Divide 100 million in cash! Xiamen sells generous dividends, and someone takes away nearly 20 million

At the end of the year, year-end bonuses are undoubtedly one of the hottest topics. However, this year, due to the unsatisfactory revenue of many sellers, the atmosphere of year-end bonuses has faded a lot. However, some confident sellers still generously distributed their profits.

Recently, Xiamen cross-border retailer Jihong Co., Ltd. announced that it would pay out 100 million yuan in cash as dividends to shareholders.

Generously took out 100 million in cash dividends, and the actual controller took nearly 20 million

On the evening of January 4, Jihong Co., Ltd. issued an announcement stating that based on the company's actual operating conditions and long-term interests, and considering reasonable returns to the majority of investors, the company plans to launch a special dividend plan to return to shareholders in the first three quarters of 2022. That is, based on the total share capital of 378,409,288 shares on the day the board of directors deliberates and approves the special dividend plan, a cash dividend of 2.63 yuan (including tax) per 10 shares will be paid to all shareholders, for a total cash dividend of 99,521,642.74 yuan.

The reason why Jihong shares are so generous in distributing money comes from the two words "rich"! The announcement pointed out that according to the financial statements for the first three quarters of 2022 (unaudited), the net profit attributable to the parent company's shareholders in the company 's consolidated statements from January to September 2022 was 198,694,830.18 yuan. As of September 30, 2022, the company's consolidated statement of distributable profit was 1520,596,666.28 yuan, and the parent company's statement of distributable profit was 433,575,670.31 yuan.

The distributable profits are as high as over 1 billion, so taking out 100 million for dividends is really nothing.

In this regard, Jihong Co., Ltd. also clearly stated in the announcement that the formulation of this dividend plan is in line with the company's business operations, sustainable profitability and future development plans. It is to provide investors with moderate returns on the basis of ensuring the company's normal operations and sustainable development, and it fully considers the interests and reasonable demands of the majority of investors.

So, who benefits the most from Jihong's large dividend? Of course, whoever holds more shares will get more money. From the equity penetration chart of Qichacha, it can be seen that Zhuang Hao, the actual controller/major shareholder of Jihong, currently holds 19.06% (number of shares: 72,129,382) of Jihong shares. Therefore, in this dividend, she can get about 18.97 million yuan from the cash dividend of 99,521,642.74 yuan.

At the same time, Jihong Co., Ltd. also launched a "warm east" activity of "giving back to shareholders by purchasing Guishi products at a discount and giving away a New Year gift package". Jihong's official WeChat account shows that from 18:00 on January 4, 2023 to 18:00 on February 20, 2023, all shareholders who purchase Guishi brand products at a preferential price will receive a gift package: limited overseas digital collections, limited edition digital sauce wine blockchain certificates, and white wine given in the month of their birthday, etc.

Since 2016, Jihong shares has distributed dividends seven times, with a total cash distribution of 286.7 million yuan.

Although Jihong shares stated that it has abundant assets for dividends, it also has to face a reality, that is, the profits of its main cross-border e-commerce business have been declining in recent years.

Cross-border e-commerce profits are declining, and the main business is in a dilemma

Jihong shares' semi-annual report shows that in the first half of 2022, the company's total revenue was 2.621 billion yuan, of which ToC Internet marketing cross-border e-commerce revenue was 1.447 billion yuan, accounting for about 55%. This shows that cross-border e-commerce has become Jihong shares' well-deserved first main business.

However, some media reported that from 2020 to the present, the gross profit margin of Jihong Co., Ltd.'s cross-border e-commerce has dropped from 77.06% to 60%, and once fell below 59% during the period; the net profit margin has dropped from 14.32% to 4.27% in the middle of this year.

There are many reasons leading to this result.

First, costs continue to rise. As we all know, logistics costs and advertising costs account for a very large proportion of the costs of cross-border e-commerce sellers, and these two costs have skyrocketed in 2020 and 2021. Under the influence of these two costs, Jihong Co., Ltd.'s cross-border e-commerce net profit in the fourth quarter of 2021 even suffered its first loss.

In particular, the continuous increase in advertising costs has brought a lot of pressure to Jihong Co., Ltd. Jihong Co., Ltd.'s cross-border e-commerce adopts the "goods find people" model, that is, using AI algorithms to analyze overseas markets, draw user portraits, and conduct intelligent product selection and accurate customer positioning. It accurately pushes independent station advertisements on foreign social networking platforms such as Meta (formerly Facebook), Google, Line, YouTube, Instagram, TikTok, etc. for online B2C sales.

Single-page e-commerce cannot make repeat purchases, and the cost of acquiring a single customer is already high. However, under this circumstance, market competition continues to intensify. In 2020 and 2021, a large number of people poured into the industry with the purpose of "making money", which put a sharp increase in pressure on old sellers in the track. In order to obtain more traffic, Jihong shares can only increase advertising investment, which is a big squeeze on profits.

In addition, the implementation of Apple's privacy agreement has dealt a heavy blow to independent website sellers such as Jihong. Under the privacy agreement, the accuracy of advertising has plummeted, and the conversion rate has been greatly reduced. Compared with before, the same input and output have become much less, which has also seriously eroded the profits in recent years.

Second, the exchange loss is serious. In the past two years, the US dollar exchange rate has been terrible, cross-border e-commerce sellers have suffered heavy losses, and their profits have been greatly "eaten up". In 2021 alone, Jihong shares' exchange losses amounted to 17 million yuan.

However, Jihong Co., Ltd. is obviously very aware of the difficulties it faces, as can be seen from its continuous cross-border investment.

Frequent cross-border layout to find new profit growth points

Unlike many cross-border e-commerce sellers, Jihong shares did not vertically cultivate or horizontally develop diversified businesses in the cross-border e-commerce industry, but chose to cross-border to find a way out. In recent years, its fields involved include liquor, metaverse, blockchain, cloud computing, and e-cigarettes.

Just recently, Jihong Co., Ltd. invested in and established a new digital technology company in Shenzhen. According to the Qichacha APP, Jiketuo (Shenzhen) Digital Technology Co., Ltd., jointly held by Jihong Co., Ltd. and Dou Jian , was established recently with a registered capital of RMB 10 million. Its business scope includes: software development; big data services; Internet data services; brand management, etc.

Not long ago on May 20, Jihong Co., Ltd. also disclosed in the "Announcement on Participation in the Establishment of an Equity Investment Fund" that the company and Xiamen SMG Sunac Investment Management Co., Ltd. and Xiamen SMG Investment Management Co., Ltd. jointly invested in the establishment of Xiamen Luyu Yuanjie Cultural Industry Equity Investment Partnership (Limited Partnership).

The scale of this equity investment fund is RMB 10.1 million. Jihong shares, as a limited partner, invested RMB 8.5 million of its own funds, holding 84.16% of the shares. This equity investment fund intends to invest 100% in unlisted companies related to the early and mid-term metaverse industry chain, including but not limited to VR/AR application field companies, virtual digital human production companies, digital collection issuance/trading platforms, etc.

However, what impressed cross-border e-commerce sellers the most was probably its layout in the liquor industry. On June 28, 2021, Jihong Co., Ltd. suddenly issued an announcement stating that the company intends to acquire no less than 70% of Diaotai Gong’s equity through transactions such as the transfer of equity from the original shareholders and capital increase in Guizhou Diaotai Gong Liquor Co., Ltd. (hereinafter referred to as “Diaotai Gong”), and Diaotai Gong will be included in the company’s consolidated financial statements.

Jihong Co., Ltd. stated that this acquisition will use Gujiao Liquor Industry as a starting point to enter the field of sauce-flavored liquor, and cooperate with existing channels to expand the company's business scope, in an attempt to create new profit growth points and enhance the company's overall competitiveness and sustainable development capabilities.

However, many people have interpreted Jihong's series of cross-border actions as "riding on the hype", believing that it is not doing its job properly. Whether these business layouts have stimulated profit growth can be found in its financial report disclosed on March 25. However, according to the forecast of Great Wall Securities, Jihong's net profit will be on the rise in the next few years. From 2022 to 2024, its net profit attributable to the parent company will be 267 million yuan, 343 million yuan, and 454 million yuan respectively.

Jihong Shares