Cross-Border Link made a profit of more than 500 million yuan in the first half of the year, but is involved in nearly 200 lawsuits!

On August 31, the 2021 semi-annual report of Cross-border Tongbao E-Commerce Co., Ltd. ( hereinafter referred to as "Cross-border Tong") was released.

Previously, the 2021 semi-annual performance forecast released by Cross-border showed that the net profit attributable to shareholders of listed companies in the first half of 2021 was 450 million to 600 million yuan. At that time, many people were worried that it would turn from profit to huge loss like the 2020 annual report.

Suppliers still gather at GlobalE-Commerce's Shenzhen office from time to time to demand payment. After many unsuccessful visits, they hope that its parent company, Cross-Border Link, will come out to solve the problem. If Cross-Border Link continues to lose money, where will the suppliers go?

Net profit of RMB 500 million, a year-on-year increase of 106.80%

The financial report shows that in the first half of 2021, Cross-border Link achieved a total operating income of 550 million yuan . Among them, the cross-border export e-commerce business achieved an operating income of 2.3 billion yuan , a year-on-year decrease of 58.27% , and the cross-border import e-commerce business achieved an operating income of 3.1 billion yuan , a year-on-year decrease of 5.74%.

In the export business, the revenue of Cross-border Link's third-party platform and self-operated websites (including mobile terminals) both declined, of which the decline of self-operated websites was as high as 81.00% . The operating data of its main self-operated websites showed that compared with December 31, 2020 , on June 30, 2021, whether it was the average monthly number of active users, the average monthly visits, or the 90-day repurchase rate and the average monthly traffic conversion rate, there was a clear downward trend, and Global Easy Shopping even experienced a cliff-like decline.

In addition, the net profit attributable to shareholders of the listed company was 500 million yuan, a year-on-year increase of 106.80%. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was -30 million yuan, a year-on-year decrease of -113.14%, and the performance plummeted.

The details are as follows:

During the reporting period, the cross-border import e-commerce business subsidiary Youyi E-Commerce achieved operating income of 3.1 billion yuan, accounting for 56.89% of Cross-Border Link's operating income, an increase of 4.40% year-on-year, and net profit of 77 million yuan, a year-on-year decrease of 23.02%.

Cross-border e-commerce export business of Cross-border is operated by Global Easybuy, Saten and Paton. During the reporting period, Global Easybuy achieved operating income of RMB 200 million, accounting for 4.48% of Cross-border's operating income, a year-on-year decrease of 93.70%, and net profit of RMB -100 million, a year-on-year decrease of 242.97%. Saten achieved operating income of RMB 400 million, accounting for 7.34% of Cross-border's operating income, and net profit of RMB -1.8 million.

Since Paton has been sold, the statistical period of data is from January to April 2021 and the subsequent revenue is no longer included in Cross-border Link. During the reporting period, Paton achieved operating income of 1.7 billion yuan and net profit of 80 million yuan.

It is not difficult to see from the above that Global Easy Shopping suffered huge losses. The reasons for this, Cross-Border Link pointed out in its financial report, are mainly three: first, the capital chain has been tight in recent years, and a large number of business talents have been lost; second, there are huge arrears in various parties' expenses such as commodity procurement, logistics warehousing, etc. that are necessary for business operations; third, there is a lack of marketing and other expenses necessary for the development of the main sales independent stations and third-party platform businesses, which has led to a sharp decline in Global Easy Shopping's business.

Involved in nearly 200 lawsuits, cross-border communication is in trouble

As soon as the 2021 mid-year report of Cross-border Communication was released, it sparked heated discussions among netizens. Some netizens shouted that they should stop cheating people, while others said that they felt that they were going to fail after reading this financial report.

The reason why netizens reacted so strongly is not only the drastic change in last year's performance, but also the series of scandals in the past six months.

Industry insiders know that there have been many negative news about KJT and its subsidiaries in the past six months, including: *ST delisting warning, suppliers coming to demand payment, bankruptcy liquidation, and facing a large number of lawsuits.

In the 2021 interim report, Cross-Border Communications also disclosed some issues.

The financial report shows that in the first half of the year alone, nine directors and executives resigned, including directors Xi Zhimin and Zhang Bo, as well as Xu Jiadong, chairman of Global Easybuy, etc. And their resignations were all concentrated in just one month (April 27-May 28).

At the same time, because the disclosure content of the same matter in the 2020 performance forecast was quite different from that in the performance forecast revision announcement and the 2020 annual report, Xu Jiadong was also issued a warning letter as a regulatory measure and was recorded in the securities and futures market integrity file.

In addition, in the mid-year report, Cross-border Link also disclosed the litigation matters it faced. Among them, one major litigation matter was a contract dispute with Shenzhen Shen International Supply Chain Management Co., Ltd., a freight forwarder, involving an amount of more than 250 million yuan. It has been settled, but it will form an estimated liability.

There are also 153 other litigation matters (in the litigation period) involving sales, postal services, transportation, procurement, financial loans, sales contract disputes, etc. , with a total amount of more than 340 million yuan.

At the same time, Global Easy Shopping and its subsidiaries still have 24 labor disputes involving an amount of 2.6148 million yuan.

Profits depend on selling assets, does Cross-Border Link still have a future?

In fact, the problems faced by Cross-Border Link are not limited to this. In addition to lawsuits and the resignation of senior executives and directors, Cross-Border Link's profitability is still a big problem.

It can be seen from the 2021 interim report that the four subsidiaries of Cross-Border Link, Global Easy Buy and Sateng, all had negative net profits, while Youyi E-Commerce's net profit was only 77 million yuan, and Paton's net profit was 80 million yuan, which added up to only more than 150 million yuan.

Where did the 500 million net profit in the first half of the year come from? I think it is inseparable from the sale of assets.

The 2021 interim report shows that the more than 700 million yuan obtained from the sale of Pato accounted for as high as 106.90% of the total profit.

Simply put, the current profit of Cross-border Link comes from selling assets, and its main business is negative. To put it nicely, it is investment income, and to put it bluntly, it is selling assets. You know, this business is not sustainable. If the advantageous assets continue to be lost, the future of this company cannot help but make people worry.

At present, Cross-border still holds advantageous assets including Youyi E-commerce and ZAFUL. It is still unknown whether these two assets can help Cross-border turn the tide. However, if Cross-border's performance still does not improve, there is a question that will once again attract industry attention: how to deal with the money owed by Global Easy Shopping to suppliers?

The problem of Global Easybuy's large amount of overdue payments to suppliers has been brewing in the industry for quite some time. Now and then, suppliers still gather at Global Easybuy or ZAFUL's office in Shenzhen to ask for payment. Cross-border E-Commerce has also stated that it has set up a special working group to clear Global Easybuy's debts to deal with Global Easybuy's supplier debts , but there has not been much progress so far.

At the beginning of last month, a supplier even submitted an "Application for Non-Bankruptcy of Shenzhen Global Easybuy E-Commerce Co., Ltd." to the local court in Shenzhen, requesting the court to rule to dismiss the bankruptcy application filed by Shenzhen Nanshan Branch of Industrial and Commercial Bank of China Co., Ltd. for Shenzhen Global Easybuy E-Commerce Co., Ltd. The reason was to avoid the failure to realize legitimate claims, and Shenzhen Global Easybuy E-Commerce Co., Ltd. did not meet the conditions that the corporate legal person could not repay the due debts, and the assets were insufficient to repay all debts or obviously lacked the ability to repay, so the court was requested not to declare bankruptcy.

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