After the National Day holiday, the Hang Seng Index opened low and continued to decline, with both the Hang Seng Index and the Hang Seng Technology Index falling across the board. The Hong Kong stock market, after experiencing a short-term rapid rise, has accumulated a large amount of profit-taking positions, making the market prone to significant fluctuations. Despite the pullback, institutions remain positive about the long-term trend of Hong Kong stocks. The latest research report from Huatai Securities points out that as global financial markets gradually warm up and liquidity improves, the Hong Kong software industry will usher in new development opportunities. Among them, cloud SaaS, AI, and internet finance sectors are expected to become leading forces in the rise, especially as downstream demand recovers and the commercialization process of technology progresses, the valuation of these sectors will be further repaired and expanded.

As a leading enterprise in the Hong Kong SaaS industry, Weimob (2013.HK) is expected to benefit from the market recovery under this broad context. Leveraging its deep cultivation in the SaaS field, Weimob is poised to become a beneficiary of the market recovery. After last year's market debates and the cooling of investment intentions, China's SaaS industry has shown a dormant trend, with everyone beginning to hone their internal skills and make strategic adjustments. Weimob Group also adapted to industry trends in the first half of the year, achieving a significant reduction in losses through cost reduction and efficiency enhancement, and focusing on core businesses. At the same time, Weimob Group's active exploration and application in the AI field have also provided new momentum for its future revenue growth and valuation expansion.

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CICC's outlook for the Hong Kong stock market in the second half of 2024 points out that although the market has experienced a period of pullback and fluctuation, the continuous efforts of policies and the market's positive response to "symptomatic" policies have provided support for the stability and potential growth of the Hong Kong stock market. Weimob Group, facing industry challenges and macroeconomic pressures, has achieved high-quality development of performance through strategic adjustments and operational optimization. At the same time, by widely applying AI technology in commercial scenarios, empowering SaaS and marketing businesses, and continuously promoting merchants to reduce operating costs and improve efficiency, it has demonstrated its adaptability and growth potential in the SaaS industry.

In terms of cost reduction and efficiency enhancement, with the help of AI technology, the operation of SaaS and marketing existing businesses has been improved. Relevant institutions point out that in the past 10 years, the computer sector has had three obvious and sustained upward trends. The first significant increase occurred after 2012 in the "Internet Plus Era," which was also a period of encouraging mass entrepreneurship and innovation. The second upward trend occurred in 2019, representing the wave of cloud computing and domestic substitution. The strong performance of the cloud computing industry stems from the superior business model of the SaaS model compared to the traditional project system. SaaS companies usually have higher user stickiness, better cash flow management, and can enhance the predictability of future performance. Weimob's performance in this stage was particularly prominent, with a compound annual growth rate of revenue of up to 46% between 2019 and 2021. The third upward trend was driven by a new wave of AI.

At present, the winter of the SaaS industry is still continuing, with shrinking demand and tightened corporate budgets, exacerbating the industry's predicament. On the other hand, it is the calm period of the secondary market SaaS sector, with Hong Kong stock market valuations generally low, and under the influence of global risk aversion, short-term pressure still exists. Judging from Weimob's latest financial report performance, the group has achieved a significant reduction in losses through strong cost control, and currently pays more attention to high-quality growth and profitability, rather than just pursuing speed and scale. After Weimob's SaaS enterprise service business successfully transformed to a large customer model last year, it is also shifting its strategic focus to industry customers and providing solutions for the scene needs of various types of customers. At the same time, with "SaaS+AI" driving intelligent upgrading to help businesses reduce costs and improve efficiency, it is actively committed to exploring and innovating business models, and transforming them into financial benefits and long-term value.

Strategically, Weimob meets the diversified needs of different customer groups by providing customized services and solutions on the supply side. It also attracts repeat and additional purchases from these customers by expanding its product matrix, thereby increasing the customer lifecycle value. On the demand side, it shifts from mainly serving top industry customers to paying more attention to mid-tier customers, which helps to tap into a larger market increment and achieve broader market penetration. The support of AI technology not only improves operational efficiency and reduces costs, but from the most intuitive perspective of merchants, AI helps them quickly master the operation of the SaaS system, enhances the customer experience through intelligent services, and makes customized business strategies easier.

In terms of strategy implementation and performance verification, during the period, Weimob's total revenue in the first half of 2024 reached 867 million yuan, with a gross profit of 576 million yuan, and the overall gross margin remained stable. Weimob achieved phased results by strategically reducing non-core and low-quality businesses. Thanks to the optimization of cash flow from merchant solutions and the significant reduction in losses from subscription solutions, the group's operating cash flow turned from a negative of 660 million yuan last year to a positive of 30 million yuan, and has been positive for two consecutive semi-annual periods. Currently, the group's cash and bank deposit balance is about 1.772 billion yuan, and the cash and financial situation is healthy. Overall, under the support of the "quantity for quality" business strategy, the group has achieved dual improvement in profit indicators and operational quality through various means of cost reduction and quality improvement.

Multi-dimensional layout: Relying on AI vertical application landing to seize the incremental market space.

The competition for large models has shifted from a parameter competition to a scenario competition, and whether they can be applied to industrial scenarios has become the key to the commercialization of large models. As a loyal partner in corporate digital transformation, Weimob's SaaS business has completed intelligent upgrading with AI large models. By deeply integrating its large model application product WAI with core businesses, it not only brings new volume to its own business but also promotes the intelligent leap of the industry.Since the launch of Weimob WAI in May 2023, Weimob has been continuously iterating the technical capabilities and application scenarios of WAI through open-source self-research and cooperation with domestic large model platforms. Currently, Weimob WAI has been deeply integrated with SaaS and marketing services. In SaaS scenarios, as of this May, Weimob WAI has expanded into more than 50 real commercial application scenarios, covering industries where Weimob SaaS clients are located, including clothing and accessories, beauty and skincare, food and beverages, fresh fruits and vegetables, daily necessities, etc., providing tens of thousands of merchants with intelligent management solutions. During the reporting period, the number of active users of Weimob WAI increased by 3.6 times compared to the second half of 2023. Through the intelligent customer service of WAI Assistant, the accuracy rate reached 82.5%, and it helped enterprises reduce manual customer service costs by more than 20%.

Recently, Weimob WAI has welcomed an important functional update, launching the multi-Agent feature, which includes system customer service Agent, mall operation Agent, data consultant Agent, and graphic expert Agent. These new features can reshape the entire business process for merchants, provide AI product services with more industry know-how and differentiation, bridge the last mile from technology to industry, and bring commercial incremental value. One week after the multi-Agent feature went live, the usage activity of Weimob AI Assistant increased by 68.5% compared to the previous period. Weimob is adapting to the trend of large model industrialization and landing, optimizing AI Agent capabilities, further expanding its layout in the enterprise-level AI market, and continuously meeting the increasingly complex and diverse needs of enterprises.

In June this year, Weimob released WAI Pro, providing customized AI applications for industries such as home decoration, e-commerce, and education, covering scenarios such as intelligent marketing, designer workflow, AI customer service, etc. WAI Pro helps enterprises improve operational efficiency and competitiveness through multimodal AI solutions, providing full-process AI support and further promoting the intelligent transformation of enterprises. The launch of this product marks an important layout of Weimob in enterprise-level AI application scenarios, meeting the intelligent needs of enterprises at different stages.

WIME, which provides AI capabilities to C-end users, is an important part of the Weimob WAI product system, committed to realizing the concept of "one-person e-commerce operation company", simplifying the e-commerce design process, and improving creative efficiency. Through this platform, Weimob has further expanded the C-end market and provided intelligent solutions for individual e-commerce operations. WIME has recently upgraded the AI commercial detail page function, allowing users to generate product detail pages with one-click operation, greatly improving the efficiency of e-commerce operations. This upgrade strategy, which takes user needs as the core, meets users' needs for efficient creation in the upcoming e-commerce promotion season, not only consolidating the existing user base but also winning more loyal followers for WIME in the fiercely competitive market.

In addition, in September this year, Weimob was invited to attend the Tencent Global Digital Ecosystem Conference and, as a Tencent ecosystem partner, successfully settled in the brand intelligent body area of Tencent AI assistant application "Tencent Yuanbao", becoming one of the first batch of enterprises to jointly build an AI intelligent body ecosystem with Tencent. Relying on the deep combination of technological innovation and industry scenarios, Weimob will work with partners to promote industrial intelligence and drive AI large models to bring a comprehensive "efficiency revolution" to the industry.

Conclusion

In the global digital wave, Chinese enterprises have shown a significant leading advantage in the application of generative AI. According to a survey by SAS, an American AI and analytical software company, and Coleman Parks Research Company, 83% of surveyed enterprises in China said they are already using generative AI technology, a proportion that ranks first among all participating countries and regions. This phenomenon indicates that Chinese enterprises attach great importance to and actively explore digital transformation. The use of AI not only improves the operational efficiency of enterprises but also opens up new growth paths for them.

Weimob is bringing new opportunities for intelligent transformation to enterprises and C-end users through its SaaS+AI strategic layout. Weimob's AI transformation takes "全民AI" and "let all Weimob SaaS customers get AI support at the first time" as the core goals, from SaaS business to enterprise-level AI solutions, and then to C-end applications, gradually achieving full coverage from technological innovation to scenario-based applications, promoting the intelligent upgrade of the entire industry chain. By deepening the understanding of business logic and continuously optimizing AI cost structure, new incremental markets are opened up and profitability is improved. Weimob not only helps merchants explore new profit models but also paves the way for its own sustainable development. With the continuous advancement of AI technology, we look forward to Weimob continuing to lead industry innovation and creating greater value for users and shareholders.