In just two weeks from the end of April, Hong Kong stocks rose for 10 consecutive trading days, leading the global market. At the same time, the recovery in Hong Kong stock transactions has also brought confidence and is driving the overall trend of the market to improve. Hong Kong Stock Exchange CEO Chen Yiting revealed that during the two weeks of April, the average daily turnover of Hong Kong stocks rebounded to 130 billion to 150 billion yuan. During the suspension of Hong Kong Stock Connect in early May, transactions were also about 110 billion yuan.

Furthermore, considering the increase in “uncertainty” of the Federal Reserve's interest rate cut this year, the return of overseas capital to the Hong Kong stock market, the continued recovery in economic fundamentals, and the introduction of a series of favorable policies, and the sluggish market performance in recent years, which has given Hong Kong stocks a valuation advantage, they have brought a lot of expectations for the future performance of Hong Kong stocks.

On the other hand, in the five measures issued by the China Securities Regulatory Commission in April of this year, it is specifically proposed to support eligible leading enterprises in the mainland industry to go public in Hong Kong. According to the data, at present, nearly 100 companies have submitted IPO applications to the Hong Kong Stock Exchange, with mainland enterprises becoming the absolute main force.

The enthusiasm of companies to go public in Hong Kong is high. Just as AI racetrack Horizon, Black Sesame, Yunzhisheng, and Insilicon Smart all compete for the speed of listing. At this time, listing has important card significance.

Judging from the recent market performance of Hong Kong stocks and the IPO market situation, it is currently a good listing window. In this context, Quantitative Technology Co., Ltd. (hereinafter referred to as “Quantifier”) recently submitted a prospectus to the Hong Kong Stock Exchange to sprint into the capital market.

Quantifier is a leading provider of scenario-based digital solutions in China. It is currently in a period of rapid growth and has achieved commercial profits. This is particularly prominent in the context where commercialization in the AI industry is generally not mature enough.

Financial data confirms this. From 2021 to 2023, the company's annual revenue grew from 351 million yuan to 530 million yuan, with a compound annual growth rate of 23%. Adjusted profit increased sharply from 66.643 million yuan to 148 million yuan, with a compound annual growth rate of nearly 50%. Both revenue and adjusted profit growth rates were very impressive, showing good operating conditions and growth.

From an investor's perspective, apart from the impressive financial data, what else is worth paying attention to? By carefully studying the prospectus, it can be found that quantifying good fundamentals is the key point worth paying more attention to. Next, we might as well start from both the growth potential of the racetrack and the company's core competitiveness, and further explore the opportunities and advantages of quantifiers.

Key point 1: The digital solutions circuit is on the cusp

As a traffic operation technology company driven by AI technology as the core, Quantifier relies on leading closed-loop scenario-based service capabilities, modular operation capabilities, large-scale product and service output capabilities, and strong AI enabling capabilities to provide scenario-based digital enabling services for multiple industries.

The company provides digital solutions for brand enterprises based on AI technology. At a deeper level, in the context of the current government's strong support for the development of the digital economy, it is an in-depth confirmation of the broad prospects of relevant enterprises represented by quantifiers.

At this year's National Conference, promoting the high-quality development of the digital economy became a hot topic of discussion. In April of this year, nine implementation measures were proposed in the “Key Work Points for the Digital Economy 2024” issued by the General Office of the National Development and Reform Commission and the General Department of the National Data Administration, which highlighted the need to further promote the digital transformation of the industry and accelerate breakthroughs in digital technology innovation. Therefore, the digital economy can be viewed as one of the most determined main lines in 2024, which undoubtedly lays a good foundation for the development of quantitative companies.

In recent years, digital technology has been increasingly integrated into all fields of economic and social development, and the digital economy has increasingly become a new engine for the transformation and upgrading of traditional industries and promoting high-quality development. From an internal perspective of enterprise development, digital transformation plays a critical role in optimizing resource allocation, reducing costs, and improving operational efficiency, making enterprises themselves increasingly demanding the digitalization of operational functions and business models.

Driven by many factors, the digital solutions market for mainland Chinese enterprises has shown a rapid growth trend in recent years. According to Frost & Sullivan, the digital solutions market for mainland Chinese enterprises grew from 482.4 billion yuan in 2019 to 775.1 billion yuan in 2023, with a compound annual growth rate of 12.6%. This figure is expected to reach 1302.8 billion yuan by 2028, and the compound annual growth rate from 2024 to 2028 has reached 10.6%. Among them, the cloud segment market has reached a compound annual growth rate of 15.1%.

Photo source: Prospectus

In the long run, with the development of industrial Internet infrastructure and the digitalization process, the market for enterprise digital solutions is booming. However, it is worth noting that a huge number of enterprises in China lack the ability to independently upgrade digitally, and the penetration rate of digital solutions is relatively low. Together, these factors have contributed to a market with rapid growth and broad potential, implying huge opportunities.

Of course, this has given enterprises the opportunity to provide scenario-based digital empowerment services for multiple industries and become the “external brain” for the digital upgrading of many enterprises. Quantifiers can fully benefit from this main line of market investment. As one of the representative companies, quantifiers are expected to be the first to benefit.

Key point 2: Multiple advantages establish a leading position in the industry

There is a consensus that digital empowerment can bring about a qualitative leap in productivity, but the question is how to implement it. The digital upgrade between different industries and enterprises requires enterprises with more advanced know-how to drive it, and also requires the B-side to embrace this change with a more open mindset.

For a long time, compared to foreign countries, the difficulty of domestic B-side business has far surpassed that of the C-side. On the one hand, companies' awareness of paying is relatively weak, and on the other hand, the mentality of “don't see rabbits, don't throw hawks” has further reduced companies' willingness to pay. However, if the products and services faced by B-side users can actually help enterprises reduce costs, increase efficiency, and improve performance levels, all of this will be different.

Therefore, quantifiers focus on pay-for-performance pricing models, which can more easily gain customer trust by earning service fees according to empowered transaction values, which is the key to becoming a leader in the industry.

Quantifier ranked 7th among digital solution providers in China in terms of 2023 revenue. Additionally, as of the end of 2023, quantifier enabled proprietary apps to maintain more than 48 million registered end customers. The number of business partners increased from 214 in 2021 to 2,529 in 2023.

The digital solutions required by a huge customer base are bound to come in various forms. Quantifiers can provide customized solutions for different customers, which is inseparable from their long-term accumulated industry knowledge and business insight.

At the same time, a problem arises: customized solutions often mean higher costs and lower operational efficiency, and business models lack replicability. How do quantifiers solve it? The secret lies in an expandable, modular technology platform.

In 2021, based on recommended search algorithms, the company built a digital technology platform integrating proprietary AI capabilities with five major modules, including a unified interface to manage operation processes, marketing tools, end users, products and services, to provide customized solutions for business partners of all sizes in a flexible and expandable manner. By combining mature business modules with each other, and connecting the quantum planet to the business partner system through an API, it is possible to quickly develop solutions that meet specific customers.

Photo source: Prospectus

In addition, in line with the call for digital economy policies, quantifiers have also launched consumption maps for urban consumer operation platforms to explore new growth points.

Up to now, the map has covered 13 regions in Beijing and 4 geographical regions outside of Beijing, Baotou in Inner Mongolia, Langfang in Hebei, Chengdu, and Chongqing, empowering local government consumer voucher issuance platforms, and helping local businesses to monetize in various consumer scenarios such as automobile services, consumer electronics, and catering.

Quantifier only launched the consumer map in the second quarter of 2022. By the end of 2023, it had accumulated 2024 business partners on the consumer map, empowering over RMB 322 million in transaction value.

Looking deeper, the lowest level of support that can do all of this is technology.

Currently, Quantifier holds a number of patented technology and software copyrights, and has successively obtained many honors and qualifications, such as a national high-tech enterprise, a high-tech enterprise from the Beijing Municipal Science and Technology Commission, a list of the first batch of trade secret protection demonstration bases in Beijing, and a key enterprise in Haidian District of Beijing.

In addition, the innovative practices of quantifiers in the field of digital empowerment have been widely recognized and praised by the industry, and have won many awards such as the “2023 China Artificial Intelligence Most Investment Value Award” selected by the Chinese Academy of Social Sciences, the “Outstanding Innovative Enterprise in the Global Digital Economy” selected by the Beijing Municipal Bureau of Economy and Information Technology, and the Chaoyang District People's Government.

Of course, the company's ability to achieve such results through continuous innovation is inseparable from the company's continuous investment in R&D. From 2021 to 2023, quantification generated more than 150 million yuan in R&D expenses, and the company's R&D expenditure ratio has always remained high. As of December 31, 2023, the number of quantitative R&D team members accounted for more than 40% of the total number of employees, which also shows the importance the company attaches to R&D innovation.

According to reports, the quantitative faction is now sprinting into the Hong Kong stock market, and the capital raised is mainly used to improve R&D capabilities and improve technical infrastructure to enable digital marketing and commodity trading. Judging from the use of funds raised, this is also a reflection of quantitivists who have always insisted on technological innovation.

It is easy to see that from R&D funding to R&D teams, quantifiers are able to continuously transform technological achievements and establish the technological advantage of leading peers because of their emphasis on technology. In this process, the company continued to consolidate its foundation, and business development showed a trend of rapid growth.

epilogue

Overall, the quantifiers chose to submit the form at this moment, which undoubtedly cleverly seized the favorable opportunity for the recovery of the Hong Kong stock capital market and the resurgence of the Hong Kong listing boom. If Quantifier is successfully listed this time, it will be able to further enhance its own brand influence and market position, inject new capital and resources, and thus accelerate the company's development.

Considering the Matthew effect of the industry, quantifiers, whether they are leading the way in commercial monetization or technical barriers laid by continuous innovation, indicate that their future development is full of potential and interest. As for the value of this stock, I believe investors have formed their own assessments and judgments after comprehensively considering the above factors.