“Dual engine, one platform”— Sheng Ye Capital launched a new growth strategy to increase investment in supply chain financing technology research and development

  2021-01-27

The year 2020 was full of unpredictable twists and turns, and also marked a year of key breakthroughs and reforms for Sheng Ye Capital Limited (“SY Capital” or the “Company”, HKEx: 6069), China’s first commercial factoring company listed on the main board of the Hong Kong Stock Exchange. Looking back on 2020, SY Capital not only survived the challenges the global pandemic presented, but also achieved steady growth and new breakthroughs.


SY Capital started 2020 with its inclusion in the Hang Seng Composite Index and the Shenzhen-Hong Kong Stock Connect, attracting wider attention from southbound investors. The Company announced its interim results shortly afterwards, reporting a stellar 46% year-on-year increase in net profit despite the pandemic. Heading into the second half of the year, as China gradually brought the pandemic under control and the market started to recover, SY Capital tapped into the favorable trends and entered into a number of innovative and meaningful strategic partnerships. For example, SY Capital completed the integration of its platform with its core enterprise customer procurement systems, which further cemented the Company’s digital risk control capability. SY Capital also signed a strategic partnership agreement with Xiaomi Factoring to provide inclusive, digital supply chain financing services in the medical sector. In addition, SY Capital signed a RMB1 billion credit facilitation cooperation agreement with XWBank, one of the first internet banks in China, to develop targeted digital inclusive financial services. On the capital markets side, SY Capital completed its second share placement since 2018, raising approximately HK$380 million. Additionally, two renowned international banks, Macquarie and DBS, initiated coverage on SY Capital with “outperform” and “buy” ratings, respectively, which marked an important milestone for SY Capital since its listing on the Hong Kong Stock Exchange in 2017 and demonstrates the recognition SY Capital commands among institutional investors.


766_511_1600_1066_320_213Photo: Mr. Aaron Yuan, Chief Strategy Officer of SY Capital speaking at the Strategy Day


On January 22, 2021, SY Capital unveiled a brand new “dual engine, one platform” growth strategy (“‘2+1’ strategy”). Under the new strategy, the Company will strive to constantly enhance its research and development (“R&D”) capabilities to integrate deeper into the supply chain ecosystem and accelerate its transformation towards a digital fintech platform. The Company will proactively pursue growth through transformation, and promote its strategic goals in the next three years more efficiently.

“Dual engine” to integrate “supply chain financing technology” and “digital financing” to maximize synergies


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For the next three years, SY Capital will implement a “dual engine” strategy by integrating “supply chain financing technology” and “digital financing” to maximize synergies. The objective of the strategy is to enable the Company to “become part of the supply chain”, thus providing better supply chain services and delivering sustainable development. It is also a major strategic pivot for SY Capital to make supply chain financing technology one of the two key drivers of its business growth. The Company will increase investment in R&D, deepen its partnerships within key industries and develop tighter connections with the supply chain ecosystem. The Company will also leverage IoT devices and smart construction site solutions, drug traceability codes and smart warehousing systems, as well as SaaS solutions to provide tailor-made smart supply chain services to small, medium and micro enterprises (“SMEs”) and core enterprises, in an effort to enhance customer stickiness and enable the more efficient acquisition of authentic transaction data. In addition, SY Capital will continuously develop its supply chain digital financing solutions, and accelerate platform transformation through fintech empowerment. While maintaining full compliance with regulatory requirements, SY Capital will continue to grow its factoring assets, increase its customer base and actively expand funding collaboration channels. By introducing more funding partners to “Easy Factoring”, its proprietary cloud-based IT system, SY Capital will be able to facilitate funding sources and needs more efficiently, therefore delivering an optimal experience to SME suppliers. Under the “dual engine” strategy, SY Capital is confident that it can fulfill its corporate mission of “making supply chain finance more efficient and inclusive”.


“One platform” to create a more efficient supply chain ecosystem


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In addition to the “dual engine”, SY Capital will also develop an integrated platform that will efficiently connect asset partners, funding providers, credit enhancement institutions and other resource partners, as well as streamline processes and upgrade the supply chain ecosystem. Guided by the “one platform” strategy, SY Capital will align the positioning of its subsidiaries to ensure its fintech service and supply chain financing operations work in synergy while maintaining relative independence. The Company will enhance its technology strengths and increase the R&D investments of its subsidiary, Sheng Ye Information Technology Service (Shenzhen) Co., Limited (“SYIT”), making it an important component of the Company’s strategic execution.


SYIT, which is a national high-tech enterprise and a high-tech enterprise in Shenzhen, now holds software product and software enterprise certificates, as well as 28 computer software copyright certificates. SYIT developed “Easy Factoring”, a cloud-based IT platform that is dedicated to providing digital supply chain technology services by leveraging its years of industry expertise and fintech innovation capabilities. The platform features various cutting-edge technologies, including invoice verification, facial recognition, China Financial Certification Authority digital signature, Optical Character Recognition, PBOC’s AR registry integration, goods on delivery video verification, Internet of Things solutions, and public data monitoring. Powered by Easy Factoring and various other IT management systems, SY Capital has connected with more than 10 blue chip core enterprises, and provides digitalized supply chain financing services to over 4,000 SMEs.


On the asset side, by applying the “1+N+Fintech” business model, SY Capital will partner with core buyers and SME suppliers within the ecosystem. In addition, by providing SaaS solutions, SY Capital is able to access real-time industry and transaction data that can be used to intelligently match assets and funds on the platform. On the funding side, SY Capital will continue to provide customer acquisition recommendations, data-based risk management, asset operation support and other services to funding partners that have been connected to the platform. Currently, the platform has connected with over 40 funding partners, including large financial institutions such as China Construction Bank, XWBank and Xiaomi Factoring. External funding partners serve as an essential part of SY Capital’s platform strategy. SY Capital will place greater priority on its technology services and enterprise financing facilitation services, reduce the reliance on on-balance sheet funding, match assets and funding more efficiently, and accelerate the ramp-up of the asset light model. In the past 7 years, the platform has managed a cumulative total of over RMB100 billion in factoring assets.


With the launch of the “dual engine, one platform” strategy, SY Capital will achieve landmark breakthroughs during its transformation and reform. Going forward, SY Capital will continue to pursue its strategic goals, enhance the platform, and accelerate efficiency improvements across all processes as it seeks to become the most reliable fintech-powered supply chain platform in Asia.