Bairong Inc. (“Bairong” or “the Company”, 6608.HK), a leading independent AI-powered technology platform in China, has released its 2021 Annual Report with new records in revenues and adjusted net profit. Its total revenues and adjusted net profit reached RMB1.623 billion and RMB141 million in 2021, representing year-on-year growth of 43% and 76%, respectively.
Highlights of the Annual Report for the year ended December 31, 2021:
- Revenues for smart analytics and operation services, its largest business segment, increased 38% year-on-year to RMB737 million, the best result in the past four years.
- Revenues from the other two segments also set new records. Revenues for precision marketing services increased by 60% year-on-year to RMB422 million.
- Revenues from insurance distribution services increased by 37% year-on-year to RMB464 million, of which life insurance and health insurance premiums accounted for the vast majority, with an average policy period exceeding 10 years and a renewal rate exceeding 95%.
- The net cash flow from operating activities rose to RMB265 million, a year-on-year increase of 27%. Cash equivalents and financial assets totaled RMB3.95 billion.
Expanding client base and strengthening relations with key clients
Bairong’s client base includes the majority of state-owned banks, more than 900 regional banks, substantially all of China’s consumer finance companies and major insurance companies. By the end of 2021, the Company had provided services to 5,700 financial services provider(FSP) clients in China, including over 3,300 paying FSP clients, an increase of 28% year-on-year. Average revenue per user(ARPU) of key FSP clients increased by 25% year-on-year to RMB5.12 million. The retention rate of key FSP clients reached 92%, and a net dollar expansion rate of 118% for KSP clients was achieved.
Bairong also strengthened its relations with key clients. Take a key state-owned bank as an example. Bairong completed methodological research for a bank-wide retail business growth project in mid-2021. It also successfully embedded an AI-enabled voicebot service function into the smart operations of the retail business line of the bank, which included “Interactive Voice Response(IVR) + manual” mode and IVR mode. Compared with previous purely manual working conditions, these two modes can help the bank reduce costs by approximately 50% and 90% respectively.
Besides organic growth, Bairong also acquired leading domestic management consulting and digital marketing cloud platforms. Last year, its largest M&A was the acquisition of Beijing All Union Technology Corp. (“All Union”).
Investing in R&D to reinforce technology innovation
Last year, Bairong’s total R&D investment reached RMB252 million, representing 16% of its total revenues. Its R&D focuses on innovation in vertical fields, including machine learning, AI-enabled voicebot and privacy computing.
Bairong won five national invention patents last year. To date, it owns over 150 software copyrights and patents. In 2022, the Company plans to expand its technological advantages in machine learning, cooperate in research and development, optimize the application of ORCA, an automatic learning platform for financial scenarios, improve clients’ ROI and other business objectives, and strengthen its competition barriers.
Undervalued by the market
Compared with its benchmark fintech and SaaS companies listed in US and HK, the Company believes that it is significantly undervalued by the market. At present, Bairong’s P/B ratio is about 0.8, lower than the median P/B ratio of the SaaS sector by 150%. The cash assets of Bairong alone are currently equivalent to 108% of its current market value. The current PS ratio of Bairong is also much lower than the average of the SaaS sector in the Hong Kong stock market.
The Annual Report demonstrated that Bairong maintained its robust growth in 2021. With its innovative technologies, profound insights and rich experience, Bairong believes it will continue to contribute to and benefit from the digital transformation of the banking industry in China.
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