Riding the Wave of 'Tech + Consumption' and Completing Strategic Upgrades, Huitongda Network (09878) Demonstrates Strong Momentum for High-Quality Development

Recently, Han Wenxiu, Executive Deputy Director of the Office of the Central Commission for Financial and Economic Affairs and Director of the Office of the Central Leading Group for Rural Work, pointed out at the 2025 Annual Summit of China Development  that under the backdrop of growing external uncertain and unstable factors, China will unswervingly do its own thing well and respond to the uncertainty of the external environment with the certainty of high-quality development. Han Wenxiu emphasized, "The expansion of domestic demand is our committed long-term strategy. We strive to make consumption the major driver and cornerstone of economic growth." He also pointed out, "We will adhere to technology leadership, innovation-driven, adapt measures to local conditions, develop new quality productive forces, vigorously encourage emerging industries, proactively cultivate future industries, and proactively use digital technology, green technology, and artificial intelligence to transform and upgrade traditional industries."

The complexity and uncertainty of the market environment continue to intertwine, which also demand higher requirements for enterprises.

As a model enterprise for cultivating new quality productive forces, Huitongda Network (09878) proactively seizes the strategic opportunities brought about by the national policy of expanding  domestic demand. Since 2024, the company has proactively adjusted and optimized its business structure, and promoted the company's sustainable and high-quality development in  multiple aspects from improving customer mix to enhancing supply chain capability. Reflecting in the data, Huitongda Network's gross profit margin increased significantly during the period, from 3.3% in the same period in 2023 to 3.8% in 2024, of which the gross profit margin in the second half of the year reached 4.3%, a sequential increase of 23%, reaching a new high level for the year. Benefiting from the continuous optimization of the business structure and the effective implementation of cost reduction and efficiency enhancement measures, the company's operating cash flow has remained positive for 6 consecutive years, and its growth energy has been continuously enhanced. It can be seen that through a highly flexible strategy upgrade, the company is accelerating its transformation  from a "business optimization period" to a "value release period".

According to Zhitong Finance APP, in order to further promote business development, the company has implemented  strategy upgrades  in the following aspects.

Firstly, improvement of customer structure - In order to improve the penetration  and stickiness of member stores, Huitongda Network will focus on the existing 21 provinces, 25,000 townships, and over 248,000 member stores, lay out AIaaS in advance, and accelerate the implementation of the AI+ strategy to strengthen the company's organic growth. From the perspective of network coverage  in the lower-tier rural market, Huitongda Network has already established economies of scale and competitive barriers. It is expected that in the next three years, under the two guiding principles of enhancing "network penetration" and "customer stickiness", the number of member stores will not only further increase, but the transaction scale of member stores will also continue to  grow from 39% in 2023 to 44% in 2024, and ultimately establish a "scale x quality" double-barrier system at the customer level to achieve customer structure optimization and upgrade.

Secondly,  improvement of supply chain capability - Huitongda Network will fully promote three major projects, improve TOP brand collaboration through the brand direct train project. The company will also build out  its self-owned brand portfolio through its integrated brand ecosystem project. Meanwhile, the company will construct an AI-driven POP platform through the open supply chain platform project. At the same time, the company will continue to optimize the supply chain structure, increase TOP procurement, increase its own brands, and increase new product categories. Benefiting from the implementation of such strategy, Huitongda Network's overall  gross profit margin shows a steady upward trend. At the beginning of 2025, the company stated at the "Own Brand Cluster Strategy Press Conference" that it will continue to expand the strategic collaboration of 5-10 TOP brands in the year.

To open up a new growth cycle with high quality strategy upgrades by dispelling the uncertainty of the market, Huitongda Network has now arrived the starting line of a new round of long development cycle. Prioritizing profit and cash flow, high quality growth through the dual growth engines of "organic and + extension", the company is well positioned to benefit from the lower-tier market with a scale of over RMB 20 trillion, Huitongda Network's advantages of "supply chain + digitization" and "online + offline" are expected to continue to strengthen.

Zhitong Finance learned from the industry that based on Huitongda Network's transformation from scale-oriented to profit-oriented, it has released a clear profit visibility: it is expected that in the next three years, Huitongda Network's target revenue compound growth rates will not be less than 10%, and the compound growth rates of net profits attributable to the parent company will not be less than 30%. It is expected that by 2026, the company's profit level will exceed the historical peak. It is worth noting that Huitongda Network's future growth curve shows significant structural optimization characteristics -- the profit growth rate will be higher than the scale growth rate. At the same time, the company plans to start a dividend plan as early as 2025 to increase shareholder returns.

Huitongda Network is currently in a critical period of business structure optimization and cultivating new momentum for long-term growth. Zhitong Finance APP believes that in 2025, Huitongda Network will start a new growth cycle. With the continuous advancement of Huitongda Network's strategic upgrade, coupled with multiple favourable policies  under the country's "Technology + Consumption" policy direction, the company's performance is bound to gradually match the growth expectations.

At present, the company's stock price has adjusted to a relatively low level. Driven by the company's strong growth momentum, the continued popularity of the Hong Kong stock market, policy support and other multiple favorable factors, Huitongda Network may usher in an unprecedented bottom out opportunity. In addition, with the launch of the company's dividend plan, investors will also be able to share the benefits of the company's high quality growth at that time.