A year after initiating its pursuit of a dual listing, the payment institution has officially pulled the plug on its Hong Kong IPO. On August 26, it was noted that A-share listed payment firm Lakala Payment Co.,Ltd. announced its board had approved terminating the issuance of H-shares and listing on the Hong Kong Stock Exchange's main board, citing changes in market conditions and adjustments to the company's strategic planning. In its announcement, Lakala stated that terminating the listing plan would not significantly impact its business operations or long-term development.
Earlier in August, Lakala published its semi-annual report for the first half of 2026, revealing substantial growth in both revenue and net profit. Revenue climbed 22.86% year-on-year to 3.257 billion yuan, while net profit attributable to shareholders surged 191.67% to 669 million yuan. However, a closer look reveals the profit surge was primarily driven by gains from equity disposals, while net cash flow generated from operating activities swung from positive to negative. Analysts suggest that the deeper reason behind Lakala's decision to abandon the Hong Kong listing lies in the structural challenges the payment industry faces in the capital markets.
Why Lakala pulled the Hong Kong listing
According to Lakala's announcement, due to evolving market conditions and strategic adjustments, the company held its fourth board meeting on August 25, 2026, where it approved the resolution to terminate the H-share issuance and listing on the Hong Kong Stock Exchange. The company emphasized that its operations remain stable and orderly, and that this termination will not materially affect its business activities or sustainable development, nor will it harm the interests of the company or its shareholders, particularly minority investors.
Lakala first listed on the A-share market in April 2019, becoming the first payment institution to go public in that market. Carrying the title of "first payment stock on the A-share market," Lakala announced its intention to pursue an H-share listing in Hong Kong in mid-2025, stating it aimed to advance its international development strategy, build a dual domestic-international circulation framework, create an international capital operation platform, accelerate the application of digital currency in cross-border scenarios, and further enhance its global competitiveness. After receiving board approval, Lakala submitted its prospectus to the Hong Kong Stock Exchange in October 2025. Since then, no significant progress was made on the listing, and the prospectus lapsed after six months.
In the seven years since Lakala's A-share listing, few payment institutions have successfully completed direct IPOs based on their payment operations. Only two—YiKa and Lianlian Digital—have done so, both listing in Hong Kong. FuYou Pay, which pursued a listing for years, failed four times after shifting from an A-share plan to the Hong Kong Stock Exchange. During the same period Lakala was pursuing its Hong Kong listing, NewGuoDu, the parent company of Jialian Pay, also launched plans for a Hong Kong IPO, but its prospectus similarly lapsed. Other market players have also floated listing plans without further progress.
Tian Lihui, a finance professor at Nankai University, believes Lakala's decision to terminate its Hong Kong listing reflects the structural difficulties payment companies face in capital markets. The core challenge for a dual listing lies in the divergence of valuation logic: A-share investors tend to apply a premium for tech-growth stocks, focusing on traffic entry points and ecosystem potential, while the Hong Kong market emphasizes cash flow stability and shareholder returns, approaching low-margin, heavily regulated, and structurally rigid payment businesses with caution. Compounded by stricter cross-border data compliance and anti-money laundering regulations, along with worsening liquidity differentiation in Hong Kong, small- and mid-cap payment firms struggle to secure reasonable valuations.
"This also signals that the third-party payment sector has shifted from a phase of capital expansion to one of stock consolidation. A listing is no longer the finish line but a starting point for re-evaluating one's own value anchors," Tian added.
Investment gains account for over 70% of profit
Turning to operational performance, Lakala delivered a "report card" with both revenue and net profit rising in the first half of 2026. But dissecting the financials reveals underlying concerns. According to the semi-annual report, Lakala's revenue reached 3.257 billion yuan, up 22.86% from 2.651 billion yuan in the same period last year. Net profit attributable to shareholders was 669 million yuan, a 191.67% increase from 229 million yuan a year earlier. After deducting non-recurring gains and losses, net profit was 219 million yuan, up 50.28%.
Specifically, Lakala's revenue comprises two main segments: digital payment services and technology services. Thanks to an increase in active merchants and higher payment transaction volumes, the former contributed 2.843 billion yuan in revenue, up 20.32% year-on-year, while the latter generated 213 million yuan, up 51.32%, mainly driven by growth from its controlled subsidiary, Tiancai Shanglong.
Lakala attributed the strong performance to improved profitability in its core business, as well as a significant year-on-year increase in investment gains from selling shares of listed companies it held. In fact, investment gains reached 610 million yuan during the reporting period, representing 72.69% of total profit. This reliance on investment gains has also caused sharp quarterly disparities in Lakala's performance. In the first quarter of 2026, revenue was 1.614 billion yuan, with net profit attributable to shareholders at 595 million yuan. By the second quarter, revenue edged up slightly to 1.643 billion yuan, roughly flat with Q1, but net profit tumbled to just 74 million yuan—a 87% plunge quarter-over-quarter and a 42.19% drop year-on-year.
An even more significant contraction appeared in cash flow. By the end of the first half of 2026, Lakala's net cash flow from operating activities stood at -103 million yuan, a 173.26% decline compared to 141 million yuan in the prior-year period. Lakala attributed this to increased tax payments and higher agency collection and payment amounts.
Tian Lihui was blunt: Lakala's first-half 2026 results look impressive on the surface but lack substance. Over 70% of profits came from one-time equity disposal gains. While non-recurring net profit growth reached 50%, its absolute scale was only around 200 million yuan—far below the 600 million yuan-plus attributable net profit—indicating that the core business's profitability hasn't yet supported the market's current valuation expectations. More concerning is the swing to negative operating cash flow, which suggests weakened receivables collection in the core payment business or increased working capital strain.
Wang Pengbo, chief analyst at Botong Consulting, echoed these concerns, warning that Lakala's profit quality deserves scrutiny. One-time equity disposal gains are not sustainable and reflect weak earnings growth in the core payment business. The reversal of operating cash flow from positive to negative also indicates a weakening ability to convert revenue into cash, as top-line growth hasn't translated into operating cash inflows. For a traditional payment institution, sustained pressure on operating cash flow will constrain future business expansion and risk provisioning, and will also heighten market doubts about the quality of its core operations.
The priority is returning to core business
As a leading player in the payment market, Lakala's domestic comprehensive acquiring transaction volume reached 2.25 trillion yuan, up 14.99% from 1.96 trillion yuan in the same period last year. Card-based transaction volume was 1.40 trillion yuan, up 7.73%, marking two consecutive quarters of positive growth, while QR code transaction volume hit 850 billion yuan, up 29.38%.
Lakala has also been pushing forward with its cross-border payment business. In the first half of 2026, the company served over 250,000 merchants in cross-border payments, up 55.86% year-on-year, with cross-border payment transaction volume reaching 54.364 billion yuan, up 46.38%. During the same period, foreign card transactions covered 287 cities nationwide, with active merchants accepting foreign cards up 50% year-on-year and foreign card transaction value up 81.57%.
When Lakala was pursuing its Hong Kong listing, some market analysts suggested this strategy would aid the development of its cross-border payment services. Regarding the reasons for terminating the Hong Kong listing and its impact on business layout, as well as plans to boost performance going forward, an interview request was sent to Lakala, but no response was received by press time.
Wang Pengbo noted that while Lakala's foreign card and cross-border businesses are growing rapidly, their transaction scales remain minuscule compared to the domestic market. Even with higher fee rates, their contribution to overall revenue is limited. Overall, Lakala's domestic QR code business is seeing slowing growth, the industry's total transaction scale hasn't shown significant expansion, and cross-border operations face external constraints from regulatory changes in foreign exchange and payments across different jurisdictions, as well as exchange rate fluctuations eroding interest margins.
Wang pointed out that for Lakala, the immediate priority is to return to its core business, reduce reliance on asset disposals to beautify profits, and genuinely improve the profitability quality of its payment operations. On one hand, the traditional acquiring track is highly competitive, with merchant fee rates under constant pressure. The company needs to control business development costs, optimize its merchant mix, and reduce resource consumption from inefficient operations. On the other hand, transformation areas like cross-border payments and SaaS digital services have been pursued for years but haven't yet generated sufficient performance contributions. These can't remain mere concepts—they need to be truly implemented to create scale revenue and build a second growth curve.
Tian Lihui also suggested that Lakala should return to the fundamentals of payment in its future operations and abandon its reliance on investment gains. First, it needs to deepen merchant service, transforming payment channels into digital operation gateways, enhancing per-customer value and loyalty through value-added services like SaaS tools and supply chain finance, rather than merely driving transaction volume. Second, it must optimize cost structures, improving gross margins through technological cost reduction and refined operations amid downward fee pressure, ensuring non-recurring profit grows in tandem with revenue. Third, cash flow management must be prioritized, with prudent assessment of accounts receivable cycles and customer credit risk, avoiding sacrificing collection quality for transaction volume.
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