data industry, expanding our data processing products along the way. This will form a robust software ecosystem for us to provide our customers with an all-encompassing software and services product suite allowing us to lead ahead in the market, ahead in our technology and ahead in our results. We 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 our shareholders and for society.”