Shenzhen Stock Exchange suffered huge losses and was delisted?

1/12 of 2024 has passed. In the past month, sellers in the cross-border circle have been busy clearing their revenue and profits from the previous year.

Is the data optimistic? Judging from the feedback from sellers on various social media platforms, it may not be:

“——Toiled hard for 365 days, sold for nothing;

——Revenue seems to be up, but when I look at the profit, it’s only one-tenth of the previous year’s.”

A number of small and medium-sized sellers are suffering from a lack of hope for net profit, and the performance forecasts of listed big sellers also show the difficulties of the market. Except for some super big sellers such as Huakai Yibai, most of the big sellers that have announced their 2023 performance forecasts have issued announcements of expected performance reductions, such as Kuaijietong, Huabao New Energy, and Xinghui Shares. Youkeshu, which has suffered losses of over 100 million yuan, is even at risk of delisting.

Youkeshu loses 360 million yuan a year and may be delisted

On January 29, Youkeshu released its 2023 annual performance forecast . In this report, we can see that in the past year, Youkeshu has not been able to turn losses into profits, with a net loss of 270 million to 360 million yuan . Although it is a decrease compared to the loss of 367 million yuan in 2022 , it is not much.

If the net profit after deducting non-recurring gains and losses is calculated, the loss range is also between 270 million yuan and 360 million yuan . In terms of revenue, Youkeshu only achieved 450 million yuan to 500 million yuan last year , and it can reach 774 million yuan in 2022 .

Not only has profitability declined, but sales capabilities also seem to be weaker than before.

Youkeshu attributed the losses to three aspects: 1. The company conducted preliminary impairment tests on various assets ; 2. Internal factors such as historical debt and financial pressure , and external adverse influences such as increasingly fierce competition in the cross-border e-commerce industry ; 3. Non-core businesses such as Internet of Vehicles operations and software services are still losing money.

At the same time as this performance loss announcement was issued, Youkeshu also issued a delisting risk warning announcement.

In the preliminary calculation of net assets at the end of 2023 , Youkeshu initially estimated that the net assets attributable to shareholders of the listed company at the end of 2023 would be approximately -287 million yuan to -197 million yuan . By April 26, 2024 ( the expected disclosure date of Youkeshu's 2023 annual report ), according to relevant regulations, its stock trading will be subject to a delisting risk warning by the Shenzhen Stock Exchange (with the stock abbreviation prefixed with " *ST " ).

However, it is not new for Youkeshu to be labeled as a "ST". As early as last year, Youkeshu was labeled as a "ST" because its net profit before and after deducting non-recurring gains and losses in the last three fiscal years was negative, and the 2022 audit report showed that there was uncertainty about the company's ability to continue operating .

But the situation is different this year. 2023 is the fourth consecutive year of Youkeshu's losses, and the possibility of passive delisting has greatly increased.

*Note: Generally, there will be three risk warnings from ST to delisting. According to the regulations of the China Securities Regulatory Commission, listed companies will issue a "Delisting Risk Warning Announcement" before delisting. It takes about 2 years for the stock to be suspended from listing. The listed company will announce the annual report of the third year of loss. Stocks that have been losing money for two consecutive years will have " ST " added before their names , and stocks that have been losing money for three consecutive years will have " *ST " added before their names. If the conditions for resuming listing are still not met within the prescribed period, they will be delisted.

The pace of turning losses into profits has stagnated, and Youkeshu is losing more during the peak season

Although the losses in 2022 and 2023 are significantly reduced compared to 2021 and 2020, Youkeshu’s self-rescue seems to have reached a bottleneck.

In 2022, Youkeshu suffered a loss of 367 million yuan, and now it is expected to lose 360 ​​million yuan in 2023, which means that the loss margin has not shrunk.

Judging from the financial data for the first three quarters of last year, Youkeshu's revenue in the first half of the year was 235 million yuan, a year-on-year decrease of 44.40%, and its net loss reached 59.2862 million yuan, a year-on-year decrease of 29.28% . At this time, it was believed that the strategy of reducing losses was still in effect .

But looking at the third quarter, Youkeshu's losses exceeded 80 million yuan in the third quarter alone . The loss in just three months was more than double that in six months . In the first nine months, Youkeshu lost 143 million yuan .

The losses in the fourth quarter were even greater. According to the performance forecast, Youkeshu lost 127 million to 217 million yuan in the fourth quarter alone . It should have made a lot of money to cover the costs during the traditional peak season, but it lost more unexpectedly.

In 2022, Youkeshu's losses (367 million yuan) decreased by 80% compared with 2021 (2.678 billion yuan). Some industry insiders believe that this is a signal that it has reached a turning point in its performance. Out of confidence in its size and past profitability, many people believe that Youkeshu will turn losses into profits in 2023 and return to the top position in the cross-border industry.

But as of now, these speculations have not become reality.

Since the wave of account bans in 2021, Youkeshu has been in a difficult situation of self-rescue, shrinking its business scale, changing its business strategy , and shifting its focus to multiple platforms. For example, in addition to deepening its presence on platforms such as Amzaon and AliExpress, it has also actively developed Shopee, Lazada, etc. "Multiple platforms in parallel" is the lesson learned from Amazon's wave of account bans.

In the first half of last year , Youkeshu’s sales on Amazon reached 49.8902 million yuan, and its revenue on Shopee reached 51.4793 million yuan, making it the third-party platform with the highest revenue .

The above strategies have brought certain results to Youkeshu, but now they seem to have failed. In terms of turning losses into profits, Youkeshu may need to find a new strategy. From the perspective of multiple platforms, Youkeshu's revenue has declined compared to 2022, regardless of which platform, and Amazon alone has fallen by 54.81% compared to the same period last year .

Losses started again, Cross-border Links struggles in the mud

Like Youkeshu, the "cross-border big brother" - Cross-border Link is also trying hard to climb out of the mud.

On January 31, Cross-Border Link also released its 2023 annual performance forecast. Its operating performance was in a loss-making state, with a net profit loss ranging from 8 million to 15 million yuan , which is much less than Youkeshu, but it does not seem to be news worth celebrating.

Since 2019, Cross-Border Link's revenue and net profit have been falling:

In 2018, the company had revenue of 21.5 billion yuan and a net profit of 623 million yuan;

In 2019, the company had revenue of 17.9 billion yuan and a net loss of 2.7 billion yuan;

In 2020, the company had revenue of 16.4 billion yuan and a net loss of 2 billion yuan;

In 2021, the company turned losses into profits, with a net profit of more than 673 million yuan;

In 2022, net profit fell again to 17.84 million yuan;

The loss in 2023 will be between 8 million and 15 million yuan .

It used to be a bright spot, thriving in the cross-border circle, but now it is only a pity to talk about it. After two consecutive years of losses of more than 2 billion yuan, Cross-border Communication was labeled "ST". It was not until 2022 that it turned losses into profits and successfully removed the label, but it suffered losses again last year. This fluctuating data seems to indicate that Cross-border Communication's profitability is declining.

In the first half of last year, Cross-border Link made a net profit of 6.18 million yuan, but in the third quarter, it lost 20.79 million yuan in just three months . According to these confirmed financial data, Cross-border Link "turned the tide" in the traditional overseas year-end sales peak season and narrowed its losses a little.

In the year 2023, which has already ended , neither Youkeshu nor Kuaishou has handed in a passing report card. In 2024, how will they turn the situation around and get out of the quagmire? Where will the fate of this pair of brothers in distress go?

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