CICC has reiterated its Outperform rating on LIANLIAN (02598), noting the current stock price corresponds to a 3x and 2x price-to-sales ratio for 2026e and 2027e, respectively. Considering market volatility, the firm has set a target price of HK$9, which implies 4x and 4x P/S multiples for 2026e and 2027e, representing a potential upside of 51%. The revenue forecast for 2026e remains unchanged at RMB 2.0 billion, while new projections for 2027e include revenue of RMB 2.4 billion and adjusted net profit of RMB 0.2 billion.
In 2025, LIANLIAN reported a 32% year-on-year increase in revenue to RMB 1.73 billion. Net profit reached RMB 1.66 billion, which included approximately RMB 2.4 billion in gains from the partial sale of its subsidiary Lian Tong and the DFX equity transaction. Adjusted recurring operating profit surged 106% year-on-year to RMB 80 million, slightly exceeding expectations.
The report highlighted that the company's total payment volume (TPV) for 2025 grew 6.1% year-on-year to RMB 3.5 trillion. Specifically: 1) Global payment TPV increased 61% to RMB 498.5 billion, driven by rapid growth in lower-fee service trade and B2B businesses, which slightly reduced the overall fee rate to 23 basis points. Revenue from this segment rose 29% to RMB 1.04 billion. 2) Domestic payment TPV grew 1% to RMB 3.0 trillion, with the fee rate increasing to 1.3 basis points. Revenue increased 18% to RMB 410 million, as the company optimized its business structure to focus on high-value demands from Chinese enterprises expanding overseas. 3) Revenue from value-added services jumped 81% to RMB 260 million, primarily benefiting from the rapid expansion of its virtual bank card business.
Management expressed optimism about the growth potential of the virtual bank card business, adopting a strategy of trading gross margin for expansion. The company expects a steady-state gross margin of 50% to 60% in the future.
In 2025, sales and marketing expenses, general and administrative expenses, and R&D expenses increased by 9%, 17%, and 13% year-on-year to RMB 270 million, RMB 650 million, and RMB 360 million, respectively. The adjusted operating expense ratio decreased by 5 percentage points to 62%, indicating the release of operating leverage.
Concurrently, the company has elevated technology upgrades to a core strategic position. It has already integrated AI models into business scenarios to enhance operational efficiency. DFX has obtained a license to operate as a digital asset trading platform and has commenced operations, while Web3 cross-border payment applications are gradually being implemented.