Huitongda Network Announces 2024 Annual Results; Initial Success from Recent Strategic Upgrades; Expanding Margin Support the Beginning of a New Growth Cycle in 2025

【For immediate release】                                    27 March 2025

 

 

 

Huitongda Network Co., Ltd.

(Stock Code: 9878.HK)

 

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Huitongda Network Announces 2024 Annual Results

Initial Success from Recent Strategic Upgrades
Expanding Margin Support the Beginning of a New Growth Cycle in 2025

 

 

(27 March 2025, Hong Kong) Huitongda Network Co., Ltd (9878.HK), an industrial internet company focusing on serving family-owned retailers in China's rural markets, is pleased to announce its annual results for the year ended December 31, 2024 (“the Year”). To accelerate its business development and capture the transformational opportunities from the latest digitalization + AI developments, the Group proactively refined its development strategy and has obtained initial successes, laying a solid foundation for long-term growth. Supported by the leadership of the Board as well as the dedication of management and staff, the Group successfully optimized its business mix and achieved a significant enhancement in profitability. During the Year, the Group recorded operating revenue of RMB60.06 billion, net profit of RMB462 million, profit attributable to equity shareholders of the Company of RMB270 million, expanding gross profit margin, and net cash inflow generated from operating activities of RMB275 million.

 

Strategic Upgrades Drive Business Optimization 

In 2024, the Group maintained its focus on high-quality development by proactively refining its business structure, resulting in a notable improvement in operating efficiency. For instance, instead of prioritizing business scale, the Group put an increasing emphasis on profit and cash flow, focusing on maximizing the contributions from high-margin businesses. The Group also proactively refined its business composition and streamlined its organizational structure, yielding an improvement in operational efficiency. Benefited from the aforesaid proactive initiatives, the Group’s overall gross profit margin saw substantial improvement of 0.5 percentage point year-on-year to 3.8%.

 

Strengthened Supply Chain Capabilities to Unlock New Growth Potential

During the Year, the Group continued to advance its plan for industrial upgrades, seeing breakthroughs in areas such as production-sales integration of self-owned branded products, strengthening collaborations with leading brands, and the introduction of new product categories, new channels, and new business models. The Group also expanded its scale and integration of its online and offline omnichannel network. For its self-owned brand development, the Group put notable efforts into establishing an integrated demand-pull supply chain, and tapping into high-value-added categories. Currently, the Group has already created a solid self-owned brand portfolio covering 10 verticals, including major home appliances, kitchen and bathroom appliances, small household appliances, liquor, home furniture, and beauty products, achieving vertical integration from production to consumption.

 

Meanwhile, the Group also further strengthened its collaborations with leading brands such as Apple,

AHC, Lenovo, Midea, Hualing, and Siemens. Through such collaborations, the Group was able to achieve higher synergies and resource efficiency, laying a solid foundation for future profitability enhancement. To fulfill the growing needs for personal care, health, and lifestyle products, the Group also fast-tracked its new product categories, new channels, and new business model development. The strategic move has allowed the Group to form relevant industry clusters, bringing further growth impetus to the Group’s future development.

 

Expanding Member Store Network, Drive High Conversion Rate through Digital and Supply Chain Empowerment and Excellent Cost-Performance Ratio

To provide better support for rural family-owned retailers, the Group focused on strengthening its cooperation with leading brands to enhance its bargaining power; on the other hand, the Group strives to offer its member stores an excellent cost-performance ratio, supported by its extensive self-owned product selection and integrated sales and production capabilities. In addition, thanks to its rich in-house data resources and smart process optimization capabilities, the Group was able to help member stores to raise operational efficiency and reduce operating costs, particularly after the smart upgrade of its “Qiancheng Cloud” SaaS+ products. To create more value in marketing, the Group also leveraged its big data analysis and AI algorithms to offer customized marketing solutions to its member stores, boosting their respective sales conversion. These initiatives have comprehensively enhanced the Group’s capabilities to cater to the highly diversified needs of a wide range of member stores across different industries and scenarios.

 

Due to the above strategic upgrades, the Group saw a satisfactory improvement in market penetration and member store acquisition. As of the end of the Reporting Period, the total number of registered member retail stores exceeded 248,000, representing a year-on-year growth of 4.8%. Among them, active member retail stores reached 95,000, a year-on-year growth of 4.9%, and the total number of subscribing SaaS+ users amounted to over 108,000, with the number of paid SaaS+ users exceeding 38,000, essentially forming a solid entry barrier.

 

Digital Platform Upgrades and New AI Applications to Support Higher Operating Efficiency of Membre Stores

During the Year, the Group significantly advanced its digitalization efforts in three key areas, namely

platformization, online integration, and intelligence development. By integrating multiple software product lines, the Group is now capable of providing an integrated, comprehensive, scalable, and standardized digital foundation for its businesses. The Group also accelerated its AI development, reaping initial success in areas such as intelligent customer service, product review, AI-driven research, and avatar live streaming. Its “Qiancheng Cloud SaaS+” platform is now equipped with enhanced features such as AI shopping assistants and AI CRM private domain marketing, able to optimize procurement and marketing functions for member retail stores that would support their digital and intelligent transformation journey. The aforementioned upgrades will allow the Group to bring AI features to procurement, marketing, customer service, and after-sales, effectively empowering member retail stores along the value chain. Compounded by the decade-long data accumulation in rural markets, the Group has established a strong foothold in future AIaaS transformation.

 

Efficiency Enhancement from Strategic Upgrades, Satisfactory Results across Operational Matrix

Benefiting from the Group’s strategic upgrades, deepened cooperation with leading brands, and the expanding coverage of its self-owned brands, the Group saw a significant improvement in gross profit margin, reporting a 0.5-percentage-point increase to 3.8%. There was also substantial improvement in cost control and expenses efficiency, with selling and marketing expenses reporting a year-on-year decrease of 22.1%, and administrative and other operating expenses reporting a year-on-year decrease of 2.5%. The Group also demonstrated its business resilience and strength in cash flow, with 2024 being the sixth consecutive year reporting positive net operating cash flow.

 

Outstanding Achievement with Growing Market Recognition

In 2024, the Group received growing recognition from different levels of government entities as well as the general public. On one hand, Huitongda Network saw multiple visits and research work from provincial and ministerial leaders from the National Bureau of Statistics, the All-China Federation of Supply and Marketing Cooperatives, the Social Work Department of CPC Jiangsu Provincial Committee, and the Jiangsu Provincial Market Supervision Administration, receiving high praise for its strategies and initiatives. On the other hand, the Group also received numerous corporate honors and provincial/ministerial-level awards during the Year, including the “Top 500 Chinese Enterprises”, the “Key Software Enterprise Encouraged by the State”, the “Top 100 Comprehensive Internet Enterprises in China”, “ESG Annual Outstanding Award” and the “Top 100 Industrial Internet Enterprises”.

 

Future Prospect

In 2025, under the backdrop of the nation’s “Technology Powerful Country” and “Consumption-Driven” strategies, rural markets are expected to become a key driver of economic growth. As the industry’s first mover, Huitongda Network not only echoes the latest policy address, but also sees fast implementation of its strategies, positioning itself as a key potential beneficiary. Huitongda Network will fully seize such an opportunity, empowering rural economic development through digital technologies and supply chain capabilities, along with the expanding use of AI applications in rural markets.

 

In 2025, the Group will focus on profitability and cash flow, and implement the following key initiatives surrounding supply chain management, member services, and digitalization:

 

1. Focus on “Top Brands + Self-owned Brands + POP” to Build a Flexible Supply Chain Network Covering All Categories and Channels

• “Brand Express Project” – strengthening cooperation with leading brands to establish a “high-quality” and “high-cost-competitiveness” product supply ecosystem, specifically catering to the needs of member stores and consumers with brand preferences. Currently, the Group has entered into strategic partnerships with over 100 leading industry brands. In 2025, the Group plans to establish 5-10 additional leading brands’ collaborations in high-growth categories, including smartphones, AI-powered glasses, robotics, drones, innovative appliances, and healthcare products.
• “Self-owned Brand Ecosystem Development Project” – expanding self-owned brand portfolio to meet the needs of member stores and consumers with a preference for high cost competitiveness and high product quality.
• “Open-Platform Supply Chain System” – establishing an AI-driven POP platform to satisfy the demand and facilitate the supply of long-tailed and customized products.

 

2. Focus on Member Services and Digital Capabilities, Pursue Efficiency and Experience Enhancement through AI Applications

• Leveraging its existing coverage of 21 provinces and 25,000 towns and villages, focus on increasing the penetration rate and stickiness of member stores to support organic growth.
• Continue to expand the applications of AI technology, especially across intelligent shopping assistants, private domain marketing, and smart operations.
• As one of the earliest domestic ToB empowerment platforms focusing on rural markets, Huitongda Network has accumulated a vast amount of operational and transaction data, supporting its development in relevant digital technologies and servicing capabilities. In view of the recent AI development, the Group is also actively exploring the possibilities of self-developed industry-specific large models, software robotic applications, and mainstream large model integration such as DeepSeek, so as to expand its functions and create additional value for its upstream and downstream partners.
• The Group’s SaaS business will move forward to AIaaS with the support of edge computing and intelligent terminals, with the aim of building a smarter, more seamless, and two-way product flow between urban and rural markets.

3. Focusing on New Product Categories, New Channels, and New Business Model Development to Bring New Growth Impetus

• In terms of new product categories, the Group will focus on high-pricing and high-margin personal care, healthcare, and lifestyle products.
• In terms of new channels, the Group will expand its network across e-commerce platforms, private domain, and cross-border channels, thereby expanding its reach and diversifying its revenue mix.
• In terms of new business models, the Group will strive to integrate regional resources through strategic investment and mergers and acquisitions, in order to rapidly expand its ecosystem, achieve economies of scale, and strengthen its control along the value chain.

 

Riding on the proactive strategic upgrade in 2024, the Group is confident of achieving further improvement in gross profit margin and net profit margin starting from 2025, with profit growth expected to outpace revenue growth. In 2025, the Company will also aim to realize dividend distributions at the earliest opportunity, in compliance with the relevant policy guidelines. With “tech-driven efficiency and supply chain value creation” at its core, the Group will continue to pursue its mission of “Creating a Better Life for Rural People”, while delivering sustainable returns to its shareholders and society.

 

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About Huitongda Network Co., Ltd.

Huitongda Network (9878.HK) is a leading industrial internet company dedicated to serving rural family-owned retailers in China’s rural markets. Supported by its digital technology and supply chain capabilities, the Group strives to provide member stores with stable and efficient one-stop supply chain solutions, as well as SaaS+ services and merchant solutions for its member stores, channel partners, brand manufacturers, and other stakeholders along the value chain. The comprehensive solutions allow the Group to create a unique digital ecosystem with niche business opportunities.

 

As of December 31, 2024, Huitongda Network has established a retail ecosystem with its 248,000+ member stores in China, covering 21 provinces and municipalities and more than 25,000 villages and towns. The Company was listed on the main board of the Stock Exchange of Hong Kong (SEHK) on February 18, 2022.

 

This press release is issued by DLK Advisory Limited on behalf of Huitongda Network Co., Ltd..

 

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