Zhitong Finance App learned that on the evening of March 22, 2024, Ling Xiong Technology (02436), the first stock company in China's DaaS (Device as a Service) industry, announced its 2023 annual results. According to the announcement, Ling Xiong Technology's revenue in 2023 reached 1,793 billion yuan (RMB, same below), up 7.8% year on year; gross profit and adjusted EBITDA (profit before tax, interest, depreciation and amortization) were 147 million yuan and 241 million yuan respectively. According to reports, in terms of 2023 revenue, Ling Xiong Technology's revenue will continue to rank first in the industry.

In 2023, despite being affected by macroeconomic factors such as the new situation and challenges facing China's economic operation, Ling Xiong Technology's full life cycle management business model of equipment remained strong and resilient, and its core business continued to maintain a high-quality development trend. Among them, revenue from the equipment recycling business, equipment subscription business, and IT technology subscription service increased by about 8.1%, 9%, and 2.4%, respectively; the number of new customers in the equipment subscription business nearly doubled year on year, and the total number of equipment subscriptions increased 15.9% year over year to about 5.744 million units.

With good customer service as the center, active performance as an equipment subscription and IT technology subscription service is outstanding

Only when the industry maintains healthy and standardized development can enterprises enjoy high-quality development dividends. As a leader in the DaaS industry, Lingxiong Technology has been taking many measures to promote the standardization and mature development of the industry over the years, and has achieved fruitful results. In 2023, Ling Xiong Technology will continue to act actively, showing its leading role in the industry, and adding a strong touch to the high-quality development of the DaaS industry.

On February 2, 2023, at a symposium for micro, small and medium-sized enterprises, individual businesses and industry associations in Shenzhen, Hu Zuoxiong, chairman of the board of directors of Ling Xiong Technology, called for more industrial policies to favor the 100 billion DaaS industry. In March 2023, the two national standards “Enterprise Credit Evaluation Index” and “Enterprise Credit Evaluation Report Preparation Guidelines”, which participated in the preparation, were released and implemented successively. In May 2023, we collaborated with several well-known brands to create the industry's first leasing festival; took the lead in establishing the DaaS industry's first forward-looking industry research think tank “Ling Xiong Research Institute”, and released major industry research reports one after another, providing a core channel for the outside world to fully understand the DaaS industry. In December 2023, the CCID Research Institute and the China Association of Small and Medium Enterprises released the first domestic “Enterprise Office Computer Rental Standardization Development Report”, which plays an important guiding role in the standardized and healthy development of the DaaS industry.

These important measures have further promoted the high-quality growth of China's DaaS industry. According to Insight Consulting data, China's DaaS market will continue to grow at a high rate in 2023. It is expected to exceed 61 billion yuan and reach 138.2 billion yuan in 2026. Ling Xiong Technology's outstanding performance has been widely praised, and has been successively named “Most Valuable Social Service Company”, “Digital Innovation Enterprise of the Year”, “Social Responsibility (S) Pioneer Enterprise Award”, and “Most Innovative Value Award of the Year” by many authoritative media.

While bravely assuming the responsibility of leading the industry, Ling Xiong Technology has always focused on serving customers well, carefully studying and grasping the needs of enterprise customers under the new situation and challenges. Under the complex macroeconomic situation, more and more enterprises are paying great attention to reducing costs and increasing efficiency, and paying great attention to cash flow. In this context, the long-standing pain points of IT equipment lifecycle management in the daily operations of major enterprises have become more prominent, such as high financial pressure to buy IT equipment at once, slow technical support response, poor IT equipment management flexibility, and low IT equipment utilization, showing strong demand for one-stop DaaS solutions to reduce costs and increase efficiency.

In this regard, on the one hand, Ling Xiong Technology has enriched and perfected the content of DaaS services, customizing equipment lifecycle management solutions for enterprise customers in different industries, while providing one-stop comprehensive IT solutions to help successfully host the 133rd Canton Fair, the 2nd China Vocational Skills Competition, the 19th Asian Games, and the 31st World University Summer Games; on the other hand, it has strengthened its market layout in key regions to provide more refined services to enterprise customers. Take the East China market layout as an example. In September 2023, Lingxiong Technology (Shenzhen) Co., Ltd., a wholly-owned subsidiary of Lingxiong Technology, established Lingxiong Meibang Technology (Shanghai) Co., Ltd. in Shanghai and officially put into operation. Through the company, Ling Xiong Technology aims to integrate high-quality industry resources, expand the national printing equipment solution market share, and further consolidate and enhance the national service capabilities and market penetration of its DaaS services in key regions.

These precise and effective measures have further enhanced Lingxiong Technology's brand and customer stickiness, expanded the number of customers, and promoted the continuous and rapid growth of the business scale. According to the data, in 2023, the number of Ling Xiong Technology equipment subscription business customers and the number of IT technology subscription service customers increased by 52.8% and 63.3%, respectively. Benefiting from this, Ling Xiong Technology's equipment subscription business revenue in 2023 increased by about 9% year-on-year to 348 million yuan; IT technology subscription service business revenue continued to grow steadily to about 159 million yuan.

Continue to build high core barriers and further strengthen the trend of concentrating market share on leading companies

“As DaaS service providers with Ling Xiong Technology as the core continue to strengthen industry infrastructure construction, and DaaS services are becoming just what major enterprises in China need in their daily operations, the penetration of China's DaaS market is increasing in an orderly manner.” The relevant person in charge of Ling Xiong Research Institute said that in fact, in recent years, the DaaS market has entered a new stage of development. One notable characteristic is that market share is gradually being concentrated on leading companies in the industry, and the winner-take-all Matthew effect is becoming more and more obvious.

“The listing of leading companies in the industry, such as Ling Xiong Technology, is a landmark event in increasing industry concentration.” Chen Liwei, partner of Oriental Fuhai, said. According to Insight Consulting's data, in 2021, the top five market players in the industry accounted for about 7.2% of the total market share in terms of revenue. Among them, Ling Xiong Technology's revenue accounts for about 3.9% of the total market share, ranking first in the industry. This also means that Lingxiong Technology's market share exceeds that of the other four major players combined. “In fact, Ling Xiong Technology continues to raise the core barriers of the industry and is further strengthening the trend of concentrating the industry's market share on it.” Some industry experts pointed it out.

According to Haitong International Research Report, the industry barriers built by Ling Xiong Technology include: first, the closed-loop DaaS ecosystem can generate strong synergy effects, cross-selling consolidates its synergy effects and is highly customer stickiness; second, a complete and powerful recycling industry chain, which has strong support and synergy effects for equipment subscription services; third, the intelligent risk control system is essential to the development of DaaS business, and the company maintains a very low bad debt rate all year round; fourth, strong support from strategic shareholders.

Among them, the three main businesses of Lingxiong Technology will continue to be deeply collaborated in 2023, with remarkable results. Enterprise customers with long-term and short-term device subscription services are transformed according to different needs and scenarios at different stages. The meticulous and thoughtful IT technology subscription service greatly enhances the user experience of enterprise customers, brings them closer to customers, enhances interaction with enterprise customers, and helps acquire customers for the two major businesses of equipment subscription and equipment recycling. In addition, Ling Xiong Technology's industry-leading recycling and refurbishment capabilities play a strong supporting role and synergistic effect on equipment subscription services, helping them achieve efficient operation and high-quality services. Ultimately, while improving customer experience and enhancing customer stickiness, it also helps customers optimize equipment usage costs.

Furthermore, deep collaboration with strategic shareholders continues to bring valuable resources to Ling Xiong Technology, thus further enhancing the development resilience of Ling Xiong Technology. The deep collaboration with JD has not only brought traffic to Lingxiong Technology's tens of millions of enterprise customers, but also reduced Lingxiong Technology's operating costs in terms of warehousing management, logistics and distribution services. With deep collaboration with Tencent, Ling Xiong Technology's DaaS solutions can not only benefit all companies residing in Tencent's creative space, but also efficiently obtain corporate customers in batches through the Tencent Conference App. Furthermore, Lenovo not only ensures priority supply and satisfaction of Lingxiong Technology's supply chain needs, but also enhances the trust and loyalty of enterprise customers to Lingxiong Technology by sharing original Lenovo equipment and tailor-made exclusive services.

By continuing to consolidate its core competitiveness, Ling Xiong Technology's foundation is more stable. Benefiting from this, Ling Xiong Technology became the only company in China's DaaS industry with revenue exceeding 1.79 billion yuan. In terms of revenue for 2023, Ling Xiong Technology's revenue continues to rank first in the industry.

Multiple benefits continue to boost DaaS market sentiment, and institutions are firmly optimistic about the development prospects of leading enterprises

According to the data, as of the end of 2023, the number of enterprises in China exceeded 58 million. Some agencies predict that by 2026, the number of registered enterprises nationwide will reach 80 million. The continued steady growth of market players has created a good basic market for the further increase in China's DaaS market penetration rate. Furthermore, as macroeconomic fluctuations continue to recover, major enterprises will, on the one hand, attach great importance to cost reduction and efficiency and cash flow, and on the other hand, accelerate digital transformation and upgrading in order to achieve high-quality development. IDC data shows that IT expenditure for small and medium-sized enterprises in China is expected to reach 13.9 billion US dollars (about trillion yuan) in 2026.

It is worth mentioning that many local governments have successively introduced policies to guide administrative institutions to use subscription methods to configure equipment. For example, in October 2023, the General Office of the Guangdong Provincial Government issued the “Work Plan on Launching Equipment Leasing Pilots in the Fields of Education, Science, and Health Care in Our Province”. “The introduction of these policies will, on the one hand, directly accelerate the conversion of equipment subscriptions. On the other hand, they will also play a good demonstration and leading role, strengthening the government and enterprise's awareness of DaaS services.” Some experts said.

Benefiting from the combined effects of the above factors, DaaS services are becoming an immediate requirement for the daily operation of enterprises, thereby speeding up the penetration rate of the DaaS market in China. According to Insight Consulting's data, the overall market size is expected to maintain a compound annual growth rate of 32% in the next few years and reach 138.2 billion yuan in 2026.

Some financiers pointed out that China's DaaS industry has ushered in a window of opportunity, and the market size has entered a fast track of growth. As a leading company in the DaaS industry, the core barriers built by Ling Xiong Technology are difficult to surpass, and its market share will be higher and higher in the future. As a result, Ling Xiong Technology's future revenue volume and profit level have a great deal of room for imagination.

Some organizations believe that as Ling Xiong Technology's business scale continues to expand and operating efficiency continues to improve, it will enter a stage of continuous and large-scale profit in the next few years. According to Haitong International's research report, Ling Xiong Technology expects to achieve total revenue of RMB 2,417/RMB 3.331 billion from 2024-2025, and the adjusted EBITDA (profit before tax, interest, depreciation and amortization) is RMB 562/861 million. Furthermore, the bank said in its first coverage report that if the penetration rate of IT equipment subscriptions in China increases to 50% and the market share of Ling Xiong Technology increases by 1 times, the company's potential growth space will be 20 times greater.

Looking forward to the future, Ling Xiong Technology will continue to adhere to the values of serving customers well, develop new productivity according to enterprise conditions, continuously improve IT technology service capabilities and service quality, and create more new value for customers. At the same time, Ling Xiong Technology will fully seize development opportunities, further penetrate core cities and other cities with great potential to expand the scope of services, make full use of the power of digital transformation to continue to strengthen the synergy of various business lines, continue to maintain high-quality development, and create greater value for shareholders.