Losses of over 30 million in half a year! The company is in decline after selling its products in bulk

The products are selling well but are still stuck in the quagmire of "loss"...

Recently, cross-border listed sellers have released their first-half financial reports, and the former popular seller Youkeshu is no exception. As we all know, since the Amazon account ban in 2021, Youkeshu has suffered a heavy blow, and its revenue has directly fallen from rising steadily at the beginning to a member of the loss-making army.

Several years have passed, but Youkeshu has not yet seen its turnaround. In the first half of this year, the revenue of its main e-commerce business still declined year-on-year, and its overall operating performance failed to turn losses into profits.

A loss of 30.87 million yuan in half a year! The once popular product is now in decline

Youkeshu's financial report shows that its revenue in the first half of 2024 was 228 million yuan, down 3.04% year-on-year, and its net profit was negative 30.87 million yuan. Compared with the negative net profit of 59.29 million yuan in the same period last year, the net profit increased by as much as 47.9%.

It can be found that Youkeshu’s loss situation has improved, but it is still in a loss-making state, and the amount of loss has reached tens of millions.

Cross-border e-commerce export business is the only core business of Youkeshu at present, and its main operating entities include Shenzhen Youkeshu and Changsha Youkeshu.

During the reporting period, the sales of Youkeshu's core product categories are as follows:

Youkeshu's main products include clothing, shoes and bags, home building materials and household goods, electronic products, mobile communications and game accessories, sporting goods, toys, health products and daily necessities, etc., with a total of 2.13676 million orders sold. Among them, clothing, shoes and bags, electronic products, mobile communications and game accessories are the main sources of revenue, with revenues of 48.7817 million yuan and 44.1229 million yuan respectively.

Overall, the average customer spending on Youkeshu's products is not high, at 85.07 yuan. The prices of clothing, shoes, bags, model aircraft accessories, and auto parts are relatively high, at 95.43 yuan and 92.1 yuan respectively.

Youkeshu's main business model is the B2C model. The company relies on third-party comprehensive e-commerce platforms such as Amazon, AliExpress, and Shopee to sell cost-effective products made in China to overseas consumers.

During the reporting period, in the cross-border e-commerce field, Youkeshu 's revenue from online channels (Shopee, Amazon, AliExpress and other platforms) was 140 million yuan, accounting for 77.27% of the cross-border e-commerce business revenue. Among them, Shopee's half-year revenue was as high as 51.75 million yuan, accounting for 28.47%, and Amazon's half-year revenue was 38.77 million yuan, accounting for 21.33%.

The Shopee platform has replaced Amazon and become the main source of revenue for Youkeshu. As we all know, Youkeshu was once a well-known Amazon seller. In 2019, its Amazon revenue reached 1.088 billion yuan, and in 2020, its revenue increased by 40.26% year-on-year to 1.525 billion yuan.

However, since the Amazon ban in 2021, Youkeshu's business on the Amazon platform has begun to decline, with revenue falling from 1.525 billion yuan to 521 million yuan, a drop of 65.86%. In 2022 and 2023, the revenue on the Amazon platform was 202 million yuan and 106 million yuan respectively, which can be said to be a continuous decline.

After Youkeshu suffered a heavy blow on the Amazon platform, the overall revenue and net profit of Youkeshu's parent company also declined sharply. The revenue in 2020, 2021, 2022, and 2023 was 5.027 billion, 1.764 billion, 774 million, and 464 million yuan, respectively, and the net profit was negative 871 million, negative 2.7 billion, negative 367 million, and negative 490 million, respectively.

In the four years from 2020 to 2023, Youkeshu's net profit attributable to the parent was approximately negative 4.399 billion yuan, which can be said to be a terrible loss.

Facing the risk of delisting, Youkeshu Bank’s loans are still overdue!

Although Youkeshu’s losses have narrowed in the first half of this year, considering all factors, the pressure that Youkeshu will face in the future is still quite great.

In 2023, the audited net assets of Youkeshu at the end of the period were negative, and Youkeshu’s stock trading was subject to a delisting risk warning, and the stock name was prefixed with “*ST”. If any of the circumstances described in Article 10.3.10 of the Listing Rules occurs in 2024, the company’s stock will be delisted.

As of June 30, 2024, the owner's equity of Youkeshu Company is -436.3915 million yuan, current liabilities are 546.2814 million yuan higher than current assets, and bank loans are overdue. These situations may cause the company to no longer have the ability to continue operations.

It is understood that as of the first quarter of this year, the remaining principal amount of Youkeshu's bank loans (including guarantees) was 306 million yuan, all of which have been overdue.

Due to adverse effects such as historical debts and funding pressure, Youkeshu's cross-border e-commerce business has not recovered as expected. In order to improve its sustainable operating capabilities, Youkeshu has clarified its next operational goals.

The first thing is to adjust the direction of platform development. While maintaining the business scale of platforms such as AliExpress, Shopee, and Lazada, we will deepen our presence on the Amazon platform and expand our business scale with the help of traffic from emerging platforms such as Temu, the overseas version of Pinduoduo.

It is worth noting that Youkeshu is also actively cooperating with the court and the administrator to carry out pre-bankruptcy reorganization work, seeking to resolve overdue debt problems with creditors through bankruptcy reorganization.

Yienjun learned that Youkeshu has been applied for bankruptcy reorganization by its creditors.

On August 15, 2024, Youkeshu stated that the company intends to sign a "Common Benefit Debt Financing Agreement" with Beijing Jiurong Consulting Partnership (Limited Partnership) (hereinafter referred to as "Beijing Jiurong") during the pre-reorganization period, and Beijing Jiurong will provide the company with a common benefit debt loan of no more than RMB 50 million (including the principal). It is used to ensure the stability of the company's daily operations during the (pre) reorganization period and the smooth progress of the (pre) reorganization work. The loan period ends on December 31, 2024, the annual interest rate of the loan is not higher than 10%, and the principal and interest will be repaid in one lump sum on the maturity date of the loan (early repayment is possible).

The loan will be used to pay for necessary expenses such as employee wages and social security, water and electricity bills, and material payments to maintain production and operations during the pre-reorganization period and during the reorganization period of Youkeshu, as well as reorganization expenses.

At present, the company's pre-reorganization work is being carried out in an orderly manner.

However, even if Youkeshu officially enters the bankruptcy reorganization procedure, there is still a risk of being declared bankrupt and liquidated due to the failure of reorganization. If the company is declared bankrupt due to the failure of reorganization, according to relevant regulations, the company's shares will be delisted.

Youkeshu, as one of the "Four Young Masters of South China City", took the route of "backdoor listing". Its parent company is Tianze Information. As Youkeshu's cross-border e-commerce business developed rapidly, its subsidiary was in the limelight. In 2022, Tianze Information directly changed its company name to Youkeshu, and the actual controller of the company had long become Xiao Siqing, the founder of Youkeshu.

Today, Youkeshu is on the verge of delisting, which is a pity. The cruelty of cross-border e-commerce lies in that when it wants to eliminate a seller, even a well-known seller cannot avoid it. In fact, not only Youkeshu, a big seller, but also many former cross-border kings are gradually moving away from the center of the topic and returning to the ordinary.

However, there is no shortage of topics to talk about in the cross-border circle. The era of distribution has withdrawn from the "C-position stage" only because the new era of cross-border e-commerce has arrived. Now, the new "benefit myth" is still hot.

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