Performance changes! Net profit in the first quarter of the year was nearly halved

Net profit fell 39.2% year-on-year, and the cross-border e-commerce business of Dama was under pressure

Recently, the listed company Jihong Co., Ltd. announced its first quarter financial report for 2024. Data showed that the company achieved revenue of 1.324 billion yuan in 2024Q1, a year-on-year decrease of 3.7%, and net profit attributable to shareholders of 43 million yuan, a year-on-year decrease of 39.2%, and net profit attributable to shareholders of 38 million yuan, a year-on-year decrease of 41%.

It is understood that Jihong Co., Ltd. was established on December 24, 2003 and is headquartered in Xiamen, Fujian. Jihong Co., Ltd. defines itself as a dual-wheel drive enterprise based on technology, innovation and digital empowerment, with cross-border social e-commerce business and paper fast-moving consumer goods packaging solution business.

From a business perspective, the decline in revenue from the company's cross-border e-commerce business dragged down the company's overall revenue level. In its cross-border e-commerce business segment, Jihong shares adopts a multi-category and multi-brand operation model, covering multiple categories such as household goods, clothing, and electronic products. Its main brands include underwear, bicycles, parasols, pet supplies, etc.

Jihong shares said that the operating income for this period decreased by 3.75% compared with the same period last year, mainly due to the year-on-year increase in the packaging business income and the decrease in the e-commerce business income compared with the same period last year. The net profit attributable to the parent company's shareholders for this period decreased by 39.22% compared with the same period last year, mainly due to the decrease in the net profit of the cross-border e-commerce business for this period and the impact of the amortization of share-based payments of 10.8496 million yuan in this period, which increased by 6.1602 million yuan year-on-year.

Coincidentally, the cross-border blockbuster Lechuang also recently announced its first quarter performance report for 2024. Among them, the net profit was 79.851 million yuan, a year-on-year decrease of 79.89%. However, although the net profit declined significantly year-on-year, Lechuang’s secretary explained that the main reason for the decline in the company’s net profit in the first quarter of 2024 was that the disposal income of the overseas warehouses sold in the first quarter of 2023 was relatively large, and the base was high, which led to a year-on-year decrease of 79.89% in the net profit in the first quarter of this year. However, this is a non-recurring gain or loss. The net profit after deducting non-recurring gains and losses in the first quarter increased by 100.08% year-on-year.

In contrast, Jihong shares did not disclose the specific reasons for the decline in net profit in the first quarter. Some time ago, Jihong submitted a prospectus to the Hong Kong Stock Exchange, planning to list on the main board of the Hong Kong stock market. If the listing is successful, Jihong shares will become the first cross-border e-commerce company to complete A+H listing.

Some industry insiders speculate that Jihong shares may be playing a big game in the capital market. About a month before the release of the first quarter report, Jihong shares had just released a brilliant annual financial report. Its 2023 annual report showed that the company's total operating income last year was 6.695 billion yuan, a year-on-year increase of 24.53%, and the net profit attributable to shareholders of listed companies was 345 million yuan, a year-on-year increase of 87.57%.

However, this news was not reflected in the share price of Jihong Shares. Correspondingly, the sharp decline in net profit in the first quarter did not cause a major impact on the share price of Jihong Shares. Instead, there were voices that the bad news had been exhausted and that the subsequent development of the share price was optimistic.

Regardless of how things develop in the future, the decline in Jihong's net profit in the first quarter is a fact that has already happened, but this does not represent the overall situation of the cross-border e-commerce industry. As the saying goes, some are happy while others are sad, and many cross-border sellers have produced a gratifying first quarter report card.

Net profit surges 31%, Zhejiang's big sellers venture into cross-border circles

Recently, Henglin Co., Ltd., a home furnishing giant from Huzhou, Zhejiang, also announced its first quarter financial report for 2024. The report showed that the company achieved operating income of 2.354 billion yuan in the first quarter, a year-on-year increase of 38.98%; net profit reached 103 million yuan, a year-on-year increase of 31.20%, of which cross-border e-commerce business has become the engine of its rapid growth.

It is understood that Henglin Home Furnishing Co., Ltd. was established in 1998 and listed on the A-share main board in 2017. It was not until 2019 that Henglin Co., Ltd. began to get involved in cross-border e-commerce business, mainly selling its own brand products on platforms such as Amazon, and later gradually expanded to multiple emerging platforms such as TikTok and Temu.

It is worth noting that although Henglin Co., Ltd. has not been involved in the cross-border e-commerce field for a long time, the related business has gradually become one of its core sources of income. On third-party e-commerce platforms such as Amazon, Henglin's own brand Nouhaus has created many popular products, one of which has achieved more than 6,000 reviews, and its monthly sales volume far exceeds the record of competing products.

On emerging platforms such as TikTok, Henglin has also achieved impressive results in a short period of time. According to its 2023 financial report, Henglin achieved the top sales in the home furnishing category on the TikTok platform in 2023, and it took less than a year to achieve this result.

Public information shows that since 2023, Henglin Co., Ltd. has begun to try to place advertisements on TikTok and direct consumers to its stores in this way. Through the powerful content marketing algorithm of the TikTok platform and the product application scenarios designed by the team, Henglin Co., Ltd. can quickly promote its products to consumers, which is also the secret of its rapid rise to the top of the category on TikTok.

In recent years, Henglin has continuously expanded its cross-border e-commerce team and insisted on taking the branding and specialization route, creating a number of very competitive products in vertical categories. In addition, Henglin is also increasing its strategic layout of multi-channel sales to reduce its dependence on Amazon's single platform.

At present, in addition to the Amazon platform, the sales share of Henglin Co., Ltd.'s brand independent sites and channels such as TikTok has begun to gradually increase. The monthly visits to its NOUHAUS independent site began to increase in 2021, and has now become a major source of revenue for NOUHAUS.

In addition to Henglin Shares, several cross-border retailers have also seen encouraging growth in net profit in the first quarter: Zhiou Technology's net profit attributable to shareholders of the parent company in the first quarter of 2024 reached 100.5 million yuan, a year-on-year increase of 15.06%; Daotong Technology's net profit attributable to shareholders of the parent company in the first quarter was 124.8 million yuan, a year-on-year increase of 73.34%; Jiemite's net profit in the first quarter was 9.019 million yuan, a year-on-year increase of 196.29%.

As the industry gradually warms up, domestic policies have also begun to lean towards sellers. On March 26, 2024, the Ministry of Commerce stated that it will issue implementation opinions on supporting the development of cross-border e-commerce as soon as possible, accelerate the construction of an industrial chain and ecosystem that adapts to the needs of cross-border e-commerce development, and promote the high-quality development of cross-border e-commerce.

It is only May now, and it is not yet the traditional peak season for the industry. In the second half of this year, more sellers may announce the good news of double growth in revenue and profits.

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