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H.E.R.O.’s Journey in Tech (26 March 2019) – Deep Science AI joins Defendry to automatically detect crimes on camera

H.E.R.O.’s Journey in Tech (26 March 2019) – Deep Science AI joins Defendry to automatically detect crimes on camera

Companies

  • China Literature Ltd., which operates one of the country’s leading online literature platforms, had signed 7.7 million writers and offered 112 million online literature works by the end of 2018 (Xinhua)
  • Investors take legal action against Nio for ‘misleading statements’ (Technode)
  • USI Collaborates with Microsoft to Launch the World’s First Azure Sphere Combo Module Designed to Meet Data Security and Connectivity Needs (ITN)
  • New Applications with Operational Updates in WiseChip Transparent OLED Displays Series (ITN)
  • Altium Launches “Altium Academic Programs” to Empower Next Generation of Technology Innovators (PRNW)

BATTSS – Baidu, Alibaba, Tencent, TSMC, Samsung, Softbank

  • Alibaba acquires Israeli startup Infinity Augmented Reality (TC)
  • Samsung Issues Rare Profit Warning on Slump in Memory-Chip Price (Bloomberg)
  • Only ‘No. 1’ companies will survive in AI era, says SoftBank CEO; Rivalry heats up as ride-hailing companies head to public markets (Nikkei)

FAANNMG – Facebook, Amazon, Apple, Nvidia, Netflix, Microsoft, Google

  • Facebook crumbles around its lonely king (MW); Social media executives will be threatened with the introduction of jail sentences unless the industry co-operates with stopping their platforms being used to spread terrorist and extremist material. (AFR)
  • Apple leaves a lot of questions about its subscription services unanswered (MW); Apple wants investors to focus on its services business. Regulators may, too (CNN); Tim Cook says Apple Card is a game changer. Experts are not so sure (CNN); What Apple’s Credit Card Means For Fintech (Forbes); Apple Card will make credit card fraud a lot more difficult (TC); Apple TV+ makes Facebook Watch look like a joke (TC); Apple TV+ joins crowded market for streaming options (Reuters); Apple’s not building a Netflix-killer. It’s got something bigger in mind (Age); Apple Launches $10 a Month Magazine, News Subscription Service (Bloomberg); Apple Shows Off Apple TV+ Video Service, Taking on Netflix (Bloomberg); Apple Debuts Apple Arcade Gaming Subscription Service (Bloomberg); Even Oprah Can’t Paper Over Apple’s Services Flaws; The iPhone maker’s big event highlights some half-baked ideas. (Bloomberg); Apple’s next big things are not things – hardware giant shifts to services with TV streaming, news, credit card and games; The strategic transformation of the tech giant into a content provider puts it in competition with Netflix and other streaming services (SCMP); Apple working on games subscription service for gadgets: Bloomberg (Reuters); Apple stretches to take on Netflix, Amex, Disney (Reuters)
  • Apple’s new ‘Sesame Street’-themed TV show will teach kids coding basics (TC)
  • Why Netflix Won’t Be Disrupted by New Competition From Apple (Barron’s); Why Netflix Won’t Be Part of Apple TV (NYT)

Asia Tech & Innovation Trends

  • China no match for US unicorns in AI, big data and robotics as it continues to play catch-up in R&D, says Credit Suisse (SCMP)
  • Yunji, a startup that enables social commerce via WeChat, files for $200M US IPO (TC)
  • This small team is building a social credit system app for China’s youth to determine who’s naughty or nice; A state-linked company partnering with the Communist Youth League Central Committee has launched a big-data credit app aimed at incentivizing positive action (SCMP); Life as one of China’s 13 million ‘deadbeats’ means slow trains, special ring tones; Individuals on a national list of ‘discredited individuals’ are barred from taking airplanes and high-speed trains (SCMP)
  • Xenodata, which develops the financial information AI analysis service “xenoBrain”, to raise 780 million yen (TC)
  • Aussie ‘influencer’ platform shoots for US stars after big capital raise (AFR)
  • Airwallex becomes the fastest Aussie unicorn after $US100m raise (AFR); Airwallex enables customers to create international bank accounts instantly, access interbank exchange rates and send money through local and international clearing networks to more than 130 countries. (Age)
  • Delhivery leading e-commerce logistics market is not a winner-takes-all game, says expert (FE)

Global Tech & Innovation Trends

  • Deep Science AI joins Defendry to automatically detect crimes on camera (TC)
  • Can AI be a fair judge in court? Estonia thinks so (Wired)
  • McDonald’s to buy AI company Dynamic Yield; Acquisition will help burger group customise its menu displays based on differing variables (FT); McDonald’s is acquiring Dynamic Yield to create a more customized drive-thru (TC); McDonald’s $300 Million Tech Deal Will Revolutionize Menus (Bloomberg)
  • Warnings of a Dark Side to A.I. in Health Care (NYT)
  • The Unicorn Stampede Is Coming (Bloomberg)
  • Tradeweb Markets plans to raise up to $709 million in IPO (Reuters)
  • Naspers Brings SoftBank-Style Mega-Tech to Europe; A $100 billion technology investor is about to land in the continent. (Bloomberg)
  • Pinterest’s future relies on pegging global sales (Reuters)
  • Lyft: Last Mile or Last Straw? (Morningstar)

Life

  • In the face of adversity, are you a Guernsey or a Brahman? (FS)
  • Mind your emotions: why emotional agility is the key to personal growth (Medium)
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H.E.R.O.’s Journey in Tech (25 March 2019) – HEROZ AI automatically proposes stock portfolio based on financial theory in new service for SMBC Nikko Securities; AI can be trusted to take our 911 calls

H.E.R.O.’s Journey in Tech (25 March 2019) – HEROZ AI automatically proposes stock portfolio based on financial theory in new service for SMBC Nikko Securities; AI can be trusted to take our 911 calls

Companies

  • HEROZ AI automatically proposes stock portfolio based on financial theory in new service for SMBC Nikko Securities (TC)
  • Vision Travel and Direct Travel enhance booking capabilities through Serko’s Zeno (TW)
  • Are Info Edge investors betting too much on Zomato valuations? (LM)

BATTSS – Baidu, Alibaba, Tencent, TSMC, Samsung, Softbank

  • Samsung scouts AI startups in Paris (Investor)

FAANNMG – Facebook, Amazon, Apple, Nvidia, Netflix, Microsoft, Google

  • Amazon gets an edge with its secret squad of PhD economists (CNN)
  • Amazon makes own play for the beauty sector as online brands pick up steam (MW)

Asia Tech & Innovation Trends

  • The Complex Fortune Growing Inside World’s Most Valuable Startup (Bloomberg)
  • China’s Ping An Insurance finds success with focus on tech; Aggressive R&D begins to pay off and complement main business (Nikkei)
  • Disaster survivor brings AI solutions to Asian insurance (Nikkei)
  • The growth of global accommodation marketplace Airbnb in Australia has proven a boon for local property management start-up Hometime, which credits the platform for quadrupling its revenue in 13 months. (AFR)
  • $500m ‘Black Mirror’ app chases ASX IPO (AFR)
  • PlayerUnknown’s Battlegrounds is the world’s most popular smartphone game. Indian cities have banned it, fearing it turns children into ‘psychopaths’ (SCMP)
  • Delhi drives push for electric vehicles in India; $1.5bn in government subsidies will support electric scooters, three-wheelers and buses Bangalore electric scooter maker (FT)

Global Tech & Innovation Trends

  • AI can be trusted to take our 911 calls (TNW)
  • Banks use AI to catch rogue traders before the act; Technology presents an opportunity to spot errant bankers before misconduct takes place (FT)
  • Google Search Moves Hurt Pinterest’s Growth, IPO Filing Shows (Bloomberg)
  • Could Walmart be the next big company to launch a game streaming service? (TC)
  • Smart grids are essential to prevent old power infrastructure from holding back the US economy (TNW)

Life

  • Dirty Work For Robots: How Two Young Immigrant Entrepreneurs Created Oven-Sized Roombas To Chase A $5B Opportunity (Forbes)

Forever Technology 恒华科技 (SZSE: 300365), China’s #1 SaaS Cloud Innovator in Smart Grid Design-Infrastructure Management-Distribution Powered by Big Data – H.E.R.O. Innovators Insights from Chairman Jiang Chunhua 江春华 | H.E.R.O. HeartWare | 25 March

Can big data, artificial intelligence, the might of the world’s biggest company you’ve never heard of and the agility of China’s #1 SaaS (Software-as-a-Service) cloud innovator in smart grid, together solve the high-value structural problem of power grid imbalance unique to China and bring back blue skies?

China’s main coal deposits are in the north, its main solar, wind and hydropower potential in the northwest and far west, and its swelling energy demand is concentrated in the coast’s congested eastern grids with continuing urbanization and aggressive promotion of electric vehicles and buses (EV) adding significant load to the electricity grid. China is the world’s largest consumer of electricity, and its demand is expected to at least double by 2035. However, China is struggling to efficiently balance its power production and demand, and to distribute electricity where and when it is needed. The utilization of ultra-high-voltage (UHV) power transmission lines, designed for long-distance transmission to send excess intermittent electricity in remote interior regions to coastal centres battling worsening air pollution, has been far lower than expected. China’s rates of renewable energy curtailment — the term for when plants are deliberately throttled or shut down due to grid capacity limits or to simply make room for coal-fired generation — are the highest in the world and getting higher. Part of the problem is that it’s easier and more lucrative to use predictable sources like coal which provide a constant stream of electricity, than the variable generation from renewables.

China’s grid system is run by the State Grid Corporation of China (SGCC) and China Southern Power Grid Co (CSG). State Grid is probably the biggest company you’ve never heard of, with nearly 1 million employees and 1.1 billion customers. Last year, it reported $9.5 billion in profits on $349 billion in revenue, making it the second-largest company on Fortune’s Global 500 list, just behind Wal-Mart. State Grid is already the biggest power distributor in Brazil, where it built its first (and still only) overseas UHV line. State Grid has also snapped up stakes in national transmission companies in Australia, Greece, Italy, the Philippines, and Portugal.

To solve the grid imbalance problem, the state undertook a monumental energy market reform to gradually liberalize the electricity distribution business and marketize electricity price transactions which started in 2015 and has accelerated in 2018 and over 7,000 electricity power sales companies with trading qualifications have been established. Whether it is a pure electricity sales company or a power distribution company or an industrial park, whether the volume is large or small, they all need information system support.

This week, we highlight the under-the-radar listed Asian exponential innovator Forever Technology 恒华科技 (SZSE: 300365) who is China’s #1 software leader in grid design, grid infrastructure project management and grid distribution. The energy market reform has propelled growth in Forever’s grid distribution software business to jump 305.7% yoy in its 1H FY2018 results and now contribute 43.1% of its sales. In its grid distribution software business, Forever has built China’s only online integrated marketplace platform “Power+” (https://www.365power.cn) to serve local power companies, power distribution companies, smart industrial parks, and energy-using enterprises to buy/sell electricity with various SaaS products to effectively support the power distribution customers in electricity purchase, electricity sales, development of the core business of the power distribution business and value-added services in big data analytics services.

For instance, Forever’s electricity sales big data forecasting platform product achieves real-time prediction within 3 seconds, and the power consumption prediction accuracy rate is over 97%, which has been verified by real data of millions of users in Guizhou, Shanxi, Zhejiang, Qinghai and other provinces. Based on the artificial intelligence machine learning algorithm and multi-factor analysis of user industry, type, holiday, business status, etc, the predictive model continuously self-improves and corrects based on historical data and future trends, dynamically adjusts the predicted algorithm parameters, and realizes self-evolution. The big data SaaS product achieves complete data governance and has complete automated data management capabilities, and automatically repairs the abnormal data and error data of electricity sales according to the rules and trends of electricity consumption, and provides external data sources such as weather, regional economic indicators, and enterprises. The SaaS product has build a library with more than 30 kinds of electricity sales forecasting algorithms and models with independent intellectual property rights, in addition to typical time series method, periodic coefficient method, cubic exponential smoothing, gray forecasting method, auto-regressive differential moving average method, holiday analysis and forecasting algorithm, etc.

Like Adobe who was misunderstood back in 2011 when it outlined its transition from package software to a subscription-based SaaS business model before compounding over 850% to US$127bn in market value, Forever is in the early tipping point stage of transforming from its original smart grid life cycle informationization project service business model 2-3 years ago to presently provide standardized SaaS cloud software products that generate healthy profit margins and growth. On 28 Feb 2019, Forever announced its preliminary estimated FY2018 results in which sales increased 38.35% yoy to RMB1.184bn, operating profit increased 42.1% yoy to RMB 298.7m, and net profit rose 41.3% yoy to RMB 271.63m, with OP margin of 25.2%, ROE (= EBIT/Equity) of 16.4% and ROA of 12%. Balance sheet is relatively healthy with net cash of RMB 505m (US$75.4m) (RMB 641.26m gross cash, RMB 136.1m gross debt) which is around 4.5% of market cap. Forever is up over 250% in share price performance since its Jan 2014 IPO to a market value of US$1.6bn, as compared to a 25% for the Shenzhen composite index over the same period.

Forever also reminds us of ASX-listed Altium, the global enterprise SaaS leader in electronics design systems for 3D PCB design and embedded system development, the equivalent in PCB design to what Adobe Photoshop is for picture editing. Since Altium made the difficult and painful transformation from conventional software to SaaS from Oct 2012 led by CEO Aram Mirkazemi, its share price had compounded over 38-fold to a market value of US$3.2bn. In grid design software, Forever commands an over 80% domestic market leadership in 3D-GIS-BIM (Geographic Information System-Building Information Modeling) design of power transmission line, power substation and power cable. The shift to a unique collaborative design cloud platform with various design tools and Slack-like collaborative project management and real-time communication mobile app “Yao Zhi” 遥知 (http://yz.365power.cn) to help achieve cross-regional, cross-professional and cross-tool collaboration design have further enhanced the value-add to its community of customers and solve the high-value problem of the uneven distribution of software design and software engineering resources in the industry. Forever also benefits from new state regulation mandating the use of 3D design software from 1 Feb 2019 for smart grid construction to build a full-service data link and improve the overall design quality of power transmission and transformation projects, which will greatly increase the penetration rate of 3D design software.

Forever operates three key software businesses to provide a full lifecycle integration for smart grids:
(1) Grid Design (30.6% of sales in 1H FY2018, GP margin 52.5%, sales growth 41.6% yoy), in which its wholly-owned Daoheng Technology 道亨科技 (http://www.slcad.com) commands an over 80% market leadership in 3D-GIS-BIM  design of power transmission line, power substation and power cable. The online design institute SaaS products were launched in May 2018. The professional design cloud platform community E-Zhilian E智联, established in collaboration with China Electric Power Development Research Institute, was put into operation in June 2018 for surveying and design enterprise managers, design and technical talents, project owners, material equipment manufacturers, software companies and other vertical practitioners and integrated with the Power+ supply chain cloud platform (https://sj.365power.cn).
(2) Grid Infrastructure Project Management (22.9% of sales, GP margin 29.1%, sales growth -21.6% yoy). Forever modernizes infrastructure management information software with its enterprise information integrated service platform (EISP) to serve power infrastructure construction enterprises, local power companies and distribution power companies, and provides infrastructure site management, process management and control services for the construction of integrated energy and power grids, and plans to establish a infrastructure management cloud community. Forever’s “smart site” 智慧工地 SaaS products (https://www.365power.cn/view/mall/wisdom-site.html) was launched in June 2018 and the infrastructure management community will be integrated into its Power+ cloud platform. The community is also the gateway for infrastructure management SaaS products.
(3) Grid Distribution (43.1% of sales, GP margin 27.8%, sales growth 305.7%). The Power+ electric service cloud supply chain platform (https://www.365power.cn) was first launched in Sept 2015. The SaaS products that can be purchased directly on the Power+ marketplace include cloud sales platform, distribution platform, intelligent data forecasting platform for power consumption, intelligent operation and maintenance scheduling platform, and energy efficiency analysis platform:
(I) electricity purchase (e.g. purchase of electricity plans, the signing of power purchase agreements, transaction bidding, transaction power settlement, transaction statistics analysis),
(II) electricity sales (e.g. customer service of the power sales company, user purchase service, power purchase service load forecast),
(III) development of the core business of the power distribution business, such as power supply, distribution network management, power collection, production management and marketing management of the distribution company with distribution network assets, and
(IV) value-added services in the energy big data service platform that provides optimized power policy services, intelligent energy-saving services, electricity diagnostic services, optimize demand response, enterprise user credit information services, energy Internet, e-commerce, as well as providing power companies with demand side data and user consumption behavior analysis. Power+ also attracts and supports industry users through industry information and Reddit-Zhihu-like online expert Q&A community to support the upstream and downstream suppliers in the industry.

Forever’s big data analysis platform (https://www.365power.cn/view/mall/bigdata.html) helps customers realize the storage, calculation and analysis applications of massive data in the power industry, supports data modeling, data analysis and data mining in the power business field, and fully discovers and utilizes data values to better serve power companies and power users. The platform has been successfully put into operation in power companies, and has realized big data applications in the fields of power marketing, electric vehicles, coal-to-electricity, power consumption information collection, and power credit reporting.

Forever also partnered with credit reporting giant Experian (LON: EXPN) to develop a online credit verification service 企业征信 (https://c.zhaobiao666.com) with professional tools to help procurement managers, bid evaluation experts, discipline inspection and supervision personnel to evaluate the creditworthiness of suppliers before the opening bid through Credit China reports, industry violations reports, suspected rigging of bids, etc. and reduce at least 80% of the workload in the credit verification of suppliers, thus improving the efficiency of bid evaluation.

Thus, with the advancement of the power system market-oriented reform, the market for distributing electricity has gradually been liberalized with over 7,000 electricity power sales companies established throughout the country. Two cross-regional trading centers in Beijing and Guangzhou and 33 provincial-level power trading centers have been unveiled; 30 provinces including Guizhou, Anhui, Shandong, Zhejiang, and Liaoning have approved transmission and distribution prices; Guangdong and Guangxi Yunnan, Hebei, Anhui, Shanxi, Shandong, Guizhou, Jiangxi have all carried out electricity transactions involving the participation of electricity sales companies.

In the spot market, in 2017, China identified the first batch of pilot projects for the construction of electric power spot market in eight regions, starting in Guangdong, Mengxi, Zhejiang, Shanxi, Shandong, Fujian, Sichuan and Gansu. Among them, the Guangdong power spot market has entered the simulation test operation in August 2018. On 27 Dec 2018, the State Grid started the trial operation of the power spot market in Gansu and Shanxi for the first time, which marked a major breakthrough in China’s first batch of power spot market. This year in 2019, Zhejiang, Fujian, Shandong, and Sichuan have also completed the preparation of the spot market construction plan, and are working on the preparation of the rules according to the plan of the local government’s power authority before the end of June 2019. This means that at least 7 provinces in China in June 2019 have the test conditions for power spot trading. Forever’s cloud sales platform has accurately matched the individualization requirements of the settlement system and transaction rules of all provinces in the country. When the sales company settles the income, it will automatically match the province’s transaction rules and electricity prices, and predict different scenarios according to the contractual agreement and power consumption. The income situation under the electricity distribution plan guides the enterprise to achieve the optimal business plan.

Forever’s customers have expanded from the two major power grid companies (State Grid Corp and China Southern Power Grid) and power design institutes to local power companies, distribution power companies, smart industrial parks, and energy-using enterprises. Many smaller-scale power sales companies have weak IT systems and require Forever’s SaaS products to conduct business smoothly and effectively. The more downstream users there are, the greater the demand for Forever’s SaaS solutions. As at 1H FY2018, the number of registered users of the cloud service platform was 59,000 (up from 10,000 in 2015), of which 4,700 were enterprise users and 54,300 were individual users. Forever’s top five customers contribute 36.26% of sales and top five suppliers account for 21.78% of COGS.

On 8 March 2019, State Grid released the monumental “Ubiquitous Power Internet of Things Construction Outline” 《泛在电力物联网建设大纲》and announced the multi-billion construction of the “Ubiquitous Power IoT” 泛在电力物联网 by 2024. The strong smart grid with UHV as the backbone is the “skeletal muscle” and the Ubiquitous Power IoT is the “neural network”, which refers to all aspects of the power system fully utilizing modern information technologies such as mobile internet, big data, cloud computing, artificial intelligence, and advanced communication technologies to realize the interconnection of all aspects of the power system. A widely interconnected, coordinated and interactive energy Internet is inseparable from the investment of grid information technology which also provide a broad platform for the company’s smart grid SaaS products and services.

Forever also combines its online services with its offline technical services to build an EPC management cloud platform to provide management services to manage the execution of the entire EPC project, providing construction management services for the owners, and realizes the built-in functions of the grid company’s internal management company, thereby improving the efficiency of EPC project execution and reducing the cost of execution of the EPC project. These comprehensive offline integrated technical services include engineering design consultation, training, operation and maintenance monitoring, infrastructure management, energy efficiency services. Thus, Forever becomes the internal management company of local power companies and power distribution companies who do not have the ability to set up a management company like a power grid company due to limited technical resources.

Forever has a small “Others” business that account for 3.4% of 1H FY2018 sales, 2.7% of GP with GP margin of 28.5%. This comprises of: (1) Water resources and hydropower ICT solutions such as flood monitoring and early warning system. dam and bridge monitoring, drone/UAV (unmanned aerial vehicle) emergency command and dispatch system; (2) Smart transport system in highway offsite overweight enforcement system, cloud-based overweight and oversized vehicle detecting system, bridge health monitoring vehicle axle load monitoring system, and (3) Overseas business. While there is some niche competitiveness in the water resources and hydropower ICT solution and smart transport system business (overweight detection vehicle system), we dislike this distraction to its core software business for smart grid and we think Forever should divest this “Others” business over time to focus on its core business.

During the ongoing transformation process to the SaaS business model, Forever remains exposed to seasonal factors of customer demand since there is a strong seasonality in the practices of its main customers who are power grid companies and related enterprises. They face increasingly stricter procedures for project budget approval and fund use, and the corresponding payment cycle is longer. In the first quarter of each year, the power system conducts pre-qualification and bidding for the grid software; in the second quarter, technical consultations are initiated and the implementation projects are initiated; the third and fourth quarters are the peak period for centralized procurement and demand supply in the power grid industry. As a result, while the customers have good reputation, Forever’s sales and profits are weighted towards the second half of the year. The estimated FY2018 overall accounts receivables period is around 250-260 days and total receivables period is around 350-360 days. For large-scale accounts receivable, Forever has developed relevant implementation plans, including regular summary analysis to ensure that each receivable has tracking and feedback. Inventory period is around 60-66 days. Forever’s operating cashflow is generally negative in the first half of the financial year before turning more positive towards the second half. In the future, Forever’s expects that its revenue will be changed from low-frequency large orders to high-frequency recurring sales.

Overall, Forever’s products and services are deployed in multiple parts of the smart grid, with a wide range of downstream customers and has unique competitiveness in the industry. Forever had also won the “Most Influential Software and Information Service Enterprise in China in 2017” with its deep efforts in the field of smart grid informationization. Forever was founded on 23 Nov 2000 by Jiang Chunhua 江春华, Fang Wen 方文, Luo Xinwei 罗新伟, Chen Xianlong 陈显龙 who collectively owns 54.26% of the company. The four key management personnel have pledged 30.5% of the shares, mainly to finance the subscription into the non-public offering of new shares back in Sept 2015 which raised RMB 750m. Most of the company’s senior management and core business leaders hold company shares, maintaining the stability of the company’s management and core technical team.

Thus far, of the 66 entrepreneurs and CEOs whom we had highlighted in our weekly research brief HeartWare, around one-third are in our focused portfolio of 40 HERO Innovators, while the rest are in our broader watchlist of 200+ stocks.

We are thankful as always to be invited by John Mihaljevic, Chairman of MOI Manual of Ideas Global, to speak at the upcoming Asian Investing Summit 2019 to take place live online on April 10-11. We look forward to sharing with the MOI community of investors about the distinctive value opportunity in a selected group of under-the-radar Asian SMID-cap exponential innovators who generate high profitability and positive free cashflow in solving high-value problems for their customers and society with a higher sense of purpose, as well as the learning insights from our investment mistakes as the world shifts structurally from Value 2.0 (the world where Charlie Munger nudged Warren Buffett from the Ben Graham-style of statistically cheap net-net asset plays in Value 1.0 towards Value 2.0 in qualitative investing in outstanding companies at reasonable prices) to Value 3.0 where disruptive innovation forces sweeping across industries create ever more “value trap” losers and a selected under-the-radar group of winners with exponential edge.

Our emotional labor of love over the past months in sharing openly our research ideas (to battle-test our ideas by critiques and avoid blindspots in investing) and setting up the proper regulated and transparent UCITS fund structure to protect investors’ interests has deepened our conviction for the positive change that we will make together with H.E.R.O. – and we are now in the final stage of giving birth at end March/April 2019 to H.E.R.O., the only Asia SMID-cap tech-focused fund in the industry and guarding investors’ interests in the regulated UCITS fund structure with daily NAV & daily liquidity and no exit fees.

To our interested clients who have been asking, we sincerely apologize for the prolonged labor in the birth of HERO over the past months as we have been preparing for a coordinated delivery of our whole family of Swiss fund series at end March and HERO will also be invigorated with the healthy seed from farsighted committed long-term institutional clients to journey far to compound value for investors. Do watch out in the coming weeks for our press release on the birth and launch of H.E.R.O.

If you are not moving forward in this exponential world, you are going backwards. If you want to join us at the leading edge of opportunity, if you identify yourself in the values and bigger sense of purpose in H.E.R.O., or you wish to tell from your heart to your most important person, son, daughter, wife, husband, or best friend that you are a farsighted and thoughtful explorer in the H.E.R.O.’s Journey participating in the long-term exponential growth of a selected group of outstanding entrepreneurs, standing up for the embracement of the human spirit, please contact us via email or WhatsApp at +65 9695 1860. Thank you very much for your patience and support and we look forward to growing exponentially with you as we explore the H.E.R.O.’s Journey together.


“The Power+ cloud platform’s integrated and professional information services for the entire life cycle of the power grid and has layouts in grid design, grid infrastructure management, grid operation and maintenance, and grid distribution for electricity selling companies, power grid owners, survey and design teams, construction companies, software suppliers, data suppliers, equipment and materials suppliers and crowdsourcing users. Different from the general provider that can only provide single or several services, the whole one-stop service greatly improves the service level of Forever’s grid design, grid infrastructure management and grid distribution services, and reduces the time and capital cost for customers to purchase multiple services. Our cloud platform has achieved healthy expansion. The number of registered users of the cloud service platform has increased from 10,000 at the end of 2015 to over 59,000 as at 1H FY2018, of which 4,700 were enterprise users and 54,300 were individual users,” comments Jiang Chunhua 江春华, founder and Chairman of Forever Technology 恒华科技 (SZSE: 300365).

Forever is China’s leading SaaS cloud innovator in Smart Grid Design-Infrastructure Management-Distribution powered by big data to solve the high-value structural problem of power grid imbalance unique to China since its main coal deposits are in the north, its main solar, wind and hydropower potential in the northwest and far west, and swelling energy demand is concentrated in the coast’s congested eastern grids with continuing urbanization and aggressive promotion of electric vehicles and buses (EV) adding significant load to the electricity grid.

China is the world’s largest consumer of electricity, and its demand is expected to at least double by 2035. However, China is struggling to efficiently balance its power production and demand, and to distribute electricity where and when it is needed. The utilization of ultra-high-voltage (UHV) power transmission lines, designed for long-distance transmission to send excess intermittent electricity in remote interior regions to coastal centres battling worsening air pollution, has been far lower than expected. China’s rates of renewable energy curtailment — the term for when plants are deliberately throttled or shut down due to grid capacity limits or to simply make room for coal-fired generation — are the highest in the world and getting higher. Part of the problem is that it’s easier and more lucrative to use predictable sources like coal which provide a constant stream of electricity, than the variable generation from renewables.

To solve the grid imbalance problem, the state undertook a monumental energy market reform to gradually liberalize the electricity distribution business and marketize electricity price transactions which started in 2015 and has accelerated in 2018 and over 7,000 electricity power sales companies with trading qualifications have been established. Whether it is a pure electricity sales company or a power distribution company, whether the volume is large or small, they all need information system support. Forever has built China’s only online integrated marketplace platform “Power+” (https://www.365power.cn) to serve local power companies, power distribution companies, smart industrial parks, and energy-using enterprises to buy/sell electricity with various SaaS products to effectively support the power distribution customers in electricity purchase, electricity sales, development of the core business of the power distribution business and value-added services in big data analytics services. Growth in Forever’s grid distribution software business has jumped 305.7% yoy in its 1H FY2018 results and now contribute 43.1% of its sales.

Forever is in the early tipping point stage of transforming from its original smart grid life cycle informationization project service business model 2-3 years ago to presently provide standardized SaaS cloud software products that generate healthy profit margins and growth, with preliminary estimated FY2018 overall sales increasing 38.35% and operating profit rising 41.3% yoy on OP margin of 25.2%. Forever operates three key software businesses to provide a full lifecycle integration for smart grids:

(1) Grid Design (30.6% of sales in 1H FY2018, GP margin 52.5%, sales growth 41.6% yoy), in which its wholly-owned Daoheng Technology 道亨科技 (http://www.slcad.com) commands an over 80% market leadership in 3D-GIS-BIM (Geographic Information System-Building Information Modeling) design of power transmission line, power substation and power cable. The shift to a unique collaborative design cloud platform with various design tools and Slack-like collaborative mobile app “Yao Zhi” to help achieve cross-regional, cross-professional and cross-tool collaboration design have further enhanced the value-add to its community of customers and solve the high-value problem of the uneven distribution of software design and software engineering resources. The online design institute SaaS products were launched in May 2018.
The professional design cloud platform community E-Zhilian E智联, established in collaboration with China Electric Power Development Research Institute, was put into operation in June 2018 for surveying and design enterprise managers, design and technical talents, project owners, material equipment manufacturers, software companies and other vertical practitioners and integrated with the Power+ supply chain cloud platform (https://sj.365power.cn). Forever also benefits from new state regulation mandating the use of 3D design software from 1 Feb 2019 for smart grid construction to build a full-service data link and improve the overall design quality of power transmission and transformation projects, which will greatly increase the penetration rate of 3D design software.

(2) Grid Infrastructure Project Management (22.9% of sales, GP margin 29.1%, sales growth -21.6% yoy). Forever modernizes infrastructure management information software with its enterprise information integrated service platform (EISP) to serve power infrastructure construction enterprises, local power companies and distribution power companies, and provides infrastructure site management, process management and control services for the construction of integrated energy and power grids, and plans to establish a infrastructure management cloud community. Forever’s “smart site” 智慧工地 SaaS products (https://www.365power.cn/view/mall/wisdom-site.html) was launched in June 2018 and the infrastructure management community will be integrated into its Power+ cloud platform. The community is also the gateway for infrastructure management SaaS products.

(3) Grid Distribution (43.1% of sales, GP margin 27.8%, sales growth 305.7%). The Power+ electric service cloud supply chain platform (https://www.365power.cn) was first launched in Sept 2015. The SaaS products that can be purchased directly on the Power+ marketplace include cloud sales platform, distribution platform, intelligent data forecasting platform for power consumption, intelligent operation and maintenance scheduling platform, and energy efficiency analysis platform:
(I) electricity purchase (e.g. purchase of electricity plans, the signing of power purchase agreements, transaction bidding, transaction power settlement, transaction statistics analysis),
(II) electricity sales (e.g. customer service of the power sales company, user purchase service, power purchase service load forecast),
(III) development of the core business of the power distribution business, such as power supply, distribution network management, power collection, production management and marketing management of the distribution company with distribution network assets, and
(IV) value-added services in the energy big data service platform that provides optimized power policy services, intelligent energy-saving services, electricity diagnostic services, optimize demand response, enterprise user credit information services, energy Internet, e-commerce, as well as providing power companies with demand side data and user consumption behavior analysis. Power+ also attracts and supports industry users through industry information and Reddit-Zhihu-like online expert Q&A community to support the upstream and downstream suppliers in the industry.

Forever’s big data analysis platform (https://www.365power.cn/view/mall/bigdata.html) helps customers realize the storage, calculation and analysis applications of massive data in the power industry, supports data modeling, data analysis and data mining in the power business field, and fully discovers and utilizes data values to better serve power companies and power users. The platform has been successfully put into operation in power companies, and has realized big data applications in the fields of power marketing, electric vehicles, coal-to-electricity, power consumption information collection, and power credit reporting.

The electricity sales big data forecasting platform product achieves real-time prediction within 3 seconds, and the power consumption prediction accuracy rate is over 97%, which has been verified by real data of millions of users in Guizhou, Shanxi, Zhejiang, Qinghai and other provinces. Based on the artificial intelligence machine learning algorithm and multi-factor analysis of user industry, type, holiday, business status, etc, the predictive model continuously self-improves and corrects based on historical data and future trends, dynamically adjusts the predicted algorithm parameters, and realizes self-evolution. The big data SaaS product achieves complete data governance and has complete automated data management capabilities, and automatically repairs the abnormal data and error data of electricity sales according to the rules and trends of electricity consumption, and provides external data sources such as weather, regional economic indicators, and enterprises. The SaaS product has build a library with more than 30 kinds of electricity sales forecasting algorithms and models with independent intellectual property rights, in addition to typical time series method, periodic coefficient method, cubic exponential smoothing, gray forecasting method, auto-regressive differential moving average method, holiday analysis and forecasting algorithm, etc.”

Forever also partnered with credit reporting giant Experian to develop a online credit verification service 企业征信 (https://c.zhaobiao666.com) with professional tools to help procurement managers, bid evaluation experts, discipline inspection and supervision personnel to evaluate the creditworthiness of suppliers before the opening bid through Credit China reports, industry violations reports, suspected rigging of bids, etc. and reduce at least 80% of the workload in the credit verification of suppliers, thus improving the efficiency of bid evaluation.

Forever also combines its online services with its offline technical services to build an EPC management cloud platform to provide management services to manage the execution of the entire EPC project, providing construction management services for the owners, and realizes the built-in functions of the grid company’s internal management company, thereby improving the efficiency of EPC project execution and reducing the cost of execution of the EPC project. These comprehensive offline integrated technical services include engineering design consultation, training, operation and maintenance monitoring, infrastructure management, energy efficiency services. Thus, Forever becomes the internal management company of local power companies and power distribution companies who do not have the ability to set up a management company like a power grid company due to limited technical resources.

Thus, with the advancement of the power system market-oriented reform, the market for distributing electricity has gradually been liberalized with over 7,000 electricity power sales companies established throughout the country. Two cross-regional trading centers in Beijing and Guangzhou and 33 provincial-level power trading centers have been unveiled; 30 provinces including Guizhou, Anhui, Shandong, Zhejiang, and Liaoning have approved transmission and distribution prices; Guangdong and Guangxi Yunnan, Hebei, Anhui, Shanxi, Shandong, Guizhou, Jiangxi have all carried out electricity transactions involving the participation of electricity sales companies. In the spot market, in 2017, China identified the first batch of pilot projects for the construction of electric power spot market in eight regions, starting in Guangdong, Mengxi, Zhejiang, Shanxi, Shandong, Fujian, Sichuan and Gansu. Among them, the Guangdong power spot market has entered the simulation test operation in August 2018. On 27 Dec 2018, the State Grid started the trial operation of the power spot market in Gansu and Shanxi for the first time, which marked a major breakthrough in China’s first batch of power spot market. This year in 2019, Zhejiang, Fujian, Shandong, and Sichuan have also completed the preparation of the spot market construction plan, and are working on the preparation of the rules according to the plan of the local government’s power authority before the end of June 2019. This means that at least 7 provinces in China in June 2019 have the test conditions for power spot trading. Forever’s cloud sales platform has accurately matched the individualization requirements of the settlement system and transaction rules of all provinces in the country. When the sales company settles the income, it will automatically match the province’s transaction rules and electricity prices, and predict different scenarios according to the contractual agreement and power consumption. The income situation under the electricity distribution plan guides the enterprise to achieve the optimal business plan.

Forever’s customers have expanded from the two major power grid companies (State Grid Corp and China Southern Power Grid) and power design institutes to local power companies, distribution power companies, smart industrial parks, and energy-using enterprises. Many smaller-scale power sales companies have weak IT systems and require Forever’s SaaS products to conduct business smoothly and effectively. The more downstream users there are, the greater the demand for Forever’s SaaS solutions. As at 1H FY2018, the number of registered users of the cloud service platform was 59,000 (up from 10,000 in 2015), of which 4,700 were enterprise users and 54,300 were individual users. Forever’s top five customers contribute 36.26% of sales and top five suppliers account for 21.78% of COGS.

On 8 March 2019, State Grid released the monumental “Ubiquitous Power Internet of Things Construction Outline” 《泛在电力物联网建设大纲》and announced the multi-billion construction of the “Ubiquitous Power IoT” 泛在电力物联网 by 2024. The strong smart grid with UHV as the backbone is the “skeletal muscle” and the Ubiquitous Power IoT is the “neural network”, which refers to all aspects of the power system fully utilizing modern information technologies such as mobile internet, big data, cloud computing, artificial intelligence, and advanced communication technologies to realize the interconnection of all aspects of the power system. A widely interconnected, coordinated and interactive energy Internet is inseparable from the investment of grid information technology which also provide a broad platform for the company’s smart grid SaaS products and services.

Overall, Forever’s products and services are deployed in multiple parts of the smart grid, with a wide range of downstream customers and has unique competitiveness in the industry. Forever had also won the “Most Influential Software and Information Service Enterprise in China in 2017” with its deep efforts in the field of smart grid informationization. Forever competes with SAP and Neusoft (SHSE: 600718) of which the power grid software business is a very small part of its business compared to its main products and services in the medical field.

On 28 Feb 2019, Forever announced its preliminary estimated FY2018 results in which sales increased 38.35% yoy to RMB1.184bn, operating profit increased 42.1% yoy to RMB 298.7m, and net profit rose 41.3% yoy to RMB 271.63m, with OP margin of 25.2%, ROE (= EBIT/Equity) of 16.4% and ROA of 12%. Balance sheet is relatively healthy with net cash of RMB 505m (US$75.4m) (RMB 641.26m gross cash, RMB 136.1m gross debt) which is around 4.5% of market cap. Forever is up over 250% in share price performance since its Jan 2014 IPO to a market value of US$1.6bn, as compared to a 25% for the Shenzhen composite index over the same period.

During the ongoing transformation process to the SaaS business model, Forever remains exposed to seasonal factors of customer demand since there is a strong seasonality in the practices of its main customers who are power grid companies and related enterprises. They face increasingly stricter procedures for project budget approval and fund use, and the corresponding payment cycle is longer. In the first quarter of each year, the power system conducts pre-qualification and bidding for the grid software; in the second quarter, technical consultations are initiated and the implementation projects are initiated; the third and fourth quarters are the peak period for centralized procurement and demand supply in the power grid industry. As a result, while the customers have good reputation, Forever’s sales and profits are weighted towards the second half of the year. The estimated FY2018 overall accounts receivables period is around 250-260 days and total receivables period is around 350-360 days. For large-scale accounts receivable, Forever has developed relevant implementation plans, including regular summary analysis to ensure that each receivable has tracking and feedback. Inventory period is around 60-66 days. Forever’s operating cashflow is generally negative in the first half of the financial year before turning more positive towards the second half. In the future, Forever’s expects that its revenue will be changed from low-frequency large orders to high-frequency recurring sales.

Forever was founded on 23 Nov 2000 by Jiang Chunhua 江春华, Fang Wen 方文, Luo Xinwei 罗新伟, Chen Xianlong 陈显龙 who collectively owns 54.26% of the company. The four key management personnel have pledged 30.5% of the shares, mainly to finance the subscription into the non-public offering of new shares back in Sept 2015 which raised RMB 750m. Most of the company’s senior management and core business leaders hold company shares, maintaining the stability of the company’s management and core technical team.

When asked about how he came about to start Forever, the challenges he faced and overcame and the breakthroughs during his early entrepreneurial period, Chairman Jiang shared briefly and reflectively the story of his early entrepreneurship period: “I am from Suizhou, northern Hubei province. After graduating from the School of Earth Science and Measurement Engineering of Wuhan University, I worked at the North China Electric Power Design Institute as a surveying and mapping engineer responsible for measuring-related work. I dreamed of wanting to do the life cycle informationization of power grid assets and I resigned to start Forever in Nov 2000.”

“Forever has experienced three stages.
(1) In the initial stage, Forever’s management rely on years of work experience in the power industry to take the lead in proposing the concept of integration of the entire life cycle of the power grid and grid information, and we are committed to the information support for the planning, design, infrastructure, and operation & maintenance for grid enterprises..
(2) During our growth period, based on our integrated life cycle informationization concept, we increase the R&D investment of our core technology systems and enhance the technological competitive advantage, and gradually grow into a smart grid information technology leader. We were listed on the Shenzhen Exchange in Jan 2014.
(3) At this stage, riding on the government support of the national power reform and the Internet+ layout, Forever has created a Internet+ service-oriented SaaS business model for the power industry. Through the self-developed cloud service platform Power+ connected to the upstream and downstream of the industry chain, and the cloud service product system such as power grid design cloud, EPC cloud, operation and maintenance cloud, we have established an Internet ecosystem for the power industry.

On the structural imbalance of the power grid and industry dynamics, Chairman Jiang comments: “China is the world’s largest consumer of electricity, and its demand is expected to at least double by 2035. The power grid structural imbalance problem is unique to China since its main coal deposits are in the north, its main solar, wind and hydropower potential in the northwest and far west and swelling energy demand is concentrated in the coast’s congested eastern grids with continuing urbanization and aggressive promotion of electric vehicles (EV) adding significant load to the electricity grid. Utilization of China’s ultra-high-voltage (UHV) power transmission lines, designed for long-distance transmission to send excess intermittent electricity in remote interior regions to coastal centres battling worsening air pollution, has been far lower than expected.”

“The grid system is run by the State Grid Corporation of China (SGCC) and China Southern Power Grid Co (CSG), utilizing UHV transmission as the backbone. State Grid is probably the biggest company you’ve never heard of, with nearly 1 million employees and 1.1 billion customers. Last year, it reported $9.5 billion in profits on $349 billion in revenue, making it the second-largest company on Fortune’s Global 500 list. State Grid is already the biggest power distributor in Brazil, where it built its first (and still only) overseas ultra-high-voltage line. State Grid has also snapped up stakes in national transmission companies in Australia, Greece, Italy, the Philippines, and Portugal.”

“China began an initiative to reform the country’s power sector in a three-stage process in 1986. In March 2002 the State Council put into effect a plan to restructure the country’s electric power system in order to create competition and separate generation and transmission functions. The State Grid was founded on 29 Dec 2002, when the restructuring divided the former State Power Corporation of China into two grid companies, five generation groups and four supporting business companies. The two grid companies created were the State Grid and a smaller China Southern Power Grid Company. State Grid has a power distribution monopoly in all but five southern regions in mainland China. The regulatory unbundling was designed to introduce competition and accelerate development as the nation struggled to meet rising energy demands and halt recurrent blackouts. But State Grid was by far the larger of two resulting transmission companies, and it operates as an effective monopoly across nearly 90% of the nation.”

“State Grid was involved in a multi-phase smart-grid project for China’s electrical grid planned for 2011-2015. China’s smart grid efforts are different from those in the US in that its plans heavily use ultra high voltage (UHV) lines. China is the first and still the only nation with the stated ambition of using UHV power lines as the ‘core’ to inter-connect its regional power grid networks into a ‘strong and smart’ national network. State Grid and China Southern Power Grid Corporation are committed to solving the problem of inadequate power grid imbalance through the planning and construction of smart grids, and strives to build a new generation of power system that is safe, green, efficient and intelligent, and promote the flexible access of various energy production and consumption entities. A strong smart grid with UHV is the backbone network.

“At higher voltages, e.g. 500kV and above, transmission losses over hundreds of kilometres are much reduced. At UHV e.g. 1,000 kV AC or 800 kV DC, losses are further reduced to 5% over 1,000 km but capital requirements are greater. In the USA it is estimated that transmission losses amount to about 6%, or 250 TWh per year, worth some $20 billion. In India transmission losses in 2011 were 222 TWh (21%). Lines capable of sending more energy over greater distances could stitch together the nation’s fragmented grids, instantly delivering excess electricity from one province to another in need. Several UHV construction projects began in 2012 to bring UHV power lines across Huainan, Wannan, and Shanghai and another from Xilingol League to Nanjing, as well as three more horizontal UHV lines through West Inner Mongolia to Weifang, from Central Shanxi-Xuzhou to Yaan-southern Anhui and 11 other lines by 2015. By the end of 2017, 21 UHV lines had been completed in the country, with four more under construction. Collectively, they’ll stretch nearly 23,000 miles and be capable of delivering some 150 gigawatts of electricity—roughly the output of 150 nuclear reactors.”

“Though China has built far more UHV lines than any other country in the world, the country is struggling to efficiently balance its power production and demand, and to distribute electricity where and when it is needed. One result is that it isn’t making full use of its existing renewable-power plants. China’s rates of renewable energy curtailment — the term for when plants are deliberately throttled or shut down due to grid capacity limits or to simply make room for coal-fired generation — are the highest in the world and getting higher. More than one-fifth of Xinjiang’s solar generating potential and one-quarter of its wind power was squandered in 2017. Part of the problem is that it’s easier and more lucrative to use predictable sources like coal or nuclear, which provide a constant stream of electricity, than the variable generation from renewables. Sending that power to eastern China instead of wasting it would help State Grid meet Xi’s promise to turn China’s skies blue again and to end rampant wastage of renewable power generation and shrink curtailment to less than 5% from 20-30% in all regions by 2020. Getting the most out of wind, solar, and other intermittent sources will require rethinking how to make grid operations more flexible and responsive.”

On the energy market reform and industry dynamics, Chairman Jiang comments: “China’s original large-scale centralized new energy model has a series of problems such as transportation, distribution, peak period shifting. Through the reform and development of energy distribution, it will solve the challenges of long-distance transportation, local consumption, and promote the development of energy storage technology.”

“On 7 Nov 2016, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) issued the ‘13th Five-Year Plan for Power Development (2016-2020)’ which will comprehensively speed up the modern distribution network construction and upgrade and actively promote the reform of the power market mechanism and market distribution. The price of competitive links other than transmission and distribution will be released in an orderly manner, the status of power grid enterprises to purchase and sell power will be changed, direct transactions of market entities will be promoted, and to give full play to the decisive role of the market in resource allocation.”

“Since the monumental release of the ‘Opinions of the Central Committee of the Communist Party of China on Further Deepening the Reform of the Power System” [[2015] No. 9] 《中共中央国务院关于进一步深化电力体制改革的若干意见》[中发 〔2015〕 9号] in 2015 to explore the market price of electricity as a commodity and increase the degree of marketization of electricity, the distribution of electricity business was gradually liberalized. More than 3,000 power sales companies were initially announced through the power trading center. The market competition mechanism was initially established. On July 16, 2018, the NDRC and NEA issued the ‘Notice on Actively Promoting the Market-based Trading of Electricity to Further Improve the Trading Mechanism’ (Development and Reform Operation [2018] No. 1027) 《关于积极推进电力市场化交易进一步完善交易机制的通知》(发改运行〔2018〕1027号) and proposed to accelerate the marketization of electricity market transactions, improve the direct trading mechanism, and deepen the reform of the power system.”

“Since the new round of power system reform was officially launched with the ‘No. 9 Document’ in 2015, the state has successively issued a series of guiding regulations and guidelines, and the direction of market-oriented reform is more clear. Up to now, the system of power system reform has been basically established, and the multi-model pilot pattern of power system reform has taken initial shape. The reform of transmission and distribution price has achieved full coverage of the provincial power grid. The formation of trading institutions has been basically completed. Two cross-regional trading centers in Beijing and Guangzhou and 33 provincial-level power trading centers have been unveiled; 30 provinces including Guizhou, Anhui, Shandong, Zhejiang, and Liaoning have approved transmission and distribution prices; Guangdong and Guangxi Yunnan, Hebei, Anhui, Shanxi, Shandong, Guizhou, Jiangxi and other provinces have all carried out electricity transactions involving the participation of electricity sales companies.”

“The electricity power distribution business has gradually been liberalized. According to the NDRC, the volume of direct power transactions will gradually be liberalized. In 2018, 100% of industrial electricity power will be released, and 100% commercial electricity power consumption will be released in 2020. Electricity power system reform will release a huge market of billions of yuan, there will be numerous business opportunities within the market, how to catch these opportunities will be the main focus of electricity selling companies and companies in both the upstream and downstream of the industry chain. The marketization rate has reached 33.5%, accounting for 25.9% of the total electricity consumption of the whole society, and there are over 7,000 sales companies with trading qualifications.”

“In the spot market, in 2017, China identified the first batch of pilot projects for the construction of electric power spot market in eight regions, starting in Guangdong, Mengxi, Zhejiang, Shanxi, Shandong, Fujian, Sichuan and Gansu. Among them, the Guangdong power spot market has entered the simulation test operation in August 2018. On 27 Dec 2018, the State Grid started the trial operation of the power spot market in Gansu and Shanxi for the first time, which marked a major breakthrough in China’s first batch of power spot market. This year in 2019, Zhejiang, Fujian, Shandong, and Sichuan have also completed the preparation of the spot market construction plan, and are working on the improvement of the plan and the preparation of the rules according to the plan of the local government’s power authority to ensure that the start-up test conditions are available before the end of June 2019. This means that at least 7 provinces in China in June 2019 have the test conditions for power spot trading. The provinces have issued their own trading rules and electricity price plans. The national medium- and long-term trading rules for electricity are still in the stage of soliciting opinions.”

“From the perspective of reform as a whole, there will be multiple market entities in the market for electricity sales, breaking market monopolies and giving play to the role of the market in free allocation. At present, the establishment of power sales companies is very fast, and there will be more and more power sales in the future. The pace of development in the field of electricity sales will be faster and faster, and eventually it will inevitably lead to a large explosive growth, breaking the pattern of unified purchase and marketing of power grids.”

The recent major news on the construction of the “Ubiquitous Power Internet of Things” has piqued our curiosity on its impact on the industry and Forever. Chairman Jiang shares his thoughts on this groundbreaking major development: “On 8 March 2019, State Grid released the monumental ‘Ubiquitous Power Internet of Things Construction Outline’ 《泛在电力物联网建设大纲》and convened a conference to announce that the most important task is to accelerate the construction of the ‘Ubiquitous Power IoT’ 泛在电力物联网, which refers to all aspects of the power system fully utilizing modern information technologies such as mobile internet, big data, cloud computing, artificial intelligence, and advanced communication technologies to realize the interconnection of all aspects of the power system. It is a smart service system with comprehensive state awareness, efficient information processing, and convenient and flexible application features, including a four-layer structure of a sensing layer, a network layer, a platform layer, and an application layer. In layman’s terms, it is the use of a new generation of information technology to connect power users and their equipment, grid companies and their equipment, power generation companies and their equipment, electrical equipment companies and their equipment, through extensive information exchange and digital management which will greatly improve the safety level, quality level, and efficiency level of energy production, energy consumption and related equipment manufacturing.”

“It will also have a profound impact on the development of China’s energy and power industry and the electricity consumption of ordinary people in daily life, when we connect our own electric car to a charging station, or use a mobile app to remotely control the smart home device in the home, or use a smart meter to obtain a household electrical diagnostic analysis. At present, State Grid has a domestic first-class information network infrastructure, with nearly 1.6 million kilometers of optical fiber, and the backbone communication network covers 35 kV and above substations; more than 540 million sets of terminals such as smart meters; and also operate the country’s largest smart car networking platform with 280,000 public charging stations, accounting for more than 80% of the total public charging stations in the whole society, and the number of platform service electric vehicle users exceeds 1.3 million, and has built a new one-stop retail model for electric vehicle sales, electric charging station report, electric card recharge, maintenance and financial insurance, and built the largest user-side energy storage cloud platform in China.”

“Strong Smart Grid and Ubiquitous Power IoT are the specific forms of realization of the energy Internet in the power system. The Strong Smart Grid is the ‘skeletal muscle’, which supports the safe and stable transmission of energy flow in the power system. The Ubiquitous Power IoT is the ‘neural network’ to realize the terminal collection and collection of information flow in the ‘source-network-load-storage’ of the power system. In recent years, with the continuous development of a Strong Smart Grid, the ‘skeletal muscle’ of the national grid has been quite developed, but an ‘athlete’ with super-physical energy must also have a rapid and sensitive ‘neural network’. A Strong Smart Grid should complement and develop with the Ubiquitous Power IoT to form a powerful value creation platform that together constitutes an energy Internet that combines energy flow, business flow and data flow. The resources provide sufficient and effective information and data support for the planning and construction of the power grid, production, operation and management, comprehensive services, and new business model development.”

“We need to allow more market players to participate in the value of the energy Internet, innovate and promote the ‘source-network-load-storage’ collaborative service, serve the large-scale development of electric vehicles and distributed new energy, serve the smart-enabled households, and optimize the use of commercial buildings and industrial enterprises with multi-energy supply. At the same time, we also need to build integrated energy service ecosystem, electric vehicle service ecosystem, distributed photovoltaic service ecosystem, energy e-commerce service ecosystem, marketing data commercialization service ecosystem. Internet service ecosystem, and strengthen the development of key equipment and system platform.”

“State Grid’s timetable for the construction of the Ubiquitous Power IoT: In the first phase (2019 to 2021), the basic realization of business synergy and data penetration, the initial realization of unified IoT management, the company-level intelligent energy integrated service platform has basic functions to support the grid business and emerging business development; in the second phase (by 2024), the Ubiquitous Power IoT will be built to fully realize business collaboration, data integration and unified IoT management. The company-level smart energy integrated service platform has powerful functions and comprehensively forms an energy Internet ecosystem with co-construction and mutual benefit.”

Overall, Chairman Jiang shares his views on the positive impact of the industry dynamics to Forever: “A widely interconnected, coordinated and interactive energy Internet will become an inevitable trend in the development of the power grid. The construction of smart grid is inseparable from the investment of grid information technology which also provide a broad platform for the company’s smart grid information services. The scale of market-oriented transactions has been greatly improved. The market-oriented reform of the power system is clearer. The power system reform has entered a stage of rapid development, and the initial release of the reform dividend will be conducive to the development of the company’s electricity distribution business. Analyzing the industry environment, there are some major development trends in the next 3-5 years. The first is integrated energy services. The new round of power system reform will eventually achieve integrated energy services. The second is the construction of the energy Internet (‘Ubiquitous Power IoT’).”

“The current domestic main network automation has already reached a high level, and it is a necessary process to build an energy Internet and realize the automation of network distribution. Therefore, Forever’s future development focus is on software and technical services related to network distribution automation, and the second is integrated energy services. Forever actively grasped the market opportunities from the power system reform which opened up the power-selling market by providing integrated solutions for power-selling enterprises and comprehensive information services covering production, operation and management for independent local power companies.”

“The advancement of the electric reform and the gradual liberalization of the distribution and selling market have greatly expanded Forever’s customer base. In the past, Forever’s customer base was State Grid, China Southern Power Grid and Electric Power Design Institute. With the gradual advancement of power reform, our customer base has expanded to dozens of local power companies, distribution power companies, power sales companies, smart industrial parks, and oil mines.”

On Forever’s transformation to the SaaS cloud business model, Chairman Jiang comments: “Our cloud platform has achieved healthy expansion. The number of registered users of the cloud service platform has increased from 10,000 at the end of 2015 to over 59,000 as at 1H FY2018, of which 4,700 were enterprise users and 54,300 were individual users.”

“The Power+ cloud platform’s integrated and professional information services for the entire life cycle of the power grid and has layouts in grid design, grid infrastructure management, grid operation and maintenance, and grid distribution for electricity selling companies, power grid owners, survey and design teams, construction companies, software suppliers, data suppliers, equipment and materials suppliers and crowdsourcing users. Different from the general provider that can only provide single or several services, the whole one-stop service greatly improves the service level of Forever’s grid design, grid infrastructure management and grid distribution services, and reduces the time and capital cost for customers to purchase multiple services.”

“The main SaaS products in the grid design process cover all majors of power design for online design institutes, and achieve cross-regional, cross-professional, cross-tool collaborative design. The main SaaS products in the grid infrastructure management include infrastructure management business platform and smart site service platform to achieve integration with intelligent hardware and external business systems. The main SaaS products in the grid distribution phase include cloud sales platform, distribution power platform, intelligent data forecasting platform for power sales. In order to serve the future power spot trading market, in July 2018, the intelligent operation and maintenance dispatching management platform and energy efficiency analysis platform were put into trial operation, taking the lead in the power spot trading market.”

When asked to elaborate on the three key software businesses of Forever in grid design, grid infrastructure project management and grid distribution, Chairman Jiang explains patiently:

Grid design software business
“National Grid issued ‘Circular 585’ 《国家电网有限公司关于全面应用输变电工程三维设计及建设工程数据中心的意见》on 2 July 2018 that starting from 1 Feb 2019, 35kV and above power transmission and transformation projects will need to mandatorily and vigorously apply 3D design software In order to implement the overall requirements of the construction of ‘Digital State Network’, build a full-service data link and improve the overall design quality of power transmission and transformation projects, which will greatly increase the penetration rate of 3D design software. After the introduction of the No. 585 document, the fourth tender of the State Grid in August 2018 (the first tender in the second half of the year) clearly stated that the power substation and the power transmission line all required the use of 3D design.”

“Forever’s Daoheng Tech was the first company to develop 3D design applications in line design and dominates the market share in the current transmission line and substation design software with a share of over 80%. Today’s powerful professional design software coexists with general-purpose computer-aided design software (CAD). AutoCAD is still the choice of power design institutes for power design, especially uncomplicated substation power wiring and power equipment wiring layout. However, AutoCAD is no longer enough for the design of the circuit design tower structure, 3D hardware assembly, etc. 3D design software will greatly improve the quality of planning and design. Different from the past 2D design software, 3D design software needs to apply a large number of geographic information system (GIS) data, three-dimensional space, and power BIM (building information modeling) technology, so it can more fully display the actual situation of substations, towers, and lines.”

“The core of BIM technology is to solve the visualization and digital handover of assets. Most of the current domestic BIM are still mainly concentrated in the design stage and part of the construction management stage, and have not yet possessed the capability of digital handover. By building the three major communities, Forever implements the BIM concept in the three stages of design, construction, and operation and maintenance. It can realize grid information collaborative design and the grid project is based on the digital delivery of BIM technology, and there is visual management of the engineering project construction process management and asset operation and maintenance based on BIM technology. This will then constitute a complete BIM, rather than a conceptual BIM.”

“The powerful 3D design software will bring a lot of convenience to the previous cost analysis and the enrichment will bring more data support and business assistance for subsequent construction, operation and maintenance. Because 3D design software can carry out 3D simulation of substation electrical equipment and civil engineering through BIM technology, the spatial information is more clearly expressed through the display of the 3D graphics form, so that many more powerful functions can be generated in the construction phase and operation and maintenance phase, such as: BOM generation and construction budget, asset management, equipment operation and maintenance.”

“The State Grid is vigorously promoting the ‘Ubiquitous Power of IoT’ and continuously promoting the application of the cloud to make multi-person collaborative design and communication possible, such as lines, civil works communication system, HVAC and collaboration between different technical departments. At present, Forever is the first to let the design software go to the cloud on a large scale and has taken the lead in the industry.”

“In the field of power design, a large amount of information, data, and results are difficult to share. Can we use a high-quality shared platform to allow resources such as industry data and models to be circulated to achieve shared win-win? There are many industry and technical experts in various power companies. Can we build a knowledge sharing platform for these talents to achieve group intelligence gathering, share expert wisdom and jointly promote the development of the industry? Our ‘Online Design Institute’ provides online collaborative design for power design institute customers through private cloud deployment, online design result handover and online management of the entire business process, which will greatly improve the efficiency of the design institute and optimize business processes.”

“As an open design platform, ‘Online Design Institute’ aggregate thousands of design industry professionals, experts and design project resources, and registered users can get paid by undertaking the design business on the platform. They will use the platform to provide professional consultation, online training, industry question and answer and data sharing. People communicate online, share experience and wisdom, showcase excellence, reflect high-end value, and jointly promote the continuous improvement of the technical level of the power industry. Forever will manage the registered personnel through the professional assessment and reputation evaluation system of the platform, and rely on the company’s qualification system and professional design ability to conduct quality audit and progress control of the design results of the registered personnel.”

“Thus, the Power+ e-Zhlian platform integrates the Internet and the power industry to bring together the wisdom of the industry, providing news information, professional materials, regulatory standards, difficult questions and answers, high-end consulting, industry training, project crowdsourcing and other services. Everyone will learn knowledge, highlight the talent of experts, share frontier results, dig deep into the value of data, lead innovation, create a first-class think tank, and make progress together through the platform. The construction of Power+ platform will promote industry exchanges, lead the development of power technology innovation, and contribute to the construction of a cleaner and efficient modern power service system.”

“Compared with foreign suppliers, Forever has a better understanding of the domestic designers and the construction habits of the construction team in the subsequent construction stage. Provincial 2D design software varies from several hundred thousand to three million depending on the configuration, and the price of 3D design software will generally reach more than 1 million to more than 5 million. Regional design institutes, provincial-level, prefecture-level, county-level, private and enterprise-level design institutes are purchasers of the 3D line and substation design software.”

“At present, the structure of China’s electric power design institute is similar to that of the power grid structure. It is divided into regional power design institutes under China Power Consultancy Group and 15 provincial power design projects under China Energy Construction Group, 17 provincial and regional power survey and design institutes under the China Electric Power Construction Group, and local and county-level power grids, company design institute, private design institute, etc. If the entire market design software is updated to 3D, the total market capacity will exceed 2 billion, which is 55% higher than the existing market.”

“Our cloud sales platform charges from thousands to tens of thousands according to the modules and functions used by the sales company. There are over 7,000 registered electricity sales companies and we target that the conversion rate will reach more than half. For large local power companies, such as Shanxi Geoelectric 山西地电, Xingyi Geoelectric 兴义地电, etc., we use a private cloud to deploy the integrated electric distribution platform, which will provide energy efficiency services, such as energy monitoring and energy saving services, for energy-using enterprises in the future.”

“The information service of smart grid is inseparable from surveying and mapping geographic information technology. Mapping geographic information is the basis of power planning and design and power business information, which runs through all aspects of the smart grid’s life cycle information management. For example, in planning and design, it is necessary to use the GIS system to select the route of the grid power transmission line and the location of the grid power substation.”

“In the power distribution network or power marketing system, GIS is used to quickly grasp the operation of the distribution network, quickly respond to the user’s fault to quickly get the power repair personnel in place. The 3D digital design system of the transmission network developed by Forever is based on our self-developed digital earth platform. In addition, in the integration platform of the power distribution, the grid platform is used to support GIS applications related to various business systems and spatial graphics. So the information service of smart grid is inseparable from the mapping of geographic information technology.”

“Forever’s collaborative design cloud platform provides design tools and application services, spatial database, mass data processing and big data analysis services, cross-disciplinary collaborative design, informatization management and 3D digital design technology for intelligent, effective and accurate power design in power grid design work for both transmission and distribution networks for electrical designers and engineers. Users include designers in State Nuclear Electric Power Planning, Design & Research Institute, State Power Grid Beijing Economic & Technological Research Institute, etc.

(1) Digital design of power transmission project. Forever integrates 3D technology, GIS technology, geographic positioning data, thematic data, intersections data and other data services to support power distribution digital design in digital line selection, 3D tower positioning, spatial electric devices analysis (including spatial 3D algorithms to solve complicated spatial electric devices calculation and verification to increase design precision), 3D tower structure design; and fulfill different phases of design requirements, such as transmission lines route feasibility report, preliminary feasibility study, preliminary design, construction design drawing, etc.
(I) In transmission line design system, Forever utilizes precise and complete data about power grid state, 2D and 3D topographic and geomorphic conditions plus various design resources to enable engineers to quickly and accurately design lines, select conductors, arrange poles or towers. It also allows 2D or 3D display of design results, automated matching of accessories for poles or towers, materials statistics, simulated calibrating of design results and selection of substation location. Thus it accelerates the designing process and improves design quality while relieving designer’s workload. Through calculation of factors like design standards geographical and meteorological conditions, it is able to determine the number and models of necessary communication, measurement or monitoring devices. Those devices provide functions like sensing, data transmission and alarming. Thus, Internet of Things is actually implemented in the first stage of power grid full lifecycle management.
(II) In distribution line design system, it is a fully integrated design tool including three modules: overhead transmission line design, cable design, switching room (substations) design. It performs project management, graphic plotting, equipment model selection, optical arrangement and project costs calculation. It helps designers adhere to design standards, improve their work efficiency, and unify construction norms and equipment specifications. It standardizes the process of power grid planning and design. Digital design results could be transferred to the other systems. It enables seamless integration with the next construction system. Furthermore, it is the precondition for data utilization in the process of operation, maintenance and marketing.

(2) Collaborative management of design project. Forever provides power grid design project management through all phases of the project, from the starting of the project, obtaining of the assignment order book, collaborative design to results inspection to realize cross-disciplinary collaboration and digitization of design data management and network sharing.

(3) Digitized transfer of design results. Following industrial standards requirements, there is a need to proceed to structured management of digitized models and construction electronic files in the platform, to form automatic digitized transfer and sharing of the results. Forever increases the efficiency of digitized transfer and supports the operation for the power grid construction full lifecycle

“YAO ZHI (http://yz.365power.cn) is Forever’s Slack-like corporate communication and co-working mobile application which provides major functions such as real-time communication, image sharing, task collaboration, establishes working group for particular task and turns it into joint task by group discussion conclusion, and provides project management based on monitoring of daily tasks, improving overall work efficiency.”

Grid distribution software business
“The integrated platform Power+ for electricity selling is currently vigorously promoted by China with the reform of the power system to restore the free trading of electricity. It is directed toward independent electricity selling companies, industrial parks, power generation enterprises, power distribution companies, etc. There are over 7,000 electricity sales companies, including pure electricity sales companies and distribution power companies. Whether it is a pure electricity sales company or a power distribution company, whether the volume is large or small, they all need information system support. In the long run, the grid investment will shift to the distribution network as a whole, benefiting Forever’s grid distribution network software platform business.”

“Forever’s electricity sales platform has become the country’s first full-scale chain of electricity suppliers, which enables the company to provide the full lifecycle services including investment and financing, consulting, network construction, professional operations, information technology, value-added services for the power sales company. The platform supports power trading companies to operate their business activities such as electricity purchase, electricity sales, value-added service and customer service, as well as provide integrated solutions for the core business value chain in power supply, distribution network management, power collection, production management, especially the companies with power distribution assets.”

“Forever’s electricity trading platform aims at an optimal allocation of power energy across the country. Various periodic trading forms (inter-annual, annual, monthly and short-term) can be carried out at the same time. It shores up a nationwide electricity market operation. This system’s core functions cover trading management, plan management, accounts settlement management, market players management, information publishing and balancing between electricity capacity and consumption. It performs data control, market operation analysis, data quality management, window service management, market information statistics and panoramic display of trading.”

“In order to serve the future power spot trading market, in July 2018, the intelligent operation and maintenance dispatching management platform and energy efficiency analysis platform were put into trial operation, taking the lead in the power spot trading market. In the software update and commissioning of our new power spot software, we have completed the deployment of two power distribution platforms.”

“During the selling process, measurement, pricing, cost and other processes area managed by the integrated marketing management platform. Forever’s electricity sales operation cloud platform covered all the details of the business processes in purchases and sales to provide comprehensive information services for the entire industry chain of electricity sales for electricity power distribution companies, pure electricity sales companies, local power companies, industrial parks, power users, etc. Electricity selling companies using the public cloud services can register their own electricity selling operating system the same way as Taobao to achieve the management of electricity selling. Users include Qinghai Electric Power Company, Shanxi Linfen Power Supply Company, Henan Xingyang Power Supply Company, Henan Qinyang Power Supply Company, etc.”

“There is a lot of work to be done by the power distribution company in terms of (1) distribution network construction planning, (2) production, operation and maintenance, (3) distribution network scheduling, and (4) purchase and sale of electricity, and conduct all aspects in an orderly manner to achieve high-efficiency operations.”
(1) Distribution network construction planning: This covers the whole process of project construction management and control, which includes feasibility study, preliminary establishment, preparation for start-up, construction, commissioning, acceptance, commissioning and post-evaluation. It needs quality, schedule, safety, technology and cost management and control.
(2) Production, operation and maintenance: It is necessary to integrate and manage all power distribution equipment assets to ensure their normal operation and data monitoring.
(3) Distribution network scheduling: This involves scheduling, data monitoring and forecasting, and operational evaluation, with particular emphasis on accurate management and analysis of data.
(4) Purchase and sale of electricity: This includes all business activities of pure electricity sales companies, from user mining, contract signing, market-based transaction purchase, deviation assessment to power settlement, customer service, and continuous marketing, all of which are key to profitability.

“The platform features include:
(1) Contract design and management: Provides the power company with the data analysis and forecasting function before the formal signing of the power sales contract, supports multiple user signing methods, customizes the settlement method, assists in contract management, purchase and sale management, electricity usage contract management, settlement management, parameter configuration, predicting the various contract benefits. It can also be converted to a formal contract with one click.
(2) Proactive deviation early warning mechanism: Manages the user power consumption plan, reports the real-time power consumption data through the demand side power collection platform or the user mobile phone app. The power deviation warning is used to remind users to use electricity reasonably and avoid the risk of assessment, enhance the actual operation ability of the electricity sales company’s purchase and sale of electricity, and help enterprises avoid operational risks and enhance customer service experience.
(3) Rights management: Realizes unified management of multi-system and full-stage user rights. It can flexibly configure organizational structure, user roles, menu resources through the fully visualized operation interface, and can filter business data according to the user’s unit and authority to achieve clear rights and responsibilities, and standardize business processes.
(4) Electricity pricing management, planning and management of electricity users, power source management, power user management, meter reading management, measurement and collection management, asset management, customer service management
(5) Real-time data monitoring, load curve forecasting, electricity price forecasting, smart power distribution, and intelligent trading, real-time and other different periods of centralized bidding, listing transactions, bilateral negotiations, contract transfer and other trading mode needs.
(6) The cloud sales platform will realize information interaction, data sharing and seamless integration with products such as power distribution monitoring platform, comprehensive energy efficiency analysis platform and intelligent operation and maintenance dispatch management platform.

“Forever’s big data analysis platform (https://www.365power.cn/view/mall/bigdata.html) helps customers realize the storage, calculation and analysis applications of massive data in the power industry, supports data modeling, data analysis and data mining in the power business field, and fully discovers and utilizes data values to better serve power companies and power users. The platform has been successfully put into operation in power companies, and has realized big data applications in the fields of power marketing, electric vehicles, coal-to-electricity, power consumption information collection, and power credit reporting.”

“The electricity sales big data forecasting platform product achieves real-time prediction within 3 seconds, and the power consumption prediction accuracy rate is over 97%, which has been verified by real data of millions of users in Guizhou, Shanxi, Zhejiang, Qinghai and other provinces. Based on the artificial intelligence machine learning algorithm and multi-factor analysis of user industry, type, holiday, business status, etc, the predictive model continuously self-improves and corrects based on historical data and future trends, dynamically adjusts the predicted algorithm parameters, and realizes self-evolution. The big data SaaS product achieves complete data governance and has complete automated data management capabilities, and automatically repairs the abnormal data and error data of electricity sales according to the rules and trends of electricity consumption, and provides external data sources such as weather, regional economic indicators, and enterprises. The SaaS product has build a library with more than 30 kinds of electricity sales forecasting algorithms and models with independent intellectual property rights, in addition to typical time series method, periodic coefficient method, cubic exponential smoothing, gray forecasting method, autoregressive differential moving average method, holiday analysis and forecasting algorithm, etc.

“The cloud sales platform has accurately matched the individualization requirements of the settlement system and transaction rules of all provinces in the country. When the sales company settles the income, it will automatically match the province’s transaction rules and electricity prices, and predict different scenarios according to the contractual agreement and power consumption. The income situation under the electricity distribution plan guides the enterprise to achieve the optimal business plan.”

“In the electrical power sales platform, annual subscription sales of the software service is generally based on the complexity of functional modules, ranging from RMB 50,000 to 1 million, and the integrated distribution software on private cloud deployment is more than 10 million. The market size of the distribution software is estimated to be RMB 4.8 billion in accordance with the current 320 incremental power distribution pilots and 100 non-incremental distribution network pilot projects similar to Zhongshan Cuiheng 中山翠亨, which has begun to conduct electricity sales. The electric power distribution platform and software market capacity will reach RMB 6.64 billion. With the continuous advancement of electricity reform, the market capacity still has room for improvement.”

Grid infrastructure management software business
“Forever’s power grid infrastructure construction series include transmission line construction management system and enterprise management system designed for power transmission companies. Users include China Electric Power Research Institute, Beijing Electric Power Company, Chongqing Electric Power Company, Guizhou Electric Power Company, Ningxia Electric Power Company, Henan Electric Power Testing and Research Institute, Chengdu Electric Power Company, etc.”

“The project management system provides support throughout the full lifecycle of project. It can be collaboratively used by Investor, Designer, Constructor, Engineer and Supplier. Thus planning and design department, engineering construction department, finance department, bidding department and production department could act like one body during the construction process. Its business functions cover feasibility study, preliminary design, construction preparation, construction, commissioning, asset handover, acceptance & operation and follow-up evaluation. It is a communication platform for all participants and especially a powerful tool helping the investor make informed decisions.“

“Forever’s production operation cloud platform considers the asset life cycle to provide information support for the power distribution production management, covering equipment, work order management, defect, standardization, production maintenance plan, site work, asset disposal, maintenance, equipment monitoring, emergency management and other functional modules.”

“In terms of operation and maintenance, secondary equipment manufacturers mainly monitor and control the operation status of equipment, that is, telemetry and remote control in the field of automation. The operation and maintenance of the power grid is actually the process of decommissioning and redesigning the equipment after a certain period of operation of the power grid. Forever’s advantages are mainly reflected in the power grid planning and design capabilities.”

“Forever’s power grid operation series cover the online real-time monitoring of equipment in operation. The series of software products includes online monitoring system for transmission lines, multi-dimension dynamic monitoring system for underground cables and incident management system. Its applications can be tailored to fit the needs of transmission and distribution companies, power generation owners and vertically integrated utilities.”

“Real time monitoring functions of transmission lines system include detecting potential faults & abnormalities and announcing alarms. It makes comprehensive assessment of the working conditions of devices. Thus a transformation in terms of power grid operational management from ‘afterward handling’ to ‘early prevention warning’, from ‘rough control’ to ‘condition assessment’, and from ‘regular inspection’ to ‘condition monitoring’ is achieved.“

“The multi-dimension dynamic monitoring and control system for underground cables performs continuous monitoring on the cable load, load rate, power tunnel covers and its access and power tunnel video surveillance, as well as the water level, gas, ground current and partial discharge inside the tunnel. It responds quickly to emergencies by virtue of 2-D and 3-D GIS graphical presentation and abnormality alarm management. It adopts Service Oriented Architecture (SOA). Utilizing GIS, GPS positioning technology, GPRS wireless communication technology and unique image processing technology, the system sorts out, analyzes, taps into and simulates complex information of all kinds. It also carries out smart grid online monitoring and emergency handling by virtue of 2D and 3D imaging technologies.”

“Forever’s power grid maintenance series cover maintenance & overhaul for networks in operation and equipment asset management. Users include Beijing Electric Power Company, Qinghai Electric Power Company, Muping Power Supply Company, Nanle Power Supply Company, Pingchang Power Supply Company, etc. This series of software products includes management system for transmission and distribution networks maintenance project and the intelligent patrol system for transmission and distribution network to perform patrolling and examination on transmission lines and transformation substations. It keeps track of their operating conditions and status change of their neighboring environment. So abnormalities and potential problems of the network can be detected in time. Thus it ensures secure operation of equipment and a stable power grid and realizes a digital and standardized management of patrolling work for power networks.”

“In recent years, China’s electrical fires have occurred frequently, causing heavy casualties and property losses. Forever’s safety production smart cloud platform uses Internet of Things technology to lay the foundation for enterprises to effectively carry out safe power management from overall macro to equipment positioning, equipment monitoring, to fault handling through IoT technology, guiding the development of hidden dangers.”

“The core functions of the safety production smart cloud platform mainly include monitoring processes, data collection, intelligent alarms, and data statistics The platform adopts the IoT technology to collect on-site safety data through various sensors and detectors. The data is transmitted to the data center through the network, and is displayed in various forms such as the Web platform, large screen, and mobile app through the analysis of the cloud platform. There is 24-hour real-time dynamic monitoring of building and corporate safety production data to achieve transparent monitoring and management of user safety production and to control the health of the power system and production system anytime and anywhere.”

“It can monitor the safety status of multiple users at the same time, and find out the leakage, overload, short circuit, three-phase unbalance, over-voltage and temperature rise abnormality in the power line; the leakage of liquid and gas, abnormal temperature and abnormal pressure; hidden dangers such as temperature, humidity, and smoke sensation in the surrounding environment. In addition to providing real-time data reading, historical data query and other data collection functions, the platform provides multiple statistical analysis modules for fault occurrence and processing. The analysis report identifies potential safety hazards in a timely manner and takes timely measures to truly help the company achieve the goal of reducing the number of failures.”

“Forever’s EPC management cloud platform revolves around the design, construction, materials and other core construction business in line with the general business model of the power industry EPC projects management requirements, providing customers with a service platform in conformity with EPC project construction process management and control requirements. With EPC general contracting management services as the foundation, and supported by the Power+ platform, we can introduce various types of industry resources to the general contractor and create information interactions between different companies for resource sharing and win-win cooperation.”

“Forever’s EPC service innovation based on internet thinking can provide the construction site with local material supply services through location services, thereby reducing procurement costs. It integrates with the Forever cloud design platform and introduces strong crowdsourcing design resources to provide professional design services.”

“It provides access to the China Electric Power Construction Enterprise Office Construction Standard Specification big data platform to enable the general contracting project participant to provide construction standards and process management guidance services. Its construction site auxiliary management platform provides the construction personnel with safety training through the mobile phone APP and the use of Beidou satellite positioning enables attendance management of the construction site personnel. Based on the business management analysis of large data, we find the weak links in EPC management process and provide support for business decisions.”

“Forever also partnered with credit reporting giant Experian to develop a online credit verification service 企业征信 (https://c.zhaobiao666.com) with professional tools to help procurement managers, bid evaluation experts, discipline inspection and supervision personnel to evaluate the creditworthiness of suppliers before the opening bid through Credit China reports, industry violations reports, suspected rigging of bids, etc. and reduce at least 80% of the workload in the credit verification of suppliers, thus improving the efficiency of bid evaluation.”

“Forever’s online revenue is divided into two parts: one is the income generated by the company’s SaaS product application; the other is the revenue generated by the online EPC project subcontracting based on the company’s comprehensive supply chain system and complete industry qualifications. Forever’s cloud service model is different from the general industry’s cloud service model. Our cloud service model takes into account the business characteristics of the power industry and industry qualifications.”

“Take a typical power grid company as an example, which generally consists of the development planning department, the operation and maintenance department, the marketing department, the infrastructure department (the EPC construction management company under each province), the Ministry of Materials (bidding management center), the Ministry of Science and Technology and Information Technology (Smart Grid Office), and the operation monitoring (control) center, the power distribution management center and other production management departments. Due to the limited allocation of personnel of some local power companies and power distribution companies, the organizational and management strength is insufficient, and it does not have the ability to set up a management company like a power grid company. Forever’s cloud service model and well-equipped offline services have solved the needs of local power companies and power distribution companies. The main responsibility of the EPC project undertaken by Forever is to build an EPC management cloud platform to provide management services to manage the execution of the entire EPC project. The EPC project undertaken by Forever actually integrates online and offline resources through the public cloud model, providing construction management services for the owners, and realizes the built-in functions of the grid company’s internal management company, thereby improving the efficiency of EPC project execution and reducing the cost of execution of the EPC project.”

“Therefore, the profit margin of the company’s EPC project is relatively high. For large-scale accounts receivable, Forever has developed relevant implementation plans, including regular summary analysis to ensure that each receivable has tracking and feedback. By increasing management measures, the follow-up will increase the intensity of the payment.”

“On 29 Aug 2016, Forever signed a ’EPC General Contracting Contract for the Design, Procurement and Construction of the Urban Distribution Network Construction and Reconstruction Project of Xingyi City, Southwestern Guizhou Province’ with Xingyi Electric Power. The estimated investment of the project is about RMB 552m. In Oct 2016, Forever also won the bid for the integrated information system EPC general contracting of the automation network reconstruction project of Anze County of Shanxi Local Power. Forever implemented the projects according to the project construction plan of the owner and the fund allocation of the project. The project are progressing smoothly.”

“In terms of market size forecasting, we estimate that each of the five major geoelectric power companies will have an EPC business of about RMB 0.5-1.5 billion per year per company, and 200 of the industrial park’s power distribution companies will have about RMB 100-200 million EPC businesses per year per company. There are 1 trillion kwh * 0.02 = RMB 20 billion per year, and the software demand is about RMB 500 million, a total of about RMB 50 billion to 100 billion annual market size. Add energy storage, new energy, charging and replacement, energy-saving, micro-grid, industrial park’s energy investment are about RMB 100 billion per year. The power distribution network has a running cycle of 8-10 years, which will be continuously updated, and the replacement of enterprises in the industrial park will also require new adjustment requirements for the design and construction of the distribution network. In summary, we expect the market size to be around RMB 200 billion per year.”

Chairman Jiang summed up his gratitude on the progress of Forever and to strive to always give back to society with gratitude: “Forever Technology was established on Thanksgiving Day on 23 Nov 2000 and is 18 years old. Forever will never forget our original heart and Purpose and strives to always give back to society with gratitude. We have practice corporate social responsibility through a variety of ways to contribute to the development of the industry and the building of a harmonious society, including the establishment of inspirational scholarships to children’s welfare institutions and the use our own technical expertise and business strength to serve the construction and transformation of power grids in poor mountainous regions and to contribute to the capital’s atmospheric control with our ‘coal to electricity’ ICT project, etc. In October 2018, Forever Technology won the ‘Top 20 List of Social Responsible Private Enterprises in Beijing’.”


Intrigued and want to read more? Download this week’s H.E.R.O. HeartWare: Weekly Asia Tech News with brief highlights of the inspiring entrepreneurial stories of tech leaders in Asia whom we have been monitoring over the past decade in our broader watchlist of over 200 listed Asian tech companies and our focused portfolio of 40 HERO Innovators who reveal their problems and successes behind building the company. Inspired by Brandon Stanton’s photo-journalistic project Humans of New York which collects and highlights the street portraits and moving stories of people on the streets around us who were doing things that changed lives and made a difference in the city but often went unnoticed, we have curated a collection of Hear the Heart of the H.E.R.O. stories on our website which we aim to update with refreshing and uplifting new stories weekly. Please check them out and give us your valuable feedback so that we can improve to make them better for you.


It started with rethinking a few questions. Question No. 1: Can the megacap tech elephants still dance? Or is this the better question: Is there an alternative and better way to capture long-term investment returns created by disruptive forces and innovation without chasing the highly popular megacap tech stocks, or falling for the “Next-Big-Thing” trap in overpaying for “growth”, or investing in the fads, me-too imitators, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model? How can we distinguish between the true innovators and the swarming imitators?

Question No. 2: What if the “non-disruptive” group of reasonably decent quality companies with seemingly “cheap” valuations, a fertile hunting ground of value investors, all need to have their longer-term profitability and balance sheet asset value to be “reset” by deducting a substantial amount of deferred innovation-related expenses and investments every year, given that they are persistently behind the innovation cycle against the disruptors, just to stay “relevant” to survive and compete? Let’s say this invisible expense and deferred liability in the balance sheet that need to be charged amount to 20 to 30% of the revenue (or likely more), its inexactitude is hidden; its wildness lurks and lies in wait. Would you still think that they are still “cheap” in valuation?

Consider the déjà vu case of Kmart vs Walmart in 2000s and now Walmart vs Amazon. It is easy to forget that Kmart spent US$2 billion in 2000/01 in IT and uses the same supplier as Walmart – IBM. The tangible assets and investments are there in the balance sheet and valuations are “cheap”. Yet Kmart failed to replicate to compound value the way it did for Walmart. Now Walmart is investing billions to “catch up” and stay relevant. Key word is “relevancy” to garner valuation.

We now live in an exponential world, and as the Baupost chief and super value investor Seth Klarman warns, disruption is accelerating “exponentially” and value investing has evolved. The paradigm shift to avoid the cheap-gets-cheaper “value traps”, to keep staying curious & humble, and to keep learning & adapting, has never been more critical for value investors. We believe there is a structural break in data in the market’s multi-year appraisal (as opposed to “mean reversion” in valuation over a time period of 2-5 years) on the type of business models, the “exponential innovators”, that can survive, compete and thrive in this challenging exponential world we now live in. Tech-focused innovators with non-linear exponential growth potential are the most relevant multi-year investment trend and opportunity.  

During our value investing journey in the Asian capital jungles over the decade plus, we have observed that many entrepreneurs were successful at the beginning in growing their companies to a certain size, then growth seems to suddenly stall or even reverse, and they become misguided or even corrupted along the way in what they want out of their business and life, which led to a deteriorating tailspin, defeating the buy-and-hold strategy and giving currency to the practice of trading-in-and-out of stocks. On the other hand, there exists an exclusive, under-the-radar, group of innovators who are exceptional market leaders in their respective fields with unique scalable business models run by high-integrity, honorable and far-sighted entrepreneurs with a higher purpose in solving high-value problems for their customers and society whom we call H.E.R.O. – “Honorable. Exponential. Resilient. Organization.”, the inspiration behind the H.E.R.O Innovators Fund, (surprisingly) the only Asian SMID-cap tech-focused fund in the industry.

The H.E.R.O. are governed by a greater purpose in their pursuit to contribute to the welfare of people and guided by an inner compass in choosing and focusing on what they are willing to struggle for and what pains they are willing to endure, in continuing to do their quiet inner innovation work, persevering day in and day out. There’s a tendency for us to think that to be a disruptive innovator or to do anything grand, you have to have a special gift, be someone called for. We think ultimately what really matters is the resolve — to want to do it, bring the future forward by throwing yourself into it, to give your life to that which you consider important. We aim to penetrate into the deeper order that whispers beneath the surface of tech innovations and to stand on the firmer ground of experience hard won through hearing and distilling the essence of the stories of our H.E.R.O. in overcoming their struggles and in understanding the origin of their quiet life of purpose, who opened their hearts to us that resilience and innovation is an art that can be learned, which can embolden all of us with more emotional courage and wisdom to go about our own value investing journey and daily life.

As the only Asian SMID-cap tech-focused listed equities fund in the industry, we believe we are uniquely positioned as a distinctive and alternative investment strategy for both institutional and individual investors who seek to capture long-term investment returns created by disruptive forces and innovation without herding or crowding to invest in the highly popular megacap tech stocks, and also provide capital allocation benefit to investors in building optionality in their overall investment portfolio.

The H.E.R.O. HeartWare Weekly highlights interesting tech news and listed Asian emerging tech innovators with unique and scalable wide-moat business models to keep yourself well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy in Asia as part of our thought leadership for our ARCHEA Asia HERO Innovators Fund to add value to our clients and the community. Hope you find the weekly report to be useful and insightful. Please give us your candid feedback and harshest criticisms so that we can improve further to serve you better. Besides the BATTSS (Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung), do also tell us which Asian tech entrepreneurs & CEOs whom you admire and respect and why – we will endeavor to do up profiles of them for sharing with the community. Thank you very much and have a beautiful week ahead.

Warm regards,
KB | kb@heroinnovator.com | WhatsApp +65 9695 1860
www.heroinnovator.com

H.E.R.O.’s Journey in Tech (23 March 2019) – Pinduoduo’s free cash flow conundrum + Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries

H.E.R.O.’s Journey in Tech (23 March 2019) – Pinduoduo’s free cash flow conundrum + Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries

Companies

  • Pinduoduo’s free cash flow conundrum (Technode)
  • Zenrin Falls on Speculation That Google Maps Partnership Is Over (Bloomberg)

BATTSS – Baidu, Alibaba, Tencent, TSMC, Samsung, Softbank

  • Tencent doubles down on customized cloud computing services (Technode)
  • Lazada bets on Chinese e-commerce models to win big in burgeoning Southeast Asian markets (SCMP)

FAANNMG – Facebook, Amazon, Apple, Nvidia, Netflix, Microsoft, Google

  • Gaming Meets the Cloud and Investors Scramble to Catch Up (Barron’s); Can Google’s Stadia compete with consoles and high-end PCs? Richard Waters looks at the tough technical challenges behind cloud gaming (FT); Big Tech competes to be the Netflix of gaming; Google, Apple and Microsoft want to use the cloud to let people play any game at any time on any device (FT)
  • Future shock: inside Google’s smart city; Plans to build a tech-fired Utopia in Toronto are gaining momentum — as privacy fears grow (FT)
  • How Netflix Nearly Lost Its Footing During the Recession and What It Did to Recover (Medium)

Asia Tech & Innovation Trends

  • Automaker Changan parters with Tencent, Alibaba on RMB 10 billion mobility business (Technode)
  • Social commerce platform Yunji to go public on Nasdaq; The company was fined by Chinese authority in 2017 for running an online pyramid scheme. (KRA)
  • In the race for 5G, Chinese carriers go slow and steady; Government’s push for cheaper rates discourages capital expenditure (Nikkei)
  • Shanghai approves IPO applications by nine pioneers on Nasdaq-style tech board; No e-commerce or internet-related firms in the running to list on new board (SCMP)

Global Tech & Innovation Trends

  • Pinterest files to go public. Its not-so-secret weapon: Moms (CNN); Pinterest has long shunned being labelled a social network. Because of that, it doesn’t push users to add friends or build connections. It also means it’s been able to avoid problems of its larger rivals like Facebook. (Age); Is Pinterest Good Enough for the Growth-Crazed IPO Market? A 60 percent revenue increase may pale next to turbocharged startups. (Bloomberg)
  • Zoom, a video-conferencing company, is the rare tech IPO that’s profitable (qz)
  • LAPD audit reveals dangers of high-tech policing (CNN)
  • Velodyne’s Godfather Of Laser Sensors Hits $500 Million Milestone, Sets His Sights On Safer Self-Driving Cars (Forbes)
  • ‘Nothing is off the cards’: Canva has designs on Nasdaq listing (Age)
  • TV Streaming Is Too Fragmented and Too Complicated. This Needs to Change. (Barron’s)
  • How Comic Con’s Owner Is Harnessing Tech to Power Its Stock (Barron’s)

Life

  • Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries Hardcover – March 19, 2019 (Amazon); Safi Bahcall – On Thinking Big, Curing Cancer, and Transforming Industries (#364) (Tim Ferris)

H.E.R.O.’s Journey in Tech (22 March 2019) – It’s Not Enough to Be Right-You Also Have to Be Kind

H.E.R.O.’s Journey in Tech (22 March 2019) – It’s Not Enough to Be Right-You Also Have to Be Kind; Takedowns and clever quips are easy, but empathy and persuasion are better

Companies

  • Kakao acquires 28.9% stake in Tidesquare (Investor)
  • GIS to ramp up in-display fingerprint sensor shipments to Samsung starting 2Q19 (Digitimes)
  • VGI and AnyMind Group sign tech partnership (NM)
  • Nearmap Aerial Imagery Helps Elite Grounds Achieve Ground-Breaking Increases in Accuracy and Productivity (BW)

BATTSS – Baidu, Alibaba, Tencent, TSMC, Samsung, Softbank

  • Alibaba to run its entire business on the cloud (Technode); Alibaba to step up cloud computing expansion amid growing global demand (SCMP)
  • Fliggy, the online travel platform owned by Alibaba, launches its own shopping portal (KRA)
  • Tencent to begin closed beta for cloud gaming service Start (Technode, KRA)
  • Tencent to cut reliance on China gaming after profit hit (Reuters); Tencent loses steam as new growth engines struggle to take off; Asia’s once-most-valuable tech company suffers steepest profit drop in 14 years (Nikkei); Relax, Things Really Aren’t So Bad at Tencent; Management trimmed its marketing budget, and games monetization is back. That’s good news, really. (Bloomberg); Why Tencent Missed the Mark on Profit by Most in a Decade (Bloomberg)
  • Clouded vision: Masayoshi Son prepares to unleash his second $100bn tech fund; Volatility in tech stocks, the Khashoggi scandal and frictions over governance have changed the mood around the Vision Fund (Economist)

FAANNMG – Facebook, Amazon, Apple, Nvidia, Netflix, Microsoft, Google

  • Apple TV App To Get A Second Life With Video Subscription Service (Forbes)
  • Amazon to Launch Mobile Ads, in a Threat to Google and Facebook (Bloomberg)
  • Google’s new gaming service will let game makers use rival clouds, executive says (Reuters)

Asia Tech & Innovation Trends

  • Wave of layoffs washes over China’s tech giants; Mass demotion at Tencent follows job cuts at JD.com and NetEase (Nikkei)
  • The China Tech Bubble Is Dead. Long Live the China Tech Bubble; Offshore private equity funds struggled to compete with a wave of onshore money. Now it’s retreating, and the water looks more inviting. (Bloomberg)
  • World’s Biggest AI Startup Exploring Cars, Global Expansion (Bloomberg)
  • Chinese smartphone firms jazz up products, seize turf in home market from Apple (Reuters)
  • China’s auto, internet giants set up 9.76 billion yuan fund to invest in ride-sharing industry (Reuters)
  • Meet TikTok, the social media your kids are watching (AFR)
  • Chinese e-commerce platform Little Red Book upgrades its brand partner platform (KRA)
  • Race is on for tech companies like Grab, Ant Financial to gain an edge in SE Asia’s financial services market (SCMP)

Global Tech & Innovation Trends

  • Robotics process automation startup UiPath raising $400M at more than $7B valuation (TC)
  • Rent the Runway hits a $1 billion valuation (TC)
  • Big banks are using AI to keep out of trouble (CNN)
  • Doctor App Babylon Health Offers Quick Appointments, But Grapples With Follow-Up Care For Mental Health (Forbes)
  • Square Stock Is a Buy Because Its Cash App Will Grow, Analyst Says (Barron’s)
  • Spotify enters high-stakes licensing talks with music industry; Universal, Sony and Warner control two-thirds of streaming service’s catalogue (FT)
  • Someone Else Is Making Money on Your Online Returns (Bloomberg)
  • Scientists reveal ancient social networks using AI-and x-rays (Wired)

Life

  • Why book value has lost its meaning: The trouble with intangibles (Economist)
  • It’s Not Enough to Be Right-You Also Have to Be Kind; Takedowns and clever quips are easy, but empathy and persuasion are better (Ryan Holiday)

H.E.R.O.’s Journey in Tech (21 March 2019) – Asian gaming companies face disruption from likes of Google; Next-generation cloud-based gaming will change the face of the industry; Asian gaming market accounted for 45%, or close to $44 billion, worth of the global industry in 2017

H.E.R.O.’s Journey in Tech (21 March 2019) – Asian gaming companies face disruption from likes of Google; Next-generation cloud-based gaming will change the face of the industry; Asian gaming market accounted for 45%, or close to $44 billion, worth of the global industry in 2017

Companies

  • Spotify rival Tencent Music posts maiden quarter loss of $130M on one-off costs (TC); Tencent Music hits low pitch after first earnings report exposes costs (Reuters)
  • ‘Everything app’ Meituan Dianping tumbles as end of lock-up nears; Tencent-backed group has posted widening losses on higher costs (FT)
  • Investors fret about Xiaomi’s game plan, sending shares tumbling; Investors worry about Xiaomi’s ability to transition into higher-profit segments (SCMP)
  • Struggling Meitu lays off 30% of its employees (KRA)
  • Toei Animation Denies ‘Dragon Ball Super’ Return, Insider Stand Firm On Its Comeback (BTC)
  • Citadel Group: signs contracts with RAH and University of Melbourne; CHARM platform goes live (KKM, AN)
  • Fundies take a look at ASX-hopeful ReadyTech’s backers (AFR)

BATTSS – Baidu, Alibaba, Tencent, TSMC, Samsung, Softbank

  • Tencent seeks new growth in year of transition as consumer businesses mature (SCMP)
  • What is WeChat’s dream? WeChat founder Allen Zhang explains (WC)
  • Samsung expects tough 2019 as memory segment stalls (Nikkei)

FAANNMG – Facebook, Amazon, Apple, Nvidia, Netflix, Microsoft, Google

  • What Facebook needs to learn from WeChat’s group-chat pains (Technode)
  • Instagram Is Asking for PayPal’s Help to Improve Its Shopping Experience (Barron’s)
  • What Facebook’s Privacy Pivot Could Mean for Its Stock (Barron’s)
  • Google’s new gaming service will let game makers use rival clouds, executive says (Reuters); What latency feels like on Google’s Stadia cloud gaming platform (TC); Google throws down clear challenge to gaming world; New video game streaming service has potential to upend $135bn industry (FT); Google Just Showed Us the Future of Gaming; Data centers could make individual game consoles obsolete (Medium)
  • How to book train tickets in India straight from the Google Pay app (TNW)
  • Teams, Microsoft’s Slack competitor, says it’s signed up over 500k organizations, adds whiteboard and live events support (TC)
  • Amazon (sub)Prime? How commingling has contaminated Amazon inventory and paved the way for a huge lemon problem. (FT)
  • Netflix Stock Could Keep Surging Because It Truly Is a Global Company (Barron’s)

Asia Tech & Innovation Trends

  • The China Tech Bubble Is Dead. Long Live the China Tech Bubble; Offshore private equity funds struggled to compete with a wave of onshore money. Now it’s retreating, and the water looks more inviting. (Bloomberg)
  • What makes China a tough yet exciting market for SaaS (TIA)
  • PicsArt hits 130 million MAUs as Chinese flock to its photo editing app (TC)
  • Smart speakers in China are learning dialects (KRA)
  • ByteDance shifts attention to live broadcasting business with its new centralised platform; ByteDance is making moves to amp up revenues from its live broadcasting businesses (KRA)
  • Tencent-backed Kwai launches new app to go after Douyin’s core users (KRA)
  • Ping An acquires Lenovo Smart Medical to help digitalize hospitals (KRA)
  • Asian gaming companies face disruption from likes of Google; Next-generation cloud-based gaming will change the face of the industry (Nikkei)
  • Japanese-led AnyMind raises $8m for AI ads in Bangkok stations (Nikkei)
  • Race is on for tech companies like Grab, Ant Financial to gain an edge in SE Asia’s financial services market (SCMP); Grab vs. Go-Jek: Inside Asia’s Battle of the ‘Super Apps’; The rival ride-hailing services are now dueling to deliver everything from groceries to mortgages to Southeast Asia’s middle class. (Fortune)
  • Indonesian mobile wallet Ovo adds mutual funds investment feature; The move extends Ovo services beyond payment (KRA)
  • Thailand’s mobile-only bank challenges millennials to save (Nikkei)

Global Tech & Innovation Trends

  • The Venture-Capital Bubble Is Going to Burst (Barron’s)
  • Postmates’ newest feature is like Uber POOL for food delivery (TC)
  • How Podcasts Learned to Speak; The once useless-seeming medium that became essential. With 660,000 shows and 62 million listeners, the century’s first new art form enters its corporate stage. (Vulture)
  • Disney Moves From Behemoth to Colossus With Closing of Fox Deal (NYT)
  • The world is coming after Silicon Valley. Tech companies must evolve to survive (CNN)
  • Next Billion-Dollar Startups News: 3-D Printing Startup Markforged Raises $82 Million (Forbes)
  • Walmart’s Chief Technology Officer leaves company as e-commerce wars flare (Reuters)
  • Can Magic Leap’s ‘mixed reality’ find the human touch? The idea that we could be captured for posterity, or teleported for a holographic call, is tantalisingly close (FT)
  • ESPN’s Ex-President Wants to Build the Netflix of Sports (Bloomberg)
  • How an App for Gamers Went Mainstream; Discord has become an indispensable tool for internet creators to connect with their fans. (Atlantic)
  • Franchise Value: videogame IP vs. movie IP (Medium)

Life

H.E.R.O.’s Journey in Tech (20 March 2019) – Tibber, a Norwegian AI to smartly manage energy + His Bosses Rejected His Idea. Then Hans Langer Became A Billionaire From His Plan For Giant 3-D Printers

H.E.R.O.’s Journey in Tech (20 March 2019) – Tibber, a Norwegian AI to smartly manage energy + His Bosses Rejected His Idea. Then Hans Langer Became A Billionaire From His Plan For Giant 3-D Printers

Companies

  • With 23% annual revenue growth, Tencent-backed China Literature wants to be the next Marvel (KRA)
  • Xiaomi has lost almost 30 percent since its highly anticipated trading debut in Hong Kong last July, hampered by plateauing smartphone demand globally and especially in its home market, where it still generated more than half its revenue (Bloomberg); Xiaomi calls on home AI devices for post-smartphone growth (Nikkei); In India, Xiaomi joins the mobile wallet war (TIA)
  • Sony and Nintendo shares drop on Google gaming plans; Internet giant announced launch of cloud-based gaming service (FT)
  • Trend Micro CFO Mahendra Negi expects jump in revenue from India (TO)
  • Rakuten Billionaire Has a New Goal for His 17,000 Workers: Learn to Code (Bloomberg)
  • Atlassian’s Trello aims for the enterprise (TC); Atlassian customer problems behind $US166m AgileCraft acquisition (AFR); Atlassian founders worth $10 billion each after record stock rise (Age)
  • Mindtree founders ‘condemn’ L&T’s hostile bid, call it a ‘grave threat’ (Forbes)

BATTSS – Baidu, Alibaba, Tencent, TSMC, Samsung, Softbank

  • TikTok operator Bytedance buys gaming start-up in move likely to sharpen rivalry with Tencent (SCMP)
  • Tencent clawing its way back from cliffhanger year, winning rave analyst reviews ahead of earnings (SCMP); Tencent to demote 10% of middle managers as game sector falters (Nikkei); Tencent Music meets profit estimates in first earnings report, shares fall (Reuters)

FAANNMG – Facebook, Amazon, Apple, Nvidia, Netflix, Microsoft, Google

  • Can Google Create the Netflix of Gaming? (Bloomberg); Google’s new Stadia gaming platform is all about streamers (TC); Google’s Stadia game-streaming platform kills downloads and lets you play anywhere (TC); Google skips the console and launches Stadia video game streaming service (CNN, FT)
  • Facebook Live Has Got to Go; The social-media giant may be doing more harm than good with live video (WSJ)
  • Instagram launches shopping checkout, charging sellers a fee (TC); You can now buy products directly on Instagram (CNN); Instagram launches in-app online shopping feature; Facebook-owned platform partners with 20 vendors including Adidas, Burberry and Zara (FT)
  • Teams, Microsoft’s Slack competitor, says it’s signed up over 500k organizations, adds whiteboard and live events support (TC)
  • Apple’s Big Spending Plan to Challenge Netflix Takes Shape (NYT)
  • Why Netflix is diving deeper into interactive storytelling; Netflix announces that Bear Grylls will front its next choose-your-adventure experiment-and there’s more to come in horror, adventure, and romance. (FastCo)
  • Nvidia Stock Will Rise Because of Its Expanding Ecosystem, Analyst Says (Barron’s); Toyota taps Nvidia simulator to develop self-driving cars (Nikkei)

Asia Tech & Innovation Trends

  • Chinese AI start-up Megvii said to plan IPO in either Hong Kong or New York to raise up to US$800 million (SCMP)
  • How AI, facial recognition technologies are revolutionising physical security in Asia (SCMP)
  • Beauty is the new buzzword in China’s tech world; From virtual makeovers to 3D nail polish printers, companies take makeup to the future (Nikkei)
  • China’s tech giants leap over ‘Great Firewall’ to spread message; Huawei uses Facebook and Twitter to counter Trump’s narrative on security risk (Nikkei)
  • Forget Tesla, It’s China’s E-Buses That Are Denting Oil Demand (Bloomberg)
  • Bytedance forms internal platform to support live-streaming business (Technode)
  • In bid to up its monetization game, Q&A site Zhihu expands membership program (Technode)
  • Singapore’s Pine Labs acquires gift card tech company Qwikcilver in $110 million deal (Forbes)
  • Bunnings to launch full e-commerce service (AFR)

Global Tech & Innovation Trends

  • Founders Fund invests in Tibber, a Norwegian AI to smartly manage energy (TC)
  • AI has become table stakes in sales, customer service and marketing software (TC)
  • Camera maker Insta360 raises $30M as it eyes 2020 IPO (TC)
  • Glossier started as a beauty blog and is now valued at $1 billion (CNN)
  • Digital health start-up Doctolib raises €150m at a €1bn+ valuation; French online medical appointment management service cements its ‘unicorn’ status (FT)
  • A Chat About The PagerDuty S-1 (CB)

Life

  • Basecamp CEO and co-founder Jason Fried gives us a peek behind the scenes of his company and discusses his philosophy on doing great work, making a positive difference, and learning to breathe in the fast paced culture of today’s workplace (FS)
  • His Bosses Rejected His Idea. Then Hans Langer Became A Billionaire From His Plan For Giant 3-D Printers. (Forbes)
  • Podcast #491: Everything You Know About Passion is Wrong (AOM)
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