Transcription of Finance News Network Interview with 99wuxian Limited (ASX:NNW) Chairman, Ross BensonDallas Baird: Hello I’m Dallas Baird from the Finance News Network and joining me from Chinese online mobile marketplace, 99wuxian Limited
(ASX:NNW) is Chairman, Ross Benson. Ross nice to have you back on FNN.
Ross Benson: My pleasure Dallas.
Dallas Baird: 99wuxian listed on the Australian Stock Exchange back in October. What can you tell me about your progress since then?
Ross Benson: Well the progress has been very positive. We’ve seen strong transaction growth, strong registered user growth, strong number of transactions. We’ve had business partner growth and merchant growth. So at the moment the business is growing very strongly organically.
Dallas Baird: You also have a few new business partners. What does that mean for 99wuxian?
Ross Benson: Well the important thing about business partners is our business model in China, is B to B to C. And so in our case, the B in the middle is the majority of the banks in China. It’s very important for our progress because as we expand our business partner base, we expand the reach that we have into all the debit and credit cardholders in China.
Dallas Baird: 99wuxian has added more merchants. Tell me about those additions?
Ross Benson: We have, our merchant pool has increased to over 150 now. Probably the most significant thing we’re seeing with the merchants is that there is a very strong focus on virtual products. This is in the area of things like online gaming, online ticketing, anything virtual also attracts a higher margin for the platform. So it’s a very positive thing for the business.
Dallas Baird: How many active vendors do you have now in your M-commerce marketplace?
Ross Benson: We have a total of 156. And probably a feature of 99wuxian’s marketplace is that all these vendors are very large, because there’s a very high hurdle rate of criteria because of the credibility issues, between a lot of our large business partners. So we have 156 and they’re all very large.
Dallas Baird: How does that expansion impact top line revenue growth?
Ross Benson: Well our main customer, we’ll call it customer acquisitions strategy via our marketing, is through our business partners. So the key driver there is that our business partners, which are the majority of the banks – we have eight of the top 10 banks in China, we now have a total of 43 business partners. And they’re all actively out there promoting mobile banking. Once they become a banking mobile customer of that particular organisation, they then become potentially a customer of 99wuxian, because they are mobile enabled for M-commerce. So the main strategy is to continue to grow our business partner pool. And there’s very strong growth because of the behavioural change in China, around mobile commerce.
Dallas Baird: The Chinese M-commerce market’s tipped by some analysts to triple by 2018. Is that how the market’s evolving?
Ross Benson: Well certainly at the moment the indicators say that we’re involved in a very fast and exciting, you know, sector M-commerce in China. A lot of the independent experts are saying that E-commerce, by the year 2018 will exceed 600 billion. And they go on to then say and there’s broad consensus, that we could see M-commerce represent over 50 per cent of this E-commerce figure. Now if that’s the case, then our market that we’re looking at is in excess of 300 billion.
Dallas Baird: And is 99wuxian positioned to adapt and grow in that market?
Ross Benson: We would say that we’re positioned very well, because I think again going back to the independent reports, there seems to be a consensus that one of the single biggest barriers to entry in M-commerce - and for that fact globally, is fear in security of payment. Now remember that when we face the customers, we’re facing them through their trusted banking partners, so we overcome that major barrier to entry. So we think strategically we’re well positioned. In addition these business partners represent today still, over 90 per cent of the retail spent in China. So whilst E-commerce is a very big space, our business partners have very considerable consumer resources. So we think strategically we’re in the right place.
Dallas Baird: Let’s talk financials; 99wuxian has just released its latest quarterly trading update. What were the highlights?
Ross Benson: Well I think the highlights are that the transaction volume was up by 111 per cent for the December quarter. We saw it grow from the June quarter of RMB580 million to the December quarter of close to RMB2.5 billion. We saw the number of transactions up significantly from 4.5 million, to just under nine million transactions for the quarter.
We saw the average transaction spin per increase by 70 odd per cent. And we also saw an increase in our business partners and merchants for the quarter - so very exciting. The revenue is up 11 per cent. That was impacted for the quarter predominantly through the activities that we had, which were very variable cost activities in accelerating our customer acquisition, to really accelerate the monetisation of our data mining activities.
Dallas Baird: And as you said, you saw a strong uplift in average transaction values. That must be encouraging?
Ross Benson: Yeah well there is, I think for the December quarter we saw the average transaction jump from RMB173, up to RMB298. This is very encouraging for a couple of reasons. The first one is I think that it represents that the quality of the customers through this B to B to C channel, tends to be higher than your B to C market. But it’s also encouraging, because the behaviour in China around M-commerce is a phenomenon that we don’t actually have a lot of control over. Remember that the new Chinese consumer has completely bypassed what we would consider, traditional E-commerce applications like the desktop. So they’re really moving straight into the mobile device as a means to transact and purchase online.
Dallas Baird: Finally Ross, what’s on the horizon for 99wuxian in calendar 2014. What would you really like to achieve?
Ross Benson: Well I think first and foremost, we’d like to achieve a positive result for shareholders in respect to the share price. So we’d like to see the share price move up and reflect the very exciting growth industry that we’re in, in China. As far as the Company operationally, we have spent quite a lot of time this year developing some opportunities in terms of data mining with our business partners.
We expect that coming into the second quarter of 2014; we’ll see some fairly major initiatives announced with business partners around some of those data mining activities. And we also believe that we will see in the short to medium term, continued very strong organic growth in registered users in total transactions volume.
Dallas Baird: Well Ross Benson thanks for the update on 99wuxian.
Ross Benson: My pleasure Dallas.
Ends
