CICC released a research report stating that considering LIANLIAN's (02598) high TPV growth, the firm raised its 2025/2026 revenue forecasts by 2%/2% to RMB 1.65/2.02 billion respectively, while maintaining unchanged adjusted profit estimates. The stock currently trades at 7x/6x 2025/2026e P/S ratios. Considering improved market sentiment, CICC raised its target price by 3.3% to HK$15.8, corresponding to 9x/8x P/S ratios and 39% upside potential, while maintaining its Outperform rating.

CICC's main viewpoints are as follows:

**1H25 Performance Meets Expectations**

LIANLIAN's 1H25 operating revenue increased 27% year-over-year to RMB 780 million, with net profit turning from loss to profit at RMB 1.51 billion (vs. 1H24 net loss of RMB 350 million). This included over RMB 1.6 billion in related gains from the partial disposal of LianTong shares. Adjusted recurring operating profit was RMB 60 million, with performance meeting expectations.

**Strong Revenue Growth with High TPV Growth in Cross-border Payments**

1H25 TPV increased 32% year-over-year to RMB 2.1 trillion, outpacing the 27% revenue growth rate. Breakdown: 1) Global payment TPV surged 94% year-over-year to RMB 198.5 billion, with higher growth in lower-fee service trade and B2B sectors leading to an overall global payment fee rate decline to 24bps. Global payment revenue increased 27% year-over-year to RMB 470 million, contributing 60% of total revenue; 2) Domestic payment TPV grew 28% year-over-year to RMB 1.9 trillion with relatively stable fee rates at 1.1bps, driving domestic payment revenue up 25% year-over-year to RMB 210 million, contributing 27% of revenue; 3) Value-added services revenue increased 34% year-over-year to RMB 90 million, contributing 11% of revenue, mainly benefiting from virtual bank card business contributions while digital rights products continued expanding.

**Relatively Stable Gross Margin**

1H25 gross profit increased 25% year-over-year to RMB 410 million, maintaining a high gross margin of 52%. Global payment gross margin was 72.7%, domestic payment 19.9%, and value-added services declined 7ppt to 19.8%, mainly due to growth in lower-margin virtual card business, which is expected to improve going forward.

**Continued Improvement in Core Business Profitability, Significant Gains from LianTong Stake Disposal**

The company completed the partial sale of LianTong subsidiary shares to American Express in 1H25, recognizing over RMB 1.6 billion in related one-time gains. The shareholding ratio decreased to 17.63%, allowing the company to share in the joint venture's long-term development dividends while better allocating resources to develop its core business. Excluding gains from the equity sale and impacts from LianTong losses/share-based payments/listing expenses/income tax, CICC calculated 1H25 recurring operating profit at RMB 62.58 million (vs. 1H24 loss of RMB 8.88 million), demonstrating enhanced core business profitability.

**Expected Steady Growth in Payment Business with Deepening Global Strategic Layout**

CICC expects steady TPV growth over the next 2-3 years, with payment revenue maintaining 20%+ growth, gross margins above 50%, and improving profitability. The firm projects 2025 recurring operating profit near RMB 70 million. The company has significant advantages in license compliance (recently obtained SFC Type 3 license for regulated leveraged foreign exchange trading activities), technological innovation, and global networks. 30% of placement funds are planned for global business, continuously strengthening global license layout and overseas local service capabilities.

**Leading Cross-border Payment Service Provider Significantly Benefits from Web3 Payments, VATP License Opens Growth Space**

The company plans to use 50% of placement funds to strengthen blockchain technology innovation and applications in cross-border payments, enhancing cross-border payment efficiency and security. The company began exploring Web3 payment deployments early and has obtained the VATP virtual asset trading platform license with cross-border payment implementation scenarios. Looking ahead, CICC expects the company to potentially broaden service boundaries, explore more monetization methods, and open long-term growth and expansion opportunities.

**Risk Factors:** Intensified market competition, regulatory compliance risks, macroeconomic volatility risks, and potential trade friction risks.