Lakala Payment Co.,Ltd. (300773.SZ) revealed its annual and first-quarter reports on the evening of April 16, showcasing a dual performance from the payment company.
At first glance, the figures appear impressive. In 2025, revenue reached 5.547 billion yuan, with net profit attributable to shareholders surging 233% year-on-year to 1.171 billion yuan. The first quarter of 2026 was even stronger, with net profit hitting 595 million yuan, an increase of nearly five times compared to the same period last year.
However, a detailed examination of the financial statements indicates that the profit was not supported by the core payment business, but rather by gains from stock investments—more precisely, one-time gains from the complete divestment of BlueFocus Intelligent Communication Group Co., Ltd. (300058.SZ).
**Investment Propping Up Operations** The connection between Lakala and BlueFocus began years ago with a strategic investment. In 2025, the nature of this investment changed. The annual report shows that Lakala altered its holding intention for BlueFocus from "long-term holding" to "short-term holding," switching the accounting method from the equity method to fair value measurement.
This change directly triggered substantial paper gains. In 2025, the sale of part of the BlueFocus shares resulted in investment income of 625 million yuan, while the revaluation of the remaining shares recognized a fair value change profit of 350 million yuan, totaling 975 million yuan. In the first quarter of 2026, the divestment of all remaining shares generated an additional investment income of 551 million yuan. Combined, these transactions brought in 1.526 billion yuan.
In contrast, Lakala's net profit after deducting non-recurring gains and losses for 2025 was only 301 million yuan, a decrease of 45.58% year-on-year. This reveals a significant gap between the actual profitability of its main business and the reported profit. This outcome is not indicative of successful investment but rather a financial maneuver—switching accounting methods and executing a concentrated sell-off to realize paper profits accrued over years. The critical question remains: with BlueFocus shares fully sold, where will the next 1.5 billion yuan come from?
**Core Business Under Pressure** Lakala's primary business, digital payment, faced challenges in 2025. Revenue from digital payment services was 4.874 billion yuan, down 5.65% year-on-year. Specifically, bank card transaction volume decreased by 13.73% to 2.47 trillion yuan, while domestic comprehensive acquiring transaction volume fell by 6.75% to 3.94 trillion yuan.
The decline in bank card payments aligns with broader industry trends, as mobile payment adoption and the promotion of the digital yuan continue to squeeze traditional acquiring services. Lakala's response has been to emphasize QR code and cross-border payments—QR code transaction volume grew by 7.9% to 1.47 trillion yuan, while cross-border payment volume surged 80.69% to 88.9 billion yuan.
However, QR code services carry low profit margins, and the cross-border business, while growing rapidly, starts from a small base. Neither is sufficient to fill the gap left by the contraction in bank card payments. The gross margin for the digital payment segment dropped by 5.1 percentage points in 2025, directly dragging down overall profit quality.
The technology services business did see growth of 44.05%, with revenue reaching 408 million yuan. However, a closer look at the notes reveals that this growth primarily stemmed from the consolidation of "Tiancai Shanglong," a restaurant SaaS company, starting in June 2025. The incremental revenue from this consolidation masks the true picture of organic growth.
**Shareholders Exiting** Amidst this superficial profit strength, major shareholders have chosen to exit. Legend Holdings, Lakala's second-largest shareholder, executed two reductions in the second half of 2025: selling 5.36 million shares in July, reducing its stake from 26.54% to 25.86%, and selling another 8.08 million shares between August and September, further reducing its holding from 25.00% to 23.97%. These disposals realized over 400 million yuan.
Notably, the average selling prices were approximately 28.7 yuan and 23.4 yuan per share, respectively, while Lakala's current share price is around 26 yuan—indicating a clear intent by Legend Holdings to sell at lower price levels.
Additionally, Sun Haoran, an individual shareholder previously holding a 2.45% stake, completely divested his position between June and August 2025. He sold 7.88 million shares in June-July, cashing out 226 million yuan, and another 11.39 million shares in July-August, realizing 266 million yuan, totaling 492 million yuan in proceeds. He no longer holds any shares.
Concurrently, in December 2025, Lakala completed a related-party transaction: it transferred three subsidiaries—Puhui Information, Runxin Factoring, and Tibet Hongcheng—to a related legal entity for a total consideration of 350 million yuan. The transfer prices for Puhui Information and Runxin Factoring were essentially at net asset value, implying no premium.
The official rationale is to divest non-core assets and focus on the primary payment business. However, from another perspective, this also represents a move to monetize assets and bolster liquidity, suggesting significant pressure on operating cash flow.
**Cash Flow Warning** Cash flow data supports this assessment. Lakala's third-quarter 2025 report showed net cash flow from operating activities was 290 million yuan, a 63% decrease compared to 791 million yuan in the same period of 2024.
Short-term liquidity ratios also deteriorated simultaneously: the current ratio fell to 0.96 (from 0.99 at the end of 2024), the quick ratio to 0.96 (from 0.99), and the cash ratio to 0.85 (from 0.88). All three metrics declined and remained below the safety threshold of 1. This indicates that if current liabilities were to come due集中ly, Lakala's cash reserves would be insufficient to cover them fully.
Against this backdrop, Lakala announced in June 2025 its plan to pursue a listing in Hong Kong. The prospectus outlined fund-raising purposes including overseas expansion, technology upgrades, and strategic investments, but notably did not explicitly mention "supplementing working capital."
It is important to note that Hong Kong regulatory compliance requirements are stringent. Between 2022 and 2024, Lakala accumulated fines exceeding 16 million yuan, and its Jiangsu branch was fined another 250,000 yuan in September 2025. Furthermore, it has over 100,000 consumer complaints on the Hei Mao投诉 platform. These compliance issues are likely to draw scrutiny from the Hong Kong Exchange.
**First Quarter: Recovery or Illusion?** Entering 2026, Lakala's performance seemed to rebound. First-quarter revenue was 1.614 billion yuan, up 24.2% year-on-year. Payment business revenue grew 20.06% to 1.385 billion yuan, and domestic comprehensive acquiring transaction volume increased by 14% to 1.12 trillion yuan.
However, net profit after deducting non-recurring items was only 85.89 million yuan, a mere increase of 1.43% year-on-year. The bulk of the reported 595 million yuan net profit still came from the 551 million yuan gain on the BlueFocus divestment.
This suggests that while payment transaction volumes recovered in the first quarter, particularly in QR code and cross-border segments, the minimal growth in core profit indicates no substantial improvement in underlying profitability. The growth might be driven by fee concessions to gain scale or an increased proportion of low-margin business. The true test will come in the second quarter—without stock investment gains, can the core business generate sufficient profit on its own?
**Challenging Transformation** Lakala's performance in 5 epitomizes the transformation challenges faced by a typical "established payment company": traditional business is shrinking, new ventures cannot yet shoulder major responsibility, financial engineering props up appearances, and major shareholders are exiting first.
The 1.5 billion yuan from stock sales obscured the fact that core business profit was halved. But with the shares sold off, the question of how the story continues remains. A Hong Kong listing is one option, but regulatory scrutiny, compliance remediation, and rebuilding trust present significant hurdles.
A more fundamental question persists: within the duopoly dominated by Alipay and WeChat Pay, and amid the push for the digital yuan, what is the unique value proposition of third-party acquiring institutions like Lakala? The company needs to answer not "how to raise funds," but "why should anyone invest in you."
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