On August 16, OneConnect Financial Technology Co., Ltd. (hereinafter referred to as "OneConnect") released its interim performance report as of June 30, 2023.
According to the financial report, in the first half of 2023, OneConnect achieved a revenue of 1.899 billion yuan and a gross profit of 696 million yuan; the net profit margin attributable to the parent increased from -26.1% to -10.0%, which was a significant improvement of 16.1% compared with the same period in 2022. percentage points, gross profit margin increased by 1.4 percentage points year-on-year to 36.7%.
Various key indicators continue to improve, especially the loss decreased by 66% year-on-year. OneConnect is getting closer to the turning point of profitability. What actions does it have in this year that deserve the market's attention?
In this regard, Shen Chongfeng, chairman and CEO of OneConnect, pointed out, "Under the guidance of value creation and active adjustment of business structure, in the first half of the year, the company continued to improve its product capabilities around the three major sectors of digital banking, digital insurance and Jiama platform. , At the same time, it also exited some highly customized, non-high-value stock businesses. Although this has a certain impact on the overall revenue scale in the short term, in the medium and long term, only by 'unloading the burden' can we go into battle lightly."
Actively adjusting the business structure and focusing on product upgrades and iterations, OneConnect has shown strong momentum in the second stage of "customer cultivation". As the economy and society fully resume normal operation, the path of accelerated transformation and steady growth of OneConnect seems to be ahead.
The second stage of "Customer Deep Cultivation" deeply explores the pain points of financial institutions
In 2023, the world's major changes unseen in a century will accelerate. As the economy and society fully resume normal operation, the overall macro situation will stabilize and improve, but there are still some challenges before a full recovery.
Against this background, OneConnect has taken product upgrades and customer deepening as the core focus, continuously reducing "burden" and increasing momentum, and has taken a steady and fast pace. In the words of Luo Yongtao, Chief Financial Officer of OneConnect, the first is to focus on product upgrades and further improve product scenario coverage, standardization, and delivery efficiency. The second is to carry out more refined cost control for all projects, including successively formulating and releasing the operation and maintenance service system, project dynamic profit and loss management plan, and delivery change management methods.
First of all, the effect of OneConnect in cost control is relatively obvious. Through the reasonable adjustment of sales, management and research expenses, OneConnect achieved a loss reduction of more than 66% in the first half of the year. After the cost reduction, the company "traveled lightly" more calmly.
In this regard, Shen Chongfeng, chairman and CEO of OneConnect, said, "With the in-depth advancement of the 'one body with two wings' strategy, the company's product standardization, delivery efficiency, and internal operation and management efficiency have all been improved in an all-round way. Thanks to Therefore, OneConnect’s loss in the first half of the year decreased by 372 million year-on-year, a loss reduction rate of more than 66%, the gross profit margin increased steadily, and the product matrix became more abundant, which laid a solid foundation for the company to turn losses into profits in the medium term.”
Secondly, OneConnect provides momentum for the continuous increase of ARPU value by upgrading its products.
OneConnect continues to refine and upgrade the current product matrix in order to increase the premium of a single product. At the same time, the company continues to enrich product modules and increase revenue per customer through cross-selling of multiple products.
In the digital banking sector, firstly, for the retail business, OneConnect has further added AI voice, sparring, double-recording scenarios, and expanded corporate marketing scenarios in the "Smart Banker" APP built for banks. The login rate is 96%.
Second, for the credit business, OneConnect has realized self-developed remote face-to-face review, and added more than 100 mature risk control label indicators in the first half of the year; the early warning rate of dangerous loans was 90%, and the accuracy rate exceeded 80%, helping banks effectively Carry out active management and control of asset quality.
Third, for business scenarios, OneConnect’s leading product —— “Super Brain” can provide monthly to daily business inspection and tracking, and assist banks in making governance decisions. In the first half of the year, the digital banking segment promoted a series of product iterations It has been upgraded and has been widely recognized and highly appraised by many state-owned banks, joint-stock banks and urban and rural commercial banks.
Finally, OneConnect has dug deep into customer needs, further deepened strategic partnerships with a number of commercial banks and insurance companies at home and abroad, and established a more stable moat.
In the process of assisting a joint-stock bank to build an enterprise-level decision-making support management system, OneConnect aimed at the pain points of the bank’s lack of quantitative support for decision-making, insufficient coordinated management of risks and returns, and low efficiency of asset and liability management. The brain" solution helped the bank achieve a 60% increase in overall budget management efficiency in the first stage, and the NII forecast deviation was less than 3%. It is expected that in the second phase, the branch's FTP profit forecast deviation will be less than 5%.
In the digital insurance segment, for the auto insurance business, OneConnect’s core claim settlement system has been continuously upgraded. Its online claim settlement workbench can help insurance companies reduce survey manpower and operating costs by 30%, and improve the efficiency of back-end claim settlement personnel by 25%. For the life insurance business, the cooperation between OneConnect and Senior Health Insurance continued to deepen in the first half of the year. Through the "universal agent" solution, it effectively promoted the conversion of potential customers, and helped Senior Health Insurance achieve outstanding results in the development of the South African market.
OneConnect's cost reduction and efficiency increase go hand in hand with product and service upgrades. It constantly improves its comprehensive advantages of "technology + business", and has sufficient strength to escort the digital transformation of financial institutions. The future picture of the waves moving forward.
"One body with two wings" turns the business flywheel, and the second growth curve "accelerates uphill"
While helping the digital transformation of domestic financial institutions gradually enter the "deep water zone", OneConnect will continue to make efforts in "one body with two wings" in 2023, and accurately grasp the growth opportunities brought about by the digital transformation needs of overseas financial institutions. A series of breakthroughs have been made in both overseas and overseas business, which has further consolidated the company's "second growth curve".
On the one hand, OneConnect’s digital financial ecosystem continues to improve. In order to help improve the reach and efficiency of financial services, OneConnect has joined hands with local governments and regulatory agencies to create a digital financial service ecosystem. In the first half of the year, OneConnect cooperated with the Hong Kong Special Administrative Region Government and the Xiamen Local Financial Supervision Bureau to create a series of benchmark projects such as the mobile transformation of the Hong Kong government's information portal and the Xiamen private equity fund reporting and monitoring system. So far, OneConnect has cooperated with 85 governments and regulatory agencies, benefiting more than 2 million SMEs.
As the first virtual bank dedicated to small and medium-sized enterprises in Hong Kong, OneConnect’s wholly-owned subsidiary, Ping An OneConnect Bank (PAOB)’s total income in the first half of the year was 66 million yuan, a year-on-year increase of 45.2%. During the period, customer loans The scale of loans and advances increased by 6.5% year-on-year to HK$1.8 billion.
As of the end of June 2023, among the small and medium-sized enterprise customers that Ping An OneConnect Bank has approved for loans, 34% of small and medium-sized enterprises have obtained bank loans for the first time, highlighting that the bank pays close attention to the unmet financing needs of small and medium-sized enterprises. Relying on its outstanding performance in providing flexible and efficient financial services to small and medium-sized enterprises through innovative models, Ping An OneConnect Bank won the "Asiamoney" 2023 Best Bank Award in 2023 again in the first half of the year. pound awards.
In addition, Ping An OneConnect Credit Information (PAOCCRA), a subsidiary of OneConnect, also announced a few days ago that it has officially joined the "Commercial Data Link (CDI)" platform launched by the Hong Kong Monetary Authority, becoming the first data processing company in Hong Kong. and alternative data products as the main services of data providers.
On the other hand, with the help of solid digital technology, OneConnect's overseas business has also put on "wings" to accelerate its flight.
With the evolution of artificial intelligence, big data, cloud computing, blockchain and other technologies, the application of digital products and tools has become increasingly abundant. The innovation of financial technology has accelerated the digitalization process and the vigorous development of the digital economy in Southeast Asia. OneConnect has so far served 170 overseas financial institutions from 20 countries and regions including Singapore, Thailand, Malaysia, Indonesia, the United Arab Emirates, the Philippines, and Vietnam.
In the first half of the year, OneConnect focused on upgrading digital banking solutions that are highly suitable for financial institutions in Southeast Asia, including further deepening the strategic partnership with SB Finance in the Philippines, following the establishment of an omni-channel digital financial platform and design and implementation core for the institution. After the development and business system, the two parties reached an employee supplementary cooperation agreement in April this year to help SB Finance improve product delivery efficiency and reduce operating costs. In addition, OneConnect and OCBC Wing Hang Bank have carried out a series of cooperation, including providing consumers with seamless online banking account opening services, and comprehensively improving the digital experience of individual users.
In the case of serving a Top 10 bank in Southeast Asia, OneConnect assisted it in the development and establishment of an end-to-end digital banking platform, helping the bank migrate more than 6.8 million users from the stock system to the platform, and through the creation of mobile banking APP and electronic Digital tools such as wallets have brought more than one million new users to the bank, and the new loan amount has exceeded US$300 million. On average, more than 1,000 new users have downloaded the bank’s mobile banking app every day.
It is not difficult to see that OneConnect's "two wings fly together" has built a comprehensive digital financial service ecosystem, and the ecology also feeds OneConnect and promotes its high-quality development.
In the first half of the year, OneConnect released its first "Environmental, Social and Governance Report 2022" (referred to as "ESG Report"), demonstrating the company's practice and effectiveness in the fields of environment, society and corporate governance from multiple dimensions. Guided by ESG's path to the sustainable development value of modern enterprises, OneConnect is expanding and replicating digital capabilities from finance to low-carbon energy fields, and continues to explore innovative applications of cutting-edge technologies in financial and low-carbon fields.
With its pioneering performance in strengthening technological strength, deepening digital empowerment, serving the real economy, practicing ESG development concepts, and actively participating in public welfare, OneConnect was awarded the All-China Federation of Trade Unions in April this year. The honor of "National May 1st Labor Award" has also become the only enterprise in Shenzhen that has won this award this year.
Looking ahead, Shen Chongfeng, chairman and CEO of OneConnect, pointed out, "The macro economy in the first half of the year has shown positive changes in a moderate recovery, and we remain cautiously optimistic about business growth in the second half of the year."
At the beginning of this year, the State Council issued the "Overall Layout Plan for the Construction of Digital China", which provided top-level design and strategic guidance for further accelerating the construction of Digital China. This proves that the policy level encourages financial institutions to continuously increase IT investment.
In the next stage, OneConnect will continue to promote its two major strategies of "deeply cultivating customers" and "one body with two wings", firmly grasping the strategic opportunity of the digital transformation of the financial industry, and is expected to continue to be "professional, professional" in the high-quality development of the digital economy Technology" creates value.
Source: Hong Kong Stock Research Institute