According to the results of the new round of MSCI index adjustments, Huitongda Network was included in the MSCI Global Small Cap Index for the first time, and the relevant adjustments will officially take effect after the market on May 31, 2024.

Generally speaking, the MSCI index is comprehensively reviewed based on factors such as liquidity, free circulation market value, and industry status. Being included in the MSCI index means that the company's value is recognized by the market.

At the same time, as one of the most widely used benchmarks in the world, the MSCI index affects the nerves of global capital markets. In particular, many long-term passive funds will directly adjust the layout according to the relevant indices; the semi-annual review (May/November) may have a stronger impact on the corresponding individual stocks than in the regular quarter due to the larger range and wider scope of adjustments and stronger event effects.

In this time window, it is worth sorting out the value logic of Huitongda Network again.

1. Model innovation and upgrading to enable growth

Huitongda Network pioneered the “platform+member store” business model, using digital technology and supply chain capabilities to empower township couple stores, and truly anchor users' immediate needs and pain points. On this underlying framework, Huitongda Network is also continuously promoting model innovation and upgrading, providing a package of solutions for the industrial chain.

From the perspective of terminal stores for husband and wife, in the face of the gradual development of e-commerce in rural areas, the long-term survival of husband and wife stores is fundamental to the long-term survival of husband and wife stores, meeting consumers' expectations for high-quality products and reasonable prices, while maintaining a certain profit margin, and gradually making up for the shortcomings of digital technology and lack of information data on various links. This is more difficult to achieve by relying on the store owner's own experience; it necessarily requires the use of platform companies with strong supply chain systems.

Huitongda Network, on the other hand, innovated and created a unique supply chain system to enable all online and offline links. In particular, it greatly reduced supply chain costs and kept more profits in township couple stores.

From the perspective of upstream brand manufacturers, under the “bridge” role of Huitongda Network, it has greatly promoted the matching of supply and demand between brand manufacturers and sinking consumers, which also helps them operate.

Behind this, Huitongda Network continues to strengthen cooperation with leading brands in various industries, while increasing the B2f reverse supply chain model, integrated production and marketing model, as well as renewing the level of intelligence of SaaS+ products and promoting the upgrading and implementation of member store activities to reduce costs and increase efficiency in the industrial chain.

Looking at the B2f reverse supply chain model, its biggest characteristic is demand-driven. It helps husband and wife stores to purchase upstream at relatively low prices through consolidated procurement, sales and production determination, etc. In actual application, Huitongda Network has also innovated and improved the existing model, participated in product development and manufacturing, and further enhanced its capabilities.

For example, in 2023, Huitongda Network reached cooperation with Jiangxi Gongqingcheng Qingchuang Group and Rongdian Group to launch a “Zhonghuida” brand air conditioner to accurately adapt to the demand for products and prices in the sinking market. The product's inventory turnaround time is only 20-30 days, showing a very high level of operational efficiency. As a result, Huitongda Network has attracted more than 10 other air conditioning brands to join the cooperation to accelerate the upgrading of the home appliance industry sector.

In the process of empowerment, Huitongda Network's own growth space has also gradually opened up. For example, it is expected that the bilateral network effect will continue to be enhanced, and more husband and wife stores, brand manufacturers, etc. will enter the ecosystem, thereby continuously expanding the scale and efficiency of the business and consolidating the leading position in the market.

II.Performance continues to be realized, and commercial potential still needs to be unleashed

At the same time, model innovation and upgrading brought continuous performance to Huitongda Network. Achievement of performance is also one of the factors that the market is currently focusing on.

Since 2024, China's economy has been recovering, which also provides some support for the “fundamental-driven” capital market. Referring to institutional views, Cathay Pacific Junan (Hong Kong) said that economic recovery will help improve overall profit expectations in the Hong Kong stock market; Dongwu Securities said that simply “cheap” valuations are not a reason to increase capital positions; the rise in Hong Kong stocks also suggests improvements in domestic fundamentals or fundamental expectations.

At the micro level, judging from the latest financial reports, the Internet profit growth rate of many well-known Hong Kong stocks was higher than expected, and the performance has entered an upward channel. The sector's investment focus is expected to return to the core main line of performance growth.

Focusing on the performance of Huitongda Network, in 2023, Huitongda Network achieved revenue of 82.43 billion yuan, an increase of 0.4%; net profit and net profit to mother surged 25.0% and 41.7% year-on-year respectively; and operating cash flow reached 470 million yuan, once again verifying the profitability and quality of its business model.

It is worth mentioning that this was achieved on the basis of the continuous growth of Huitongda Network, and its performance has maintained a positive trend since 2020.

In terms of operational data, Huitongda Network has also ushered in overall growth. The total number of member stores exceeded 230,000, and the number of new member stores increased 15% year over year; the number of SaaS+ subscribers reached 132,000, up 15.6% year on year, of which the number of paying users reached 48,000, an increase of 61.4% year on year; the average purchase amount of member stores in a single store increased from 250,000 yuan in the previous year to 350,000 yuan.

It can also be seen from this that the number of paying users on the Huitongda network is growing faster, simultaneously increasing the number of users and the value of individual users, and gradually unleashing its commercial potential. This means that the implementation of its subsequent performance is also supported.

Based on the foregoing, Huitongda Network has both the ability to expand on a large scale and has strong profitability. The future development prospects are broad, and it is only a matter of time before value is advanced. Coinciding with the time window of being included in the MSCI Global Small Cap Index, its value has been verified once again, and subsequent performance is worth looking forward to.