Chen Youliang might be a Beggar's Sect elder, but he was not very strong. His main strengths were in his intellect and his methods. Happy was not at all wary of him.
However, what made Happy concerned was that Chen Youliang had entered Spirit Snake Island multiple times for Dragon Saber. He used all sorts of traps to kill Xie Xun, but in the end, Dragon Saber landed into Happy's hands.
Chen Youliang might have come up to the arena on behalf of Huang Rong to force him to use Eighteen Dragon Subduing Palm, and he might also have the intention to ask him about Dragon Saber's whereabouts.
Chen Youliang landed on the arena while dressed in rags, and he wrapped his fist in his palm to greet Happy in a very friendly manner. "Young Swordsman Happy, your name has spread far and wide among those in the righteous path because of the battle at Eternal Peace Temple! I admire you greatly, and it is my honor that I am given the chance to fight against you today."