Main points of investment
Revenue from merchant solutions declined year-on-year, gross profit margin grew steadily, and large-scale sales and R & D investment led to an increase in net loss compared with the same period last year. The company's 2021H1 realized revenue of 803 million yuan, down 2.5% from the same period last year, mainly due to a decrease in revenue from merchant solutions; gross profit of 487 million yuan (YoY+1.2%), corresponding to a gross profit margin of 60.7%, an increase of 2.3pcts over the same period last year, mainly due to the increase in the proportion of high gross margin business subscription solutions The net loss was 370 million yuan (YoY+60.8%), corresponding to a net loss rate of 46.1%, an increase of 18.2pcts over the same period last year, mainly due to an increase in operating expenses, including 439 million yuan (YoY+29.0%) for sales expenses, 1.49 million yuan (YoY+42.4%) for administrative expenses, and 297 million yuan (YoY+46.4%) for other operating expenses.
Kuaishou Technology's acceleration of business closed-loop construction has led to a reduction in the stock of small and medium-sized merchants, but the number of medium and large merchants subscribing to SaaS is growing at a high speed compared with the same period last year. 2021H1, the company added 19054 paying merchants, down 41.1 percent from the same period last year, mainly due to: 1) high base in the same period of 20 years; 2) structural changes of new paying merchants. In the first half of the year, the number of paid merchants in the company's stock was 87457, a decrease of 12.4% compared with the same period last year. This was mainly due to the loss of Kuaishou Technology anchor customers and the increase in the closure rate of merchants affected by the epidemic due to the acceleration of the commercial closed-loop construction of Kuaishou Technology platform. However, the number of paid merchants in SaaS products in stores with medium-sized and large customers increased by more than 100% compared with the same period last year.
The continuous decline of GMV from Kuaishou Technology has led to a slowdown in overall GMV growth, while other channel businesses have maintained steady growth.
2021H1, the GMV generated by merchants through excellent solutions reached 48.1 billion yuan (YoY+4.1%), the growth rate of 105.9pcts was lower than that of the same period in 2020, mainly due to the continued decline of GMV from Kuaishou Technology channel. Kuaishou Technology's business GMV as a percentage of total GMV continued to decline to 20% in the first half of the year and is expected to fall to 10% to 15% by the end of the year.
GMV from other channels maintained steady growth, growing by 34% year-on-year. Revenue from merchant solutions is based on transaction volume fees, and slow GMV growth is another reason for the year-on-year decline in 2021H1 merchant solution revenue.
The ecosystem continues to expand, and Zanxin retail is expected to become a new growth engine. Based on the demand of physical merchants for online and offline integrated operation, it is praised that the new retail business brand was officially released in May 2021. Up to now, Zanxin Retail has many large customer cases, which is expected to become a new growth engine. At the same time, in order to better solve the problems encountered by merchants in the process of digitization, we praised the formal release of two major strategies in the first half of the year: 1) ONE strategy: unite more manufacturers to provide one-stop solutions, so as to attract more customers to cooperate. 2) K100 program: provide private domain operation consulting services, expert teams, ecological cooperation resource support, as well as low-level technical support and data empowerment for large brands and retailers to further enhance their ability to serve large merchants.
Our point of view: the company is the leading SaaS service provider in the field of private domain traffic, and has formed a more mature SaaS product system. Youzan Technology, a subsidiary of the company, will be listed on the main board of the Stock Exchange by way of introduction, which will further accelerate the implementation of SaaS business strategy, consolidate the company's leading position in China's cloud business services industry, and its growth potential will be further released. In addition, the optimization of the company's new paying user structure is expected to lead to an increase in sales and renewal rates; at the same time, the rich product matrix can meet the business needs of different scenarios, coupled with the upgrading of the sales network, the company still has a lot of room for growth. Investors are advised to pay attention to it actively.
Risk tips: 1) more upstream flow suppliers build their own e-commerce tools for closed-loop operation; 2) industry policy risks; 3) New retail business is not as advanced as expected.