A strong quarter doesn’t make Yeahka a bargain

The payment technology company posted impressive third-quarter results, yet its lofty valuation is limiting near-term upside for its stock

Key Takeaways:

• Yeahka’s gross payment value surged 50% in the third quarter compared with the previous three months
• The payment services provider’s stock trades at a forward price-to-earnings ratio around 30 times, signaling a premium valuation

By Bai Xin Rui

Yeahka Ltd. (09923.HK), the electronic payments services company once favored by star stock picker Cathie Wood, was a stock superstar earlier this year, more than doubling from a mid-January low to an intraday high of HK$16.58 in late June. But it’s been downhill since then, with the stock now trading at just half that level. The stock briefly regained some of its mojo last week, rising 7.4% in a single day after the company issued a business update reporting strong gains for its overseas business in the third quarter.

Yeahka has quite the pedigree, founded in 2011 by Liu Yingqi, a former general manager of Tencent’s payment arm, who secured an early strategic investment from his former employer in 2012. The company established its Leshua Technology payment unit in 2013, and obtained a coveted license to process bank card payments from China’s central bank in 2014, renewing the license five years later.

Evolving from its origins in payment processing using point-of-sale (POS) terminals, Yeahka has gone on to become China’s largest independent non-bank provider of such services for a newer generation of QR code-based payments. It also operates an in-store e-commerce business. Liu Yingqi remains its largest shareholder with a 35% stake.

As its China business matures, its younger overseas unit has become Yeahka’s newest growth engine. That unit was a star in the third quarter, as its overseas gross payment value (GPV) hit nearly 1.3 billion yuan ($184 million), surpassing the 1.1 billion for all of 2024 and jumping 50% from 800 million yuan in the second quarter. The company attributed the explosive growth to an aggressive expansion of the Asia merchant network by its Fushi Technology portfolio company, serving clients like PlayMade, Jumbo and Shihlin Taiwan Street Snacks.

Premium fees overseas

Fushi is positioned as a merchant-focused software as a service (SaaS) platform allowing merchants to create demand-driven, immersive shopping experiences – essentially AI-powered stores – with tailored services for international clients, Yeahka said earlier this year in its midyear report.

Domestic broker Pacific Securities previously noted Yeahka’s overseas payment fee rates are roughly five times higher than what it charges domestically, with gross margins exceeding 50% – about four times the levels for its China business. Consequently, the 50% quarterly GPV growth will almost certainly help to boost the company’s profitability.

More crucially, there’s still plenty of room for more overseas expansion. Pacific Securities highlighted Yeahka’s use of global payment channels like HSBC, and pointed out the company aims to make inroads in major economies including the U.S. and Japan, accelerating its global ecosystem buildout. It sees potential for Yeahka to emulate European payment leader Adyen.

Meituan partnership

Back on the domestic front, Yeahka entered the in-store e-commerce business in 2020, providing services enabling consumers to purchase or book services online before redeeming them inside participating stores. Leveraging partnerships with companies like Meituan to reach more merchants and enhance its service quality, Yeahka recorded China GPV of 616.3 billion yuan in the third quarter, far larger than the international business.

Despite receiving lower domestic payment fees, Yeahka’s domestic business continues to grow, especially within its focus on local lifestyle services. Researcher iResearch forecasts China’s local services market will exceed 35 trillion yuan this year, after growing by an average 12.6% annually from 2020 to 2025. Such a vast market and rising digital penetration offer significant additional growth potential for Yeahka’s in-store e-commerce business.

While the in-store e-commerce business faces intensifying competition, including from content platforms like Douyin and Kuaishou, Yeahka continues to have an advantage through its close partnership with Meituan, China’s leading provider of online-to-offline (O2O) services. Meituan works with a wide array of merchants, providing an entry point for Yeahka’s payment services, especially for digitally underserved small businesses. Urgency among such smaller merchants to digitalize post-pandemic could offer a big opportunity for Yeahka.

Separately, Yeahka has capitalized on the growing power of AI to offer solutions to merchants through its targeted advertising unit, Beijing Chuangxinzhong Technology. Chuangxinzhong’s services allow merchants to input keywords to auto-generate images and videos, slashing their costs for actors, editing and production.

In the first half of this year alone, transaction volume from Chuangxinzhong’s services grew by 40% month-on-month each month, lowering material costs for users by 80%. The services contributed 20% of Yeahka’s total AI-generated video content for the six-month period. Chuangxinzhong also became the first partner within the ecosystem of TikTok parent ByteDance capable of converting content into computer-generated virtual avatars, helping to build a digital commerce intelligence ecosystem.

Yeahka’s array of activities, from content generation to its core payment services, combined with its close ties to big names like Meituan and ByteDance, as well as its strong overseas growth, could help the company return to revenue growth this year. According to analysts polled by Bloomberg, the company is expected to record 2025 revenue of 13.35 billion yuan, up 8.6% year-on-year, with an estimated net profit of 114 million yuan, up 38.6%.

Even after its recent stock pullback, Yeahka’s shares still trade at a steep 30 times forward price-to-earnings (P/E) ratio, suggesting limited near-term upside potential. A renewed interest by Cathie Wood or another high-profile investor could provide some lift, though there’s no indication that has happened yet. Absent such a catalyst, the shares are likely to remain range-bound for now.

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