For the capital market, 2023 will be another year of ups and downs.

Under the influence of various macro factors, the Hong Kong stock market continues to fluctuate, and the market environment is full of uncertainty. This also makes investors maintain a cautious attitude towards investing in Hong Kong stocks.

As the saying goes, risk and opportunity coexist, and fluctuations often hide investment opportunities worth paying attention to. Among them, the DaaS (Equipment and Service) circuit, which is characterized by an asset-heavy operating model, is one of the hot topics of market attention.

1. Grasp the major market trends and look at the growth of the DaaS industry

Why DaaS racetrack?

When evaluating the investment potential of any industry, it is important to adapt to market trends. The DaaS industry has become a high-profile racetrack not only because of companies' demand for cost reduction and efficiency, but also because of a deep understanding of the nature of the industry and collaborative development with the same frequency as the market.

On the one hand, the core essence of DaaS services goes far beyond providing full-life cycle solutions for IT office equipment. More importantly, it has built the concept of providing a complete office ecosystem for corporate customers.

In recent years, as companies' demand for cost reduction and efficiency has gradually increased, asset-light operations have gradually become a trend. In this context, DaaS has successfully transformed the traditional leasing and recycling market through digital means such as equipment information management, data analysis and forecasting, etc., providing innovative solutions for enterprises, effectively reducing operating costs and improving IT operation efficiency. Its commercial value is to help enterprises better manage cash flow and withstand cyclical risks.

On the other hand, policy-level support is also a key driver for the Booming DaaS Industry.

In recent years, the publication of a series of fiscal and taxation policies, financing policies and other policies has driven rapid growth in the number of small and medium-sized enterprises, and the demand for IT equipment lifecycle management services continues to rise. Compared with traditional IT equipment procurement and management methods, DaaS is more in line with the business needs of small and medium-sized enterprises due to its flexibility and efficiency.

According to public data, by the end of 2022, the number of micro, small and medium-sized enterprises in China had exceeded 52 million, an increase of 51% over the end of 2018. This trend has largely catalyzed the development of the DaaS industry, making it show a high degree of certainty in the market.

As a result, the growth certainty of the DaaS circuit is also reflected. Deeply understanding market demand, adapting to enterprise development trends, and policy support, the DaaS circuit is expected to continue to benefit from the rapid growth in the number of small and medium-sized enterprises. As an investor, pay attention to the development of the DaaS industry, or be able to find a relatively steady investment path in the face of market shocks.

2. What is the value of Lingxiong Technology in providing equipment life cycle services?

Looking further, in the face of many choices on the racetrack, many investors tend to choose leading companies as investment targets. This is because leading companies in the industry have usually built a perfect and stable business model, with high market share and brand influence.

Take Lingxiong Technology as an example. As the largest DaaS supplier in China, the closed-loop ecological DaaS service model of the entire industry chain can provide enterprises with one-stop services including IT equipment subscription (leasing) services, IT technology subscription services, IT equipment management SaaS services, and IT equipment recycling services.

It is worth mentioning that attention is paid to the asset-heavy nature of DaaS services and the trend of digital development in various industriesLingxiong Technology became the first enterprise in the industry to start and continue to further advance digital construction, and has achieved the digital opening of the entire chain.

From front-end customer acquisition, to central office business processing, order delivery, and asset management, to back-office business and finance integration and automated financial statement output, Lingxiong Technology has established a comprehensive digital architecture to enable the entire chain of information to circulate without barriers.

Data accumulation at all stages also provides strong support for operations such as enterprise process control, risk management, and data analysis, etc., improving the overall efficiency of IT operations and services, and achieving more refined operation management.

The continuous deepening of digital construction will strengthen the synergy between the company's main businesses and improve the effectiveness of its own operation management and customer service.

The results of operations under this business model have been recognized by investors.

Huang Yuewei, general manager of Dachen Finance Shanghai Branch, the earliest investor of Lingxiong Technology, said, “The emergence of Little Bear U Lease (Lingxiong Technology) has enabled the maximum use of IT equipment and extended the original equipment that can only be used by enterprises for 3-5 years to 5-7 years through his operation and management. This is fully in line with the current real needs of a thrifty society.”

The gradually maturing closed-loop ecological DaaS service model for the entire industry chain has not only formalized the original IT leasing, but has also revolutionized the service model within the industry.

It can be said that Lingxiong Technology's service model has led more enterprises to recognize the positive impact of the leasing model on enterprise operating efficiency, and has provided an effective sample for the transformation and upgrading of enterprises in the DaaS industry.

As more companies begin to adopt this service model, it is foreseeable that this will bring greater economic benefits to the DaaS industry, and at the same time enhance the social benefits of the entire industry, further increasing the recognition and influence of Lingxiong Technology and the DaaS industry in society.

Conclusion:

The DaaS service industry where Lingxiong Technology is located has always been a challenging field. To succeed in this field, in addition to requiring a large amount of technology and resources to support high-quality services, enterprises must also continue to innovate and adapt flexibly to changes in the market.

However, once a business successfully establishes an effective service model and gains market acceptance, it is easier to scale up and achieve sustained growth. Like a snowball, companies can use the advantages they have accumulated to continuously expand their market share and improve their competitive position.

Lingxiong Technology has successfully interpreted this logic as “the largest enterprise-level DaaS supplier in China”. The data shows that in the first half of this year, the number of long-term device subscription customers increased by about 38.1%, the number of IT technology subscription customers increased by 48.8%, and adjusted EBITDA increased by about 5.2% year-on-year.

Going back to the capital market perspective, we may be able to wait for the value of Lingxiong Technology to be released.