We are an IT solution provider focusing primarily on traditional software-driven solutions for financial institutions during the Track Record Period and we are also committed to providing innovative software-driven solutions, including solutions powered by data analysis and image and text recognition technologies, for both financial institutions and healthcare institutions. According to the CIC Report, traditional software-driven solutions refer to solutions that facilitate the digitalization of various institutions focusing on the collection and storage of data, mainly based on software or locally deployed IT systems; and innovative software-driven solutions include data-driven systems involving advanced analytics and technologies including cloud computing, AI, IoT, etc, where user data and feedbacks will be shared and analyzed for further applications, as well as IT solutions developed for newly-emerged businesses. According the CIC Report, in additional to a traditional IT solution provider, we are also a provider for innovative IT solutions because our innovative IT solutions adopt the advanced technologies, including data analysis and image and text recognition technologies, and some of them are also developed for newly-emerged businesses for financial institutions and healthcare institutions. According to the CIC Report, we are a top 100 provider of over 2,500 providers of IT solutions for financial institutions in China in terms of sales revenue in 2019, and we are also a provider of healthcare IT solutions in China, with solutions including featured medical quality control and safety warning system, which enables supervisors and department directors at hospitals to monitor the behavior of healthcare professionals on a real-time basis. Our solutions enable financial institutions, healthcare institutions and other enterprises to achieve intelligent business processing and data visualization, improve operational efficiency and optimize service quality. We focus on serving financial institutions and healthcare institutions, many of which are banks and hospitals and are closely connected to people''s daily life, and through providing such institutions with both traditional and innovative IT solutions, we aim to improve the general public''s experience in their daily use of financial or healthcare services.
We focused primarily on our traditional software-driven solutions and generated the majority of our total revenue from our traditional software-driven solutions during the Track Record Period. Since Mr. Zhai''s acquisition of Beijing Newlink in December 2016, we have been consistently focusing on providing software development services, technical and maintenance services and self-developed software products. Right after Mr. Zhai''s acquisition, we have actively explored business opportunities, and obtained industry recognition and business relationships with potential customers, leveraging our management''s extensive experience and expertise in the IT solution market and finance industry. With our experience accumulated in the development and provision of our traditional software-driven solutions and to keep abreast to the constant development of information technology, we have explored new business opportunities by developing innovative software-driven solutions, including solutions powered by data analysis and image and text recognition technologies, and started to generate revenue from such solutions since 2018. We expect that we will continue to generate the majority of our total revenue from our traditional software-driven solutions in the near future, and that we will continue to diversify our solution offerings and support our long-term business growth by investing in the development of our innovative software-driven solutions, including solutions powered by data analysis and image and text recognition technologies.
We provide financial institutions, primarily including banks, trust companies and asset management companies, with a comprehensive spectrum of solutions, such as BEAI platform, over-the-counter bond bookkeeping system, distributed trading platform and RPA solution, to help refine their financial services, data management, security management and operation management and enable them to better serve their clients in new business scenarios and adapt to changing regulatory requirements. Our revenue generated from IT solutions for financial institutions was RMB20.7 million, RMB109.7 million, RMB127.0 million, RMB46.7 million and RMB53.1 million in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively, among which 100%, 90.6%, 76.3%, 72.3% and 92.8% was generated from traditional software-driven solutions, respectively. According to the CIC Report, we are an early mover in the market of over-the-counter bond bookkeeping system, and our over-the-counter bond bookkeeping system was implemented in nine banks as of March 31, 2020, representing 52.9% of a total of 17 banks that engaged third-party providers of such system in China as of the same date. Empowered by our technology capabilities, we also offer Robotic Process Automation solution, or RPA solution, to optimize operational efficiency of financial institutions by replacing labor intensive procedures with process automation through robotic execution. According to the CIC Report, we were one of less than ten domestic RPA solution providers for financial institutions in China that successfully commercialized RPA solutions and generated revenue, as of March 31, 2020.
On the other hand, we have placed much emphasis on responding and tackling pressing social needs in our innovative healthcare IT solutions, including medical quality control and safety warning system, critical values warning system, clinical pathway management system and telemedicine system, with application of healthcare data analysis, including data preprocessing, mining and visualization, for healthcare institutions in China. Benefiting from our management''s industry insights, we have started our research and development of our medical quality control and safety warning system in January 2017, which later witnessed significant market potential driven by various favorable governmental policies regarding medical quality control and healthcare data analysis. Our revenue generated from IT solutions for healthcare institutions was nil, nil, RMB12.3 million, RMB4.0 million and RMB2.7 million in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively, all of which was generated from our innovative software-driven solutions. As we developed our system based on the customer''s specific needs, we stood out among other competitors in the tendering process and successfully obtained our first engagement in the healthcare industry. We are a provider of medical quality control and safety warning system with real-time monitoring functions and intelligent analysis of full range of medical data acquired from existing medical databases of hospitals in China. We are committed to making improvements to healthcare quality by enabling hospitals to effectively monitor each aspect of their daily operations, efficiently analyze clinical data and timely respond to emergencies through application of healthcare data analysis, including data preprocessing, mining and visualization. Our medical quality control and safety warning system was first implemented in November 2018 in a Class III Grade A hospital in Chongqing with over 3.8 million annual outpatient visits and over 110,000 surgeries performed annually and helped it achieve comprehensive medical quality control and effectively reduce risk of medical disputes caused by medical malpractice. With our proven track record of successful system deployment, as of June 30, 2020, we expanded the implementation of our medical quality control and safety warning system to 44 hospitals, 29 of which were Class III Grade A hospitals, and entered into cooperation arrangements with 240 hospitals, over 70% of which were Class III Grade A hospitals, to implement such system in 2021. As of June 30, 2020, we recognized revenue from 33 hospitals of such hospitals.
We are a technology-driven company with good in-house research and development capabilities. Since our inception, our technical team has developed substantially all core technologies used in our solutions and commercialized over 30 IT solutions for financial institutions. Specifically, as of the Latest Practicable Date, our technical team has developed and utilized the following technologies during the research and development of our IT solutions:
‧ technologies relevant to data collection and preprocessing, including massive data search and collection, scattered data integration, highly concurrent data synchronization, high speed and reliable data transmission, and streaming computing technology for data cleansing;
‧ technologies relevant to distributed computing, including distributed and concurrent computing model for real-time massive data analysis, distributed server cluster for massive data calculation, and real-time risk identification and alert;
‧ technologies relevant to data analysis and data mining, including key and usable data extraction from raw data, massive data pattern and trend analysis, data analysis modeling, and forecast analysis based on past data pattern;
‧ technologies relevant to data visualization, including computer graphics and image processing technology, 3-D data modeling, dynamic data display, and computer vision and computer-aided design; ‧ technologies relevant to RPA and related technologies, including RPA for business process automation, natural language processing, machine learning, and image and text recognition; and
‧ technologies relevant to distributed trading architecture, including microservice architecture technology, distributed and parallel data processing, distributed database technology, and dynamic resource allocation technique.
We have built up and expanded our technical team from 127 technical staff as of December 31, 2016 to 403 technical staff as of June 30, 2020. We made significant investments into our research and development activities. During our Track Record Period, our research and development expenses increased significantly. Our research and development expenses were RMB3.2 million, RMB10.5 million, RMB14.3 million, RMB11.1 million and RMB3.5 million in 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively, representing 15.2%, 8.7%, 9.6%, 19.8% and 5.9%, respectively, of our total revenue for the same periods. See “Financial Information — Period to Period Comparison of Results of Operations — Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019 — Research and development expenses.” Driven by our competitive strengths, we experienced significant growth during the Track Record Period. We generate revenue from the provision of software development services, technical and maintenance services and software sales for financial institutions, healthcare institutions and other enterprises. In 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, we generated 100.0%, 91.4%, 71.5%, 69.7% and 88.9% of our total revenue, respectively, from our traditional software-driven solutions. During the same periods, our revenue contribution from our innovative software-driven solutions was nil, 8.6%, 28.5%, 30.3% and 11.1%, respectively. Our revenue increased significantly from RMB21.1 million in 2017 to RMB120.6 million in 2018, and further increased by 23.5% to RMB149.0 million in 2019. Our revenue increased by 4.6% from RMB56.2 million in the six months ended June 30, 2019 to RMB58.8 million in the six months ended June 30, 2020. Our net profit increased significantly from RMB1.5 million in 2017 to RMB31.1 million in 2018, and further increased by 6.4% to RMB33.1 million in 2019. Our net profit increased by 29.2% from RMB2.4 million in the six months ended June 30, 2019 to RMB3.1 million in the six months ended June 30, 2020. Our adjusted net profit, a non-HKFRS measure, increased significantly from RMB1.5 million in 2017 to RMB31.1 million in 2018, and further increased by 23.2% to RMB38.3 million in 2019. Our adjusted net profit increased significantly from RMB2.4 million in the six months ended June 30, 2019 to RMB11.3 million in the six months ended June 30, 2020. Our adjusted net profit represents our profit for the year/period excluding the effect of [REDACTED] expenses.
Source: Newlink Tech (09600) Prospectus (IPO Date : 2020/12/21) |