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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to Digital China Holdings 2018 Midterm Results Teleconference. Management with us today include Chairman and CEO, Mr. Guo Wei; Chief Strategy Officer, [ Mr. Wu Johnson ]; Vice President, [ Mr. Sean Biao ]; Vice President of Instant Technology and Logistics, Mr. [ Tan Xiao ]; Company Secretary, Mr. Terence Wong.
Today, our briefing will be conducted in 2 sessions. First, [ Johnson ] will discuss Digital China Holdings' latest financial and business performance, and then we will open the floor for questions.
Now I would like to transfer the call to [ Johnson ].
Hi, everyone. I'm Johnson, Chief Strategy Officer of Digital China Holdings. I'm honored to give you a very brief introduction of our business and also the future growth [ strategy ].
First, the good news is that our business is turning around and profitable in the first half of this year. Also, we can see a very promising business growth, and we are confident to tell you that we will close the year with positive results.
Second, we made progress in the development of each of our businesses. Digital China IT service, as our main revenue contributor, grows healthy and is moving into FinTech arena.
Our emerging business, Sm@rt City and Smart Logistics, grows very fast and incubated some cool technologies. Also, we did pretty well to invest in our ecosystem business, such as Smart Health and Sm@rt Manufacturing, which is highly recognized by the market. From all 3 business categories, we have incubated many key technologies which give us competitive advantages and will be introduced to you later today.
Also, from all of our business, we start to get intensive various type of data which support our corporate strategy of transition from IT service company to data-driven technology company. Here, I would like to introduce some of our technology.
Human + Robot logistic business model. The automatic sorting system of our sales develop business application model, Human + Robot, is being used to build a smart logistic warehouse there. SHINEFLY, an intelligent diagnostic platform jointly launched with Philips provides medical institutions with a safe and a reliable medical Big Data cloud application platform. Yanyun DaaS can support the national big data strategy break down the isolated information islands and the incremental solution efficiency. This is an innovative technology that we apply to Sm@rt City business solution.
X-DATA, our self-developed X-DATA logistics Big Data platform, together with our visualization platform, is able to capture every aspect of the logistics process.
Our big data technology, just mentioned, has been applied to a wider range of industries. Through the process of a data accumulation, expansion, utilization and application, we will turn the data into monetization. Some of the examples of the big data monetization, including the financial credit score, health care data for drug development and public security systems.
Our value propositions are we have the right application scenarios for big data technology. We have the leading market position in a number of industries, particularly in finance, logistics and health care. Through more than 2 decades of the IT industry, we have a large number of the client base and the partnership, which you can see.
Numbers. The business highlights on Page 8 summarize our performance in the first half of this year. In short, the whole business is turning around, returning to profitability. A number of breakthrough with financial performance improved across the business segments.
Our turnover is about HKD 6.89 billion (sic) [ HKD 6.98 billion ] with 21% year-over-year growth, driven by the IT service and the Smart Logistics business. The gross profit was HKD 1.2 billion with 11% year-over-year growth, and the gross profit margin is about 18%. Profit attributable to shareholders rose to HKD 137 million compared to the loss of approximately HKD 452 million last year.
Overall, operating environment of Digital China has been very favorable. E-commerce and IT banking solution markets are expected to rise by double digits, possible -- positive for all our logistics and IT service FinTech business. The Circular 39 by the state council has also presented a policy-driven opportunity of Sm@rt City business with Yanyun DaaS product.
The big data application this year are particularly pronounced in the areas of Sm@rt City, finance, health care. Some key examples include a number of the citizen service platforms have been launched in Guangzhou and Shenzhen and other cities.
Our Yanyun DaaS product is helping many local governments break down the isolated information island in prevailing legacy systems. Our Digital China Health big data solutions are increasingly being used in clinical environment such as the Children’s Hospital of Fudan University in Shanghai.
As you can see, overall, the business is sustaining its growth trends. Digital China, IT service and the Smart Logistics are key revenue driver and will remain so.
In new business, we saw sustained growth in Sm@rt City and the commercial rentals. New business revenue dropped 34.8% because we did not have much property to sell this year, and we scaled down the financial business to control the financial risks. This is positive for our future performance. Given a very favorable operating environment, we can reasonably expect an [ earning uptrend ] to be sustained.
Instant Technology Logistics is a leading player in B2B and the B2C, with more than 1 million square meter warehousing area serving more than 50 Fortune 500 customers, and the daily volume is about 300,000.
We run our logistics warehouse business based on artificial intelligence and the big data technology. Our X-DATA platform is a big data platform that has captured every aspect of the logistics process, helping our customers with procurement, inventory management and the logistics planning.
Our Human + Robotics business model could deal with the high volume at peak season. By combining robotics operation with a preprogrammed manual process, we can save 40% of the manpower, 50% warehouse space and the [indiscernible] sorting efficiency of staff by 2 to 3x.
Recently, we upgrade our Human + Robot [ to 2.0 version at the Pinggu warehouse, where we set a new version of the robot capable of working in a free environment at an elevated platform as opposed to traditional robotic operation on the ground. It is amazing. We hope you have the time to visit the [indiscernible].
We see a very robust growth in our logistics business. B2B logistics, strong connection with core enterprise customers, such as Xiaomi, Schneider, China Mobile and Geely.
In B2C logistic area, we have a full-scale strategic cooperation with Cainiao Network, with business extending into bring the brand flagship stores to expand broadly and the Tmall online supermarket.
Oversea warehouse in Belt and Road countries. We have launched an oversea warehousing business, in which our warehousing in Myanmar was awarded the ] ZTE Global Top Five Warehouses.
These are the macro trading results for our e-commerce business. Instant Technology Logistics has a set comprehensive e-commerce service for leading brand in the world, including multiplatform web designs; online operation; financial settlement; warehousing and the logistics e-commerce supply chain service. Service for Huawei has been growing, despite a general downturn in the mobile market.
Digital China Gold Storage. Developed with more than 10 years of the logistics operation experience, independent research and the development, the software supports cloud service models and the real-time data interface. Profit has been an uptrend.
Sm@rt City. Sm@rt City 3.0 is being applied across the country. Urban big data platform [indiscernible] in other areas. Construction of the new intelligent CBD and intelligence water infrastructure system in Guangzhou. eLongyan is a comprehensive service platform of citizens in Longyan City, Fujian Province.
Here, we lay out the foundation of our Sm@rt City business. We believe we have the full competency and advantage in a couple of the areas. First, Digital China has been the lead provider on the Sm@rt City business in China. We got the brand. And we have the ecosystem because we have a group of the business with a [ finish ] among all the partners.
We know government, and we have the close cooperation with the top think tanks in China and gives the -- consultant to the government. And also, we have the core technologies. We have the Yanyun DaaS and the Blockchain, and we will add more in this area.
Digital China IT service. Our efforts to focus our FinTech yielded very impressive financial results. Revenue rose about 20%. Gross profit rose 19%. Profit attributable to Digital China Holdings rose 210% to HKD 134 million.
Digital China Financial Cloud has capital and the business partnership with Jingdong Finance, they could capture opportunities in helping banks migrate to an Internet format.
Digital China Health. SHINEFLY cloud-based precision health care platform was awarded the Best Practice Award by Intel Life Science Forum. Also, Digital China Health's Series A Round financing brought in a group of investors. The post-investment valuation is about HKD 3.8 billion. We plan to send the company's IPO at some other stage.
iSESOL is a leading industry Internet platform covering devices in 26 province and 161 cities. It has become the first 5 industrial Internet platform certified by the Alliance of Industrial Internet, ranked as 2018 China Top Ten Industry Cloud Platform at the China IoT Ecosystem Forum.
That's all the introduction for today. In short, we did pretty well in the first half of the year, and we believe we can close this year at a very positive result.
And also, as said, we did pretty well in all the business, including the main business, which is Digital China IT service and moving toward the FinTech arena and also in the emerging business, which is Sm@rt City and Smart Logistics. And actually, I forget to say, Smart Logistics becomes the second-largest revenue contributor to our business and followed by the Sm@rt City business. And third, our ecosystem business is growing pretty fast.
So also, you see we have intubated a lot of the core technologies, and we start to get intensive data from the various channels. So we are moving towards -- to the direction transitioning our company from IT corporation to the data-driven technology company with the solid milestones. And hopefully, we have your support on the way towards that. Thank you, everyone.
Thank you, [ Johnson ]. This concludes the prepared remarks for today, and we are now ready for questions. [Operator Instructions] The Q&A session will be conducted by Mandarin. Should there -- if any questions raised in English, Digital China team will provide consecutive translation [Foreign Language] Operator, can you ask -- take the first question?
[Foreign Language] DBS, Susanna Chui.
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[Foreign Language] CCBI, Eric Yu.
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[Foreign Language] Peak Asset Management, [ Brian Time ]. [Foreign Language]
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[Foreign Language] Please ask the question in English, and we will provide translation, okay?
I heard from the presentation that the company have plan to list some of its subsidiary. Can you expand on what -- which company you will be taking a separate listing? And do you kind of have a timetable for this? That's the first question. Second question, do you think the company can expand more on that wealth management product? I think from your presentation announcement, you make a special paragraph, a mention on this settlement plan regarding this wealth management plan. Maybe the company can expand on it, especially the remaining HKD 1.9 billion, what's the chance of getting those back? And do we have a timetable for this?
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Can I just...
[Foreign Language] Please go ahead, if you have a follow-up question, and then we will answer your original second question, okay? So please go ahead on your follow-up question. Yes. Yes, go ahead.
In your announcement, you mentioned about the use of proceeds from the rights issue, and that's a area you mentioned that you haven't agreed [ on the ] investment, the size and -- with this medical data. I'm a bit confused, kind of -- because in your announcement, you also mentioned about this DC Health. Are we talking about the same company?
Are you saying that the right -- the money raised from the right issues, whether the money is being applied to DC Health, is it the same company is the question, right?
Yes, on Page 33 of the announcement.
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Thank you [indiscernible]. Due to the time, we have to conclude the call. So if you have further questions, feel free to contact Mr. Davin Wu, Investor Relations Manager of Digital China. Again, thank you, everyone, and see you next time. Thank you.
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