Against the macro background of the country vigorously supporting the development of the private economy and the real economy, huitongda net (09878.HK), as one of the top 120 enterprises in the list of the top 500 private economy, and as a platform enterprise empowering and assisting the growth of small and micro private economy, is embracing unprecedented development opportunities.

Dual-wheel drive: Macroeconomic policies coexist and prosper with the private and real economies.

Since the beginning of this year, the country has issued a series of policies several times, clearly demonstrating firm support for the development of the private economy, optimizing the development environment for the private economy, legally protecting the property rights and entrepreneurs' rights of private enterprises, and fully promoting the vigorous development of the private economy and private enterprises. These policies provide broad development space for outstanding private economy entities like huitongda net, aligning their business models closely with national strategies, and fully benefiting from the dividends brought by policies.

In early September, the 2024 China Top 500 Enterprises Summit Forum was successfully held in Tianjin. Huitongda Net ranked 296th in the "China Top 500 Enterprises," up 5 places from last year; at the same time, it ranked 100th in the "China Top 500 Service Enterprises," up 2 places. As a leading industry internet company in the sinking retail market, huitongda net focuses on 6 major categories including consumer electronics, household appliances, agricultural production materials, transportation, home building materials, and alcoholic beverages. Its business already covers 21 provinces and 0.025 million townships, providing quality services to over 0.246 million stores.

The company focuses on two core areas: supply chain capacity building and strengthening membership service capabilities. It has established deep cooperation with many leading brands, deepened the implementation of various strategies, and promoted the comprehensive upgrade of digital and AI services through an integrated online and offline approach, providing strong empowerment support for member store customers. With outstanding supply chain integration capabilities and cutting-edge digital technology, huitongda net has created a comprehensive service system for rural retail stores in the vast sinking market, offering one-stop product procurement, efficient operation management, and precise marketing support.

According to the latest statistics from the Sinolink Securities research report, nearly 70% of China's population lives in third- and fourth-tier cities and below, exceeding 0.8 billion people. In addition, the disposable income growth rate in the sinking market is higher than that in the top market, providing huge consumption potential for the sinking market. In terms of consumption trends, as of 2023, social zero consumption in the sinking market accounts for over 60%, and post-pandemic shares are further shifting towards the sinking market, highlighting its increasing importance.

As a model of private economy, Huitongda actively responds to national policies, fully utilizes its own advantages, continuously optimizes service quality and improves service efficiency through technological innovation and iterative models, providing more precise and efficient empowerment solutions for small and micro private economic entities. Currently, Huitongda Network has constructed a comprehensive and multi-dimensional support network for small and micro private economic entities with its innovative "+supply chain", " +technology", and " +marketing" empowering systems. For example, with " + supply chain", Huitongda has not only helped upstream manufacturers reduce costs and improve efficiency but also ensured that township retail stores can directly access first-hand quality sources, achieving high-quality and inexpensive product purchases. This measure significantly enhances the market competitiveness of small and micro private economic entities, promoting the harmonious symbiosis and coordinated development of the entire supply chain.

Taking the example of Mr. Huang, the owner of a mobile communications store in Hongyao Town, Lianshui County, Huaian City, Jiangsu Province, since joining the Huitongda system, the store's sales volume has significantly increased. Mr. Huang expressed deeply, "Thanks to Huitongda's professional operational support and participation in the Apple Township Authorized Store project, the store's visibility has greatly increased and successfully expanded to online platforms, realizing a new O2O instant retail mode with online ordering and offline delivery." This vivid case fully demonstrates Huitongda Network's outstanding achievements in empowering small and micro private economic entities.

This business model not only effectively reduces the purchasing costs of township retail stores, improves operational efficiency but also expands sales channels through digitization, thereby increasing sources of revenue. In the macro environment where the country strongly supports the private economy, Huitongda Network's development model has gained broader recognition and support, laying a solid foundation for its continuous expansion and deepening services.

As the cornerstone of the national economy, the real economy's importance is self-evident. Huitongda Network has achieved rapid development by deeply cultivating the real economy in townships. The country has repeatedly emphasized the need to vigorously develop the real economy, promote the transformation and upgrading of traditional industries, which has opened up broad market space for Huitongda Network.

With strong supply chain integration capabilities, Huitongda Network introduces high-quality goods into sinking markets to meet the increasingly diverse needs of township consumers. Simultaneously, by significantly improving the operational efficiency and customer experience of township retail stores through digitization, it effectively promotes the transformation and upgrading of the real economy in townships. Under the policy orientation of revitalizing the real economy, Huitongda Network's development model is more in line with the pulse of the times, poised to receive more policy support and market opportunities, leading the new chapter of integrated development between the private economy and the real economy.

Favorable commercial circulation policies: Multiple opportunities in the household appliances and new energy industries

2024 is the "Consumer Promotion Year", where the country vigorously promotes the replacement of old with new for household appliances, automobiles, and other consumer goods. For example, in the first half of the year, the Ministry of Commerce and 7 other departments issued the "Detailed Rules for Subsidies for Scrapping and Purchasing New Cars," stipulating a subsidy of 10,000 yuan for scrapping and purchasing new energy vehicles/gasoline vehicles respectively meeting the conditions, providing new impetus to the car consumption market.

With the deep implementation of national policies promoting consumption, the replacement of old with new for new energy vehicles and household appliances, and the countryside promotion, Huitongda Network is embracing unprecedented development opportunities in the household appliances and new energy vehicle industries.

On one hand, Huitongda Net, as an important participant in the household appliance industry, actively responds to national policies by integrating upstream supply chain resources to provide high-quality and affordable household products for rural retail stores. For example, Huitongda collaborates with Akai to create 'Small Town Select' kitchen and small appliance new products.

The product focuses on 'quality and price ratio', with more than 10 products launched, including rice cookers, electric pressure cookers, etc., fully catering to the needs of consumers in the sinking market.

At the same time, Huitongda Net also utilizes its own digital technology advantages to provide precise marketing strategies and customer services for rural retail stores, helping rural consumers better understand and purchase household products. Driven by national household appliance consumption policies, Huitongda Net's household appliance business achieved rapid growth, further solidifying its leading position in the household appliance industry.

With the rapid development of the new energy vehicle market and the strong support of the country for the new energy industry, Huitongda Net is also actively laying out in the new energy sector, reaching deep cooperation with leading new energy companies such as NIO. Leveraging its channel advantages in the sinking market, Huitongda Net provides sales and after-sales service of new energy vehicles to rural consumers, promoting the popularization of new energy vehicles in rural markets.

Furthermore, Huitongda Net also leverages its own digital technology advantages to provide precise market analysis and marketing strategies for new energy vehicle manufacturers, helping manufacturers better understand the needs of rural consumers, optimize product design and production. Driven by national new energy policies, Huitongda Net's new energy business is also expected to achieve rapid growth, becoming a new profit growth point for the company.

CSRC's '6 Merger Rules' are expected to accelerate the return-to-A strategy pace.

In September 2024, CSRC officially released the much-anticipated '6 Merger Rules' policy. The issuance of this policy provides more convenience and support for enterprises in the M&A market, Guronghui believes that this not only provides favorable conditions for Huitongda to more deeply connect with upstream production enterprises but also provides external impetus for Huitongda Net, a Hong Kong-listed company, to return to the A-share market in the future.

'6 Merger Rules' policy mainly includes improving the efficiency of M&A review, simplifying approval processes, and strengthening M&A supervision. Among them, improving review efficiency and simplifying approval processes will effectively reduce the time and economic costs of corporate M&A transactions; strengthening M&A supervision will help standardize the market order and prevent market risks. The implementation of these policies will provide more convenient and efficient services and support for corporate M&A transactions.

For Huitongda Net, the implementation of the "six mergers" policy will bring the following bullish impacts:

First, accelerating the pace of returning to the A-share market. With the further opening up of the merger market and continuous optimization of policies, Huitongda Net is expected to achieve rapid business expansion and market share increase through mergers and reorganizations, providing strong support for its accelerated return to the A-share market.

Second, expanding financing channels. By entering the A-share market through mergers and reorganizations, Huitongda Net will have a broader financing channel, assisting the company in raising more funds for business expansion, technological innovation, and enhancing overall strength and competitiveness.

Third, more rapidly implementing the integrated production and sales, upgrading strategies such as self-owned brands. With the support of the merger policy, Huitongda Net is expected to more extensively participate in product research and development, production end through acquisitions, and equity participation, promoting the core strategic implementation of integrated production and sales and self-owned brand.

From the market perspective, the release of the "six mergers" policy further enhances investors' confidence in the future development of Huitongda Net. Many analysts believe that with the continuous implementation of policies and the gradual maturation of the market, Huitongda Net is expected to have a place in the future merger and reorganization market. At the same time, returning smoothly to the A-share market will bring more development opportunities and growth space for Huitongda Net.