Adjusted Profit Doubles to ¥0.8 Billion
LianLian Digitech (02598.HK) reported a 106% year-over-year increase in adjusted recurring operating profit to ¥0.8 billion for 2025, beating analyst expectations. The company's total revenue for the year grew 32% to ¥17.3 billion. While reported net profit was ¥1.66 billion, this figure was inflated by a one-time gain of approximately ¥2.4 billion from the sale of partial equity in subsidiaries. The strong performance in adjusted operating profit reflects improved operating leverage, with the adjusted operating expense ratio declining by 5 percentage points to 62%.
Global Services Revenue Expands Over 80%
The company's growth was primarily fueled by its global payments and value-added services. Total Payment Volume (TPV) reached ¥3.5 trillion, a 6.1% increase from the previous year. The global payments segment was a standout, with its TPV expanding 61% to ¥498.5 billion, contributing to a 29% rise in segment revenue to ¥1.04 billion. In contrast, domestic payment TPV grew only 1% to ¥3 trillion, though its revenue increased 18% to ¥4.1 billion as the company focused on higher-value clients. Value-added services, particularly virtual bank cards, were the fastest-growing area, with revenue climbing 81% to ¥2.6 billion. Management indicated a strategy of accepting lower initial margins to capture market share, targeting a stable gross margin of 50-60% in the future.
CICC Sets HK$9 Target on Tech Strategy
In response to the strong results, investment bank CICC maintained its "Outperform" rating for LianLian Digitech on March 30, issuing a target price of HK$9 per share. This target represents a potential 51% upside from the current price. CICC also introduced a 2027 forecast, projecting revenue of ¥2.4 billion and an adjusted net profit of ¥0.2 billion. The bank's positive outlook is supported by LianLian's strategic initiatives, which include upgrading its technology infrastructure, embedding AI models into its operations, and exploring Web3 cross-border payments through its newly licensed DFX digital asset trading platform.
