Lockdown-bruised IT service firms bullish about future business growth

Shanghai-based IT service firms faced a financially-challenging quarter due to pandemic lockdowns, but remain confident about the future, with new business expansion and increased research spending, Shanghai Daily learned on Thursday.

The firms, all listed in global capital markets, cover online healthcare, finance and logistics and delivery, services that affect millions of users in Shanghai and China.

HK-listed Ping An Health, offering online healthcare services, posted revenue of 2.83 billion yuan (US$435 million) in the first half, 25.9 percent down from a year ago. Its net loss, however, narrowed by 51 percent to 426 million yuan.

Company chairman and chief executive, Fang Weihao, is confident about China's huge market potential, with surging demand and national strategies such as Digital China and Healthy China 2030, he said at the company's headquarters in Shanghai.

In 2025, China's medical spending will hit 15 trillion yuan compared with nine trillion yuan in 2020, according to industry figures.

Ping An Health offers Family Doctor services through its online healthcare consultancy and drug delivery services, demand for which has grown during the pandemic. In the second half, it plans to expand its corporate customer services, a business which now serves 2 million employees in 749 enterprises.

In the near future, the company's paid membership subscribers will hit 50 to 60 million, compared with 40 million now.

New York-listed FinVolution, an online finance platform headquartered in the Pudong New Area, posted revenue of 2.66 billion yuan in the second quarter, with 11.8 percent growth from a year ago. But its net profit decreased 5.7 percent to 585.2 million yuan.

With a "challenging quarter," FinVolution chose to improve services for small business owners and increase research spending, said CEO Zhang Feng.

The company served over 500,000 small business owners across wholesale, retail and manufacturing industries in Q2. Related transaction volume increased 67.7 percent to a record high of 10.4 billion yuan, accounting for one-quarter of its total transactions.

Smaller businesses are the backbone of China's economy. They are a prime employer of millions of workers and those in Shanghai have been seriously hit by the pandemic. Their ability to survive and prosper again is the key to getting the post-lockdown economy up and running, analysts said.

FinVolution has set up a new platform for small and medium enterprises, offering services like vehicle and house property valuations, merchant payment code applications, social security payment and corporate group insurance, all with online channels.

FinVolution's research spending grew 10.9 percent to 116 million yuan in Q2. By June, it had applied for 154 patents, including 32 invention patents.

Nasdaq-listed Dada, a local on-demand delivery and retail platform, posted a net loss of 578.8 million yuan in the second quarter, slightly narrowing from a 640.4 million yuan loss a year ago.

The pandemic put people "in the changing consumption environment," and local on-demand retail and delivery services "represent one of the biggest opportunities in this era," Dada said.

Dada maintains a positive attitude about the market, working with empowering partners, streamlining operations and driving business growth in a sustainable way.

In the third quarter, it expects revenue to grow 39 to 45 percent year-on-year.