2016 Annual Results of HengTen Networks are Announced Community O2O Business has been Fully Landed


       On March 21, HengTen Networks (HK.0136) announced 2016 annual results in Hong Kong: HengTen Networks Group Limited (hereinafter referred to as "HengTen Networks") turned into profit-making. Compared to the previous fiscal year, it realized a net profit growth of 102.35%; revenue of HK$ 133 million, an increase of 31.13%; a gross profit of HK$ 56.687 million, an increase of 109.1%; and an increase of gross profit rate by 15.95% to 42.78%.

       Development of Product Functions has been Completed

       Intelligent Community Pilots have been Successfully Built

       It is learned that the product functions of HengTen Networks have been built and the number of its users continues to grow. As at the end of 2016, the HengTen Mimi APP had 53 functions, with a total of nearly 260,000 registered users, pilot community property owner authentication ratio of 93.8% and APP function usage coverage ratio of 98%.

       In addition, the property services provided by HengTen Networks are more intelligent. The property-related services of HengTen Mimi include services such as online payment of property management fees,
reporting for repair and community broadcasting. The completion rate for repair reporting orders reached 90.9%. HengTen Networks also developed all-round intelligent communities by introducing intelligent access control and intelligent parking system at pilot communities, which enable property owners to unlock access to communities and use the parking lot with mobile phones. It is learned that HengTen Networks would continue to expand the scale of intelligent communities.

       HengTen Networks also introduced vertical e-commerce for life services. Through cooperation with leading e-commerce platforms in the PRC, the HengTen Mimi APP has a shopping mall channel supplying customized products covering more than 10 categories including cosmetics, food and beverage, daily necessities, mobile phones and digital products, and maternal and baby products. Meanwhile, HengTen Mimi joined hands with well-known tourism business platforms to provide ticketing and travel services.

       Focusing on Value-Added Business

       Enhancing the Profitability of the Platform

       It is introduced that, in 2017, on the basis of the existing product functions, HengTen Networks will further explore value-added services to optimize its business model, and continue to expand the scope of pilot programs and increase their scale.

       Internet home business is an important profit point which has been successfully explored by HengTen Networks. As disclosed in the announcement, HengTen Networks has also set up a “home alliance” with leading home appliance branded suppliers and well-known e-commerce platforms in the PRC so as to develop “one-stop” Internet home services. As at the end of 2016, Internet home business covered more than 100 Evergrande communities in most provinces and cities in the PRC, with revenue of HK$31 million in the whole year. In 2017, HengTen Networks will also conduct in-depth exploration of property owners’ needs of home products and gradually introduce more product categories on its Internet home platform, so that all kinds of home products can be bought online “one-stop” at its platform.

       Community finance is another "cake" sought-after by HengTen Networks. In 2016, HengTen Networks launched “Ye Zhu Bao”, one of its “Enjoy Life” wealth management product series. The product recorded total sales of HK$90 million in face value for just two tranches of online offering. HengTen Networks partnered with well-known banks to provide Internet lending business. Featured by low thresholds for application and fast approval process, such business has been generally recognized by users. In the future, HengTen Networks will also develop diversified finance products integrated with community scenes and focus on the development of wealth management, community lending and safe wealth management products for the public and other products which are especially for property owners.

       It is noteworthy that, on the basis of the defined model of lease and sale of second-hand properties, HengTen Networks will expand the scale of pilot communities and further promote the services for lease and sale of second-hand properties. In addition, HengTen Networks will start to explore the second-hand property renovation business model.

       With the Support of Two Substantial Shareholders

       HengTen Networks Gains Momentum for Development

       As is known to all, each of the two substantial shareholders of HengTen Networks has huge influence in their respective industries. China Evergrande is ranked among Top 500 in the world and has become the largest property developer in the world, owning over 600 property projects across China. At the same time, Tencent, an Internet giant, recorded continuous growth of user number. By the third quarter of 2016, the total number of monthly active accounts of QQ, Weixin and WeChat of Tencent reached 1,723 million.

       This year's report on Chinese government work pointed out that the year 2016 was a year of further promotion of the “Internet +” Action and China’s big data strategy. According to data, in 2016 the overall size of the PRC community O2O reached RMB255.97 billion, an increase of 52.9% over last year. This means that the future of China’s community O2O has the potential to be a trillion-level blue ocean market.

       "The rapid development of HengTen Networks proves that it complies with China national policy and further explores the blue ocean of the market." As some industry analysts said, "The fundamental cause should attribute the success to that HengTen Networks is established in communities scenes, it integrates many kinds of resources in an innovative manner, its profit model  is targeted, and it develops an open, complete, rich community O2O ecosystem."