As another major economic form after agricultural economy and industrial economy, digital economy is an important engine to promote the high-quality development of national economy. The 2023 government work report emphasizes the need to vigorously develop the digital economy, speed up the digital transformation of traditional industries and small and medium-sized enterprises, strive to raise the level of high-end, intelligent and green, raise the level of normalized supervision, and support the development of platform economy.

With the strong support of relevant policies, digital technology is upgrading, transforming and reengineering all the elements of the upstream and downstream of China's traditional industrial chain, promoting the cost reduction and efficiency of traditional industries. In recent years, the development of industrial digitization in China has achieved remarkable results, and a large number of excellent digital enterprises rooted in vertical tracks and empowering traditional industries have moved towards the capital market one after another, which has attracted the eyes of the public.

Recently, in the market spotlight, it is Frances, an one-stop logistics equipment solution provider that empowers the track of on-site logistics equipment and has a leading scale and influence in the industry.

Zhitong Financial APP learned that Frances officially launched its IPO on October 31 and plans to list on the main board of the Hong Kong Stock Exchange under the symbol "02499" on November 10. The listing price ranges from HK $14.18 to HK $16.18 per share, with 200 shares per share, according to the Hong Kong Stock Exchange. The company plans to sell 12.136 million H shares worldwide, of which Hong Kong public offerings account for 10 per cent, international offerings account for 90 per cent, and another 15 per cent over-allotment options.

In fact, long before the listing, Frances has been favored by well-known institutions and capital, including Dachen, Zhong Ding, Xingfu Capital, Centennial Life Insurance, GF Securities Co., LTD. and other well-known institutions.

Once landing on the main board of the Hong Kong Stock Exchange, Frances will successfully win the name of "the first share of China's on-site logistics equipment solution". At this time of listing, the market can not help but wonder how Frances became a leader in the industry and successfully attracted the attention of a lot of capital. Let's analyze the business model, fundamental performance and industry prospects one by one by dismantling the company's prospectus.

The coordinated development of the three major businesses covers the whole life cycle of logistics equipment in the field.

In fact, when it comes to Frances, we have to mention that the company covers the whole life cycle of logistics equipment in the field.

Zhitong Financial APP learned that on-site logistics equipment is mainly used to replace intensive labor, and can be widely used in handling, moving, sorting, stacking goods and heavy objects and other mechanical operations in workplaces such as manufacturing factories, logistics parks, warehouses, airports, ports, etc. There are many kinds of logistics equipment in the field, among which forklift is the most widely used.

In recent years, with the rapid development of China's manufacturing industry and logistics industry, the market demand for on-site logistics equipment is increasing rapidly. As the use and management of logistics equipment in the field has multiple pain points, such as high purchase cost, high maintenance cost, strong professionalism, difficult management and so on, most enterprises are difficult to obtain satisfactory services from traditional service providers. In order to solve the pain point of this industry, the one-stop solution covering the whole life cycle of logistics equipment in the field came into being.

With its rich experience in on-site logistics equipment subscription business, Frances, which has been engaged in the field for more than 16 years, has taken the lead in launching an one-stop solution for the use and management of on-site logistics equipment for manufacturing and logistics enterprises. to provide customers with services including equipment subscription, maintenance and disposal.

Specifically, from the equipment subscription service as the starting point, the company introduces a variety of service types to relevant customers through cross-selling. After gaining customers' trust in the company's technology and execution capabilities, most customers will decide to adopt the company's equipment subscription services. In recent years, nearly 70% of Frances's on-site logistics equipment subscription service customers have been transformed from equipment maintenance service customers, which shows the effectiveness of the company's cross-selling strategy. In addition, by participating in relevant exhibitions and activities in the sales market, the company not only strengthens its ties with suppliers, but also obtains first-hand information on the market needs of logistics equipment and accessories business divisions in the field, so as to better understand the diverse needs of customers.

From equipment subscription service to maintenance service to the sales of logistics equipment and accessories in the field, Frances' business layout has formed benign positive feedback and completed the coverage of the whole life cycle of logistics equipment in the field. as a result, the "flywheel effect" leads to the continuous growth and development of the company's business.

This also makes Frances a leader in the industry. Frances is the largest provider of on-site logistics equipment solutions in China in terms of revenue in 2022, according to cautionary data. In terms of the size of the equipment fleet in 2022, Frances also ranks first in the industry, and the size of its equipment fleet is more than the sum of the remaining 9 of the top 10 market participants in the same year.

In fact, Frances has always been in the forefront of the digital transformation of the logistics equipment industry in the field. In recent years, the company has developed a technology platform based on the Internet of things-- intelligent assets operation and management system. Comprehensive digitization has been implemented in equipment procurement, maintenance and management. Through this system, the company can realize real-time monitoring of equipment status, supply chain and inventory management and timely scheduling of personnel and equipment, which can improve the efficiency of equipment use and minimize the cost of operation and maintenance. According to Zhitong Financial APP, compared with the traditional on-site logistics equipment procurement model, on-site logistics equipment solutions can help enterprises reduce costs by about 20% in the entire equipment life cycle. At present, the smart assets operation and management system has covered more than 97.3% of the company's equipment fleet.

In order to meet the diverse needs of customers, Frances has built a sound supply chain capacity, completed the construction of three major supply chain bases, and achieved a long-term and stable cooperative relationship with upstream suppliers. At the same time, the company has also established a complete supply chain database and carried out efficient and standardized management of logistics equipment in the field. As of April 30, 2023, the company's supply chain database has recorded about 331000 kinds of parts information, complete records of each brand of equipment applicable to the accessories model, specifications, performance indicators, inventory level and procurement and other information, and for each part of the preparation of its unique identification code, so as to achieve accurate matching of parts and quickly out of storage, efficient to meet customer needs.

Under the efficient operation of the smart assets operation and management system, the company has established a strong service network, covering both online and offline. As of April 30, 2023, the company has 67 offline service outlets in 47 cities across the country, managing more than 40,000 on-site logistics equipment. Benefiting from the comprehensive and flexible service network layout, Frances is able to respond accurately and quickly to customer needs, and the company can reach the customer's designated location from any service network within 8 hours of receiving demand.

The business model is widely recognized, and sound fundamentals create the background of value.

Of course, such an excellent business model is favored by the market, and the company's customer base has expanded year by year, from 7477 in 2020 to 8170 in 2022. Among them, there is no lack of large manufacturing and head logistics enterprises. According to the "Top 50 Chinese Logistics Enterprises in 2022" list released by the China Logistics and Purchasing Federation, seven of the top 10 logistics enterprises in China in 2022 are customers of Frances. It is worth mentioning that while the company's customers are growing steadily, Frances has also achieved a high customer retention rate. For the years ended December 31, 2020, 2021 and 2022, and for the four months ended April 30, 2023, the company's net income retention rates for major customers remained at 98%, 99%, 97% and 100%, respectively.

Driven by the popular business model and industry-leading market position and scale, the company's revenue has continued to grow from 981 million yuan (RMB, the same below) in 2020 to 1.194 billion yuan in 2022, with a compound annual growth rate of 10.4%. The year-on-year growth rate of revenue in the first four months of 2023 reached 25.8%, from 347 million yuan in the same period in 2022 to 437 million yuan.

In addition, Zhitong Financial APP also noted that in 2020, 2021, 2022 and the first four months of 2023, the company's operating activities generated net cash of 452 million yuan, 528 million yuan, 522 million yuan and 155 million yuan respectively, indicating that the company's cash flow is very healthy and abundant.

The brilliant performance proves that the company's business model has obvious economic benefits, and the sustained and stable cash flow confirms once again that the company's commercialization path has been completely opened. Although the company's net profit performance has fluctuated slightly in recent years, with the steady recovery in manufacturing and the surge in demand for the company's business, the company's profits have returned to the high growth track.

Hit the "pain point" of the industry directly and establish the attribute of high growth of the industry

If you want to consider the investment value of a company, the room for development of the industry is also an indispensable reference factor. In the blue sea track, Frances as the leader, there is a lot of room for imagination.

According to the data of Zhenshi Consulting, since the 21st century, China's manufacturing and logistics industry has experienced rapid development, which has led to the demand of related industries for on-site logistics equipment. However, as Chinese enterprises pay more and more attention to cost control and operating efficiency, the traditional on-site logistics equipment purchase mode has multiple pain points such as high cost and difficult maintenance, which makes the market demand for Chinese on-site logistics equipment solutions increase rapidly.

Zhitong Financial APP learned that China's on-site logistics equipment solution market has experienced rapid expansion in the past five years, with the overall market size increasing from 6.9 billion yuan in 2018 to 11.4 billion yuan in 2022, with a compound annual growth rate of 13.6 percent. It is worth noting that although the market scale is expanding rapidly, the market of on-site logistics equipment solutions in China is still in the early stage of development, and the penetration rate is relatively low compared with developed countries and regions. Data show that the estimated penetration rate of logistics equipment solutions in the United States in 2022 is 54.6%, while in China, the figure in the same year is only 3.7%, indicating that the industry has great growth potential in the Chinese market. In the future, driven by the development of the manufacturing and logistics industries and the growing demand for cost reduction and efficiency, the size of the market is expected to increase to 34.9 billion yuan by 2027, with a compound annual growth rate of 25.0% from 2022 to 2027, and the related penetration rate will further increase to 5.9%.

At the same time, the policy is also continuing to expand the development space of the industry. In recent years, with the rise of digital economy to "national strategy", promoting the intelligent and digital development of traditional industries has become an important part of promoting the healthy development of digital economy. In this year's government work report, it is proposed to speed up the digital transformation of traditional industries, strive to improve the high-end and intelligent level, and support the economic development of the platform. In the future, with the continuous deepening of the platform economy, China's on-site logistics equipment solution market is bound to accelerate expansion, while the industry concentration is bound to focus on the head enterprises, showing a situation of the strong and strong. As the forerunner of China's on-site logistics equipment solution industry, its growth coincides with the development direction of the national digital economy and will continue to benefit.

To sum up, Frances, which has been ploughing the industry for 16 years, has built an one-stop solution covering the whole life cycle of logistics equipment in the field through the synergy of the three major business sectors. as the forerunner of the industry, it has successfully created a strong competition barrier and achieved obvious first-mover advantages in terms of operation, service and scale. At a time when China's on-site logistics equipment solution market is full of blue ocean potential, it is the right time for Frances, as the "number one" in the industry, to land in the capital market.

In recent years, digital, intelligent and other related concepts of digital economy have been an important main line of market attention. At a time when the market is chasing the pure target of the digital economy, Frances is expected to achieve an "acceleration" of performance with the excellent prospect of the industry, and listing is only a new starting point for its Nuggets in the 10 billion market.