OneConnect Financial Technology (OCFT) Q2 Earnings call transcript Aug 16, 2024

OneConnect Financial Technology Co. Ltd. recently held its second quarter 2024 earnings call, revealing a significant improvement in financial performance and a strategic focus on digital transformation. The call, led by Chairman and CEO Chong Feng Shen and CFO Yongtao Luo, highlighted key achievements, growth opportunities, and future plans for the company.

Financial Highlights and Strategic Shifts

OneConnect reported a significant decrease in net loss from continuing operations attributable to shareholders, marking a step closer to achieving profitability. The company's solid performance is attributed to its efforts in product portfolio adjustments, customer expansion, overseas expansion, disciplined cost control, and efficiency improvement.

The financial results reflect a shift towards quality growth, with a decrease in low-margin customized projects. This strategy, combined with the sale of the Virtual Banking Business to Lufax, resulted in a net profit of RMB 139 million in the first half of 2024. The company also saw a 14.8% increase in revenue from overseas customers, underscoring the success of its overseas market expansion strategy.

Digital Transformation and Strategic Focus on Banking and Insurance

OneConnect's strategic focus on digital transformation is evident in its commitment to improving product capabilities in the three major business segments: Digital Banking, Digital Insurance, and Gamma platform. The company aims to empower financial institutions and enterprises to enhance their digital operation and service capabilities through digital transformation.

In the retail digital banking segment, OneConnect has upgraded its product offerings with customer-centric, data-driven, and AI-assisted tools to drive intelligent operations. These tools help banks achieve accurate target customer segmentation and asset allocation, ultimately improving product quality. The company's smart credit system, which has already proven successful in the domestic market, is also being exported to overseas markets, with a focus on Southeast Asia.

Overseas Expansion and Market Penetration

OneConnect's overseas business has seen remarkable growth, with revenue from overseas customers accounting for 21.2% of total third-party revenue. The company has successfully deepened its cooperation with leading banks and financial institutions in Southeast Asia, China, Hong Kong, and South Africa. This expansion strategy is expected to continue, with a focus on exporting smart credit systems, P&C insurance systems, and other digital solutions to overseas markets.

Investor Relations and Future Prospects

During the call, key shareholders and investors asked questions regarding the company's dividend payout plans and overseas business strategy. The company's management provided clear and confident responses, indicating a strong focus on sustainable growth and value creation for shareholders.

The outlook for OneConnect remains positive, with a clear strategic focus on digital transformation, overseas expansion, and product innovation. The company's commitment to improving operational efficiency and cost controls is also noteworthy, as it positions itself for long-term profitability.

In conclusion, OneConnect's strong financial performance, strategic focus on digital transformation, and commitment to overseas expansion make it an attractive investment opportunity for those interested in the financial technology sector. The company's leadership in digital banking and insurance solutions, coupled with its expanding presence in overseas markets, sets it apart as a key player in the industry's digital revolution.