New York, NY, April 17, 2025 (GLOBE NEWSWIRE) -- Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies has released Update Note on Zhibao Technology Inc. (NASDAQ: ZBAO). The update note includes information on Zhibao Technology Inc.’s financial results, management commentary, recent developments, outlook, and risks.
The update note is available below.
Zhibao Technology Update Note April 2025
Highlights from the note include:
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H1 FY 2025 Revenue Exceeds Projections, Marking Turnaround to Operating Profitability: For the six months ended December 31, 2024, Zhibao reported total revenue of RMB 146.4 million ($20.1 million), reflecting a 73.7% year-over-year increase from RMB 84.3 million in H1 FY2024 and surpassing our estimate of $18.65 million. The strong revenue growth was primarily driven by a RMB 69.6 million increase in insurance brokerage service fees, which totaled RMB 145.0 million, partially offset by a RMB 7.5 million reduction in managing general underwriting (MGU) fees which declined to to RMB 1.8 million. Management anticipates sustaining this growth trajectory in the second half of FY2025, targeting full-year revenue growth exceeding 70%. The cost of revenues increased by 91.5% to RMB 103.8 million ($14.2 million) from RMB 54.2 million, resulting in a 660-bps contraction in gross margins. Operating expenses as a percentage of revenue reduced significantly from 45.6% to 26.5%, reflecting improved operating leverage and better efficiency. This operational efficiency offset the gross margin contraction, allowing Zhibao to report an operating income of RMB 3.8 million ($0.5 million), compared to an operating loss of RMB 8.4 million in the prior year period. Net loss narrowed considerably to RMB 1.5 million ($0.2 million), from the RMB 8.5 million loss reported in the same period last year. On a non-GAAP basis, Zhibao delivered an adjusted net profit of RMB 5.0 million ($0.7 million), highlighting the underlying strength of its core operations and the scalability of its 2B2C digital insurance model. The company concluded H1 FY 2025 with cash reserves of RMB 28.1 million ($3.9 million), compared to RMB 2.4 million as of June 30, 2024.
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Zhibao Expands Its Natural Gas Insurance Portfolio with Strategic YipinSmart Agreement: Zhibao Technology Inc. announced in March 2025, its expansion into the natural gas insurance market through its subsidiary, Sunshine Insurance Brokers. Initiated in December 2024, the Marketing Agreement with YipinSmart, a subsidiary of China Gas that specializes in smart home solutions and safe natural gas use, covers five cities in Zhejiang and Jiangsu provinces, serving a combined population of over 36 million. This partnership creates a dedicated business channel to promote both household and commercial property insurance to urban gas customers and extends Sunshine’s natural gas insurance solution to 18 cities and territories across China. Moreover, this effort builds on previous collaborations with Shenergy Group and Shenzhen Gas Group, which serve Shanghai and Shenzhen, two megacities with a combined population exceeding 42 million, thereby further advancing the company’s strategy for dependable revenue, margin expansion, and improved cash flow. We view this strategic expansion as not only diversifying Zhibao’s digital insurance offerings but also reinforcing its market presence through key partnerships, positioning the company to target the growing natural gas insurance segment in China.
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Zhibao Strategic Expansion Roadmap: Zhibao Technology Inc. continues to navigate market changes by enhancing its service offerings and operational capabilities. The company is seeking expansion into foreign markets through strategic partnerships with local entities, while also exploring ways to export its PaaS and accumulated expertise to address demands in Southeast Asia and other regions. In parallel, Zhibao is pursuing partnerships with businesses that share similar models, enabling the exchange of resources and strengthening its platforms and solutions in targeted niches. A key milestone in this global expansion is Zhibao’s forthcoming in-house reinsurance company, Zhibao Labuan Reinsurance Company Limited, in Malaysia. This reinsurance entity represents an innovative extension of Zhibao’s business model, designed to capture additional revenue per policy from reinsurance premiums, while sharing potential underwriting profits. It is also expected to elevate Zhibao’s bargaining power with local insurance and reinsurance partners, further creating synergy with the company’s operating entities in China. Supported by these initiatives, along with continued investments in its digital platform, ongoing enhancements to its embedded insurance offerings, and an expanded portfolio that now includes pet insurance, natural gas, and sports, Zhibao appears well-positioned to sustain strong growth, optimize profitability, and maintain its market-leading position in China’s digital insurance sector.
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Sunshine Insurance Brokers Secures Huiminbao Contract in Yunnan: Sunshine Insurance Brokers, a subsidiary of Zhibao Technology Inc., has been awarded the contract to provide brokerage services for Huiminbao Inclusive Medical Insurance in Baoshan, Yunnan. This development expands Sunshine’s presence in Yunnan (a province of over 47 million people) by adding a cost-effective, low-premium (CNY 99 annually) health insurance product to its portfolio. The initiative complements existing inclusive homeowner and cross-border insurance offerings in the region, reinforcing the company’s strategy to drive growth through broad market penetration. We note that this contract positions Zhibao to potentially capitalize on the vast, underpenetrated Western Chinese market with the potential for incremental revenue, margin expansion, and profitability gains.
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Valuation: Zhibao’s H1 FY 2025 financial results and operational indicators reflect a strong growth trajectory, improved operating discipline, and the increasing scalability of its 2B2C embedded digital insurance model. The strong top-line growth of 73.7% is complemented by the continued expansion of its distribution network, as the number of B-channel partners grew from approximately 1,500 to over 2,000, underscoring the platform’s scalability and growing market acceptance. The growing partner base has enabled Zhibao to serve more than 20 million end users by the end of the reporting period. Looking ahead, Zhibao’s strategy is anchored in leveraging its digital platform to establish long-term strategic partnerships, diversify its revenue mix, and potentially pursue targeted acquisitions and partnerships that enhance cash flow visibility and margin expansion. We have revised our financial model to reflect the latest financial results and updated the comparable company analysis, yielding a valuation estimate of $7.05 per share, contingent on successful execution by the company.
About Zhibao Technology Inc.
Zhibao Technology Inc., through its subsidiaries, provides digital insurance brokerage services in China, and has pioneered the 2B2C ("to-business-to-customer") embedded digital insurance brokerage model, establishing itself as a first mover in this innovative market segment. It also offers Managing General Underwriter (MGU) services; and offline insurance brokerage consulting services. The company was founded in 2015 and is operationally based in Shanghai, China.
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms.
For more information, visit https://www.diamondequityresearch.com.
Disclosures:
Diamond Equity Research LLC is being compensated by Zhibao Technology Inc. for producing research materials regarding Zhibao Technology Inc. and its securities. This compensation is meant to subsidize the high cost of creating the report and monitoring the security. However, the views in the report reflect those of Diamond Equity Research. All payments are received upfront and are billed for an annual research engagement paid upfront semiannualy. As of 04/17/25, the issuer had paid us $57,500 consisting of $22,500 ($22,480 after bank fees) for the initiation report and a minimum of one update note as part of the $35,000 annual contract (first six‑month installment, commenced April 10, 2024); $12,500 for the second six‑month installment of the first‑year term, paid October 10, 2024, covering a minimum of two additional update notes; and $22,500 for the first six‑month installment of the second‑year term. Diamond Equity Research LLC may also be compensated for non-research-related services, including presenting at Diamond Equity Research investment conferences, issuing press releases, and providing other additional services. The non-research-related service cost is dependent on the company but usually does not exceed $5,000. The issuer has not paid us for non-research-related services as of 04/17/2025. Issuers are not required to engage us for these additional services. Additional fees may have accrued since then. Although Diamond Equity Research company sponsored reports are based on publicly available information and although no investment recommendations are made within our company sponsored research reports, given the small capitalization nature of the companies we cover we have adopted an internal trading procedure around the public companies by whom we are engaged, with investors able to find such policy on our website public disclosures page. This report and press release do not consider individual circumstances and does not take into consideration individual investor preferences. Statements within this report may constitute forward-looking statements, these statements involve many risk factors and general uncertainties around the business, industry, and macroeconomic environment. Investors need to be aware of the high degree of risk in small capitalization equities including the complete loss of their investment. This report does not explicitly or implicitly affirm that the information contained within this document is accurate and/or comprehensive, and as such should not be relied on in such a capacity. All information contained within this report is subject to change without any formal or other notice provided. Investors can find various risk factors in the update report and in the respective financial filings for Zhibao Technology Inc. Please review update report attached for full disclosure page.
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