China Youzan (8083 HK) 2020 Result meet expectation with strong momentum in offline commerce SaaS business April 14, 2021 196

PSR Recommendation: BUY Status: Maintained
Target Price: HKDHKD3.94

Investment Summary
The company has made adjustments on its revenue breakdown structure, transaction fee
and extended service revenue are now included in the merchant solution segment.
In the 2020 result announcement, the company has made adjustments on its revenue
breakdown structure. The revenue is now separated into three segments, namely subscription
solutions, merchant solutions and others. The company SaaS sector is now classified as
subscription solution, while transaction fee and extended service revenue are now included
in the merchant solution segment. The remaining businesses of the company are included in
the other segment.
The 2020 results meet expectation, with a positive cash flow from operating activities
The company’s 2020 revenue was RMB 1.821 billion (+55.8% YoY), which is in line with our
previous forecast (previous forecast was RMB 1.822 billion). The revenue from subscription
solution was RMB 1.048 billion (+76.6% YoY). The revenue from merchant solution was RMB
757 million (+33.7% YoY) and the revenue from other business was RMB 15 million (+78.1%
YoY). The revenue proportion of the three segments were 57.6%/41.6%/0.8% respectively.
The growth rate of merchant solution revenue was significantly slower than that of GMV
(GMV growth rate over the same period was 60.8%). The main reason wasthat the company’s
merchant solution revenue in 2019 includes transaction fee revenue generated from nonYouzan business. If the relevant revenue was excluded, the 2020 revenue growth of merchant
solution was in line with the GMV growth, which matches with the link-with-GMV charging
model of the merchant solution segment. The revenue from extended services grew 84% YoY
and exceeded the growth of the GMV.

About the author

Kevin Chiu
Analyst
Research

Kevin Chiu received Bachelor`s Degree from University of Bristol and obtained Master`s Degree with distinction in Accounting and Finance from Warwick Business School. Kevin once worked as an analyst in the Equity Capital Market department of China Securities International, and he is familiar with the operation of Hong Kong`s capital market. Kevin is currently a licensed research analyst at Phillip Securities and covers TMT / Education sectors.

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