FAST NEWS: Supply Chain Financing Disruptions Drag Down Linklogis Profit

The latest: Supply chain financing solutions provider Linklogis Inc (9959.HK) announced Thursday that it expects to post an adjusted profit of 125 million yuan ($18.5 million) to 130 million yuan for the first half of the year, down 14.5% to 17.8% from 152 million yuan in the same period last year.

Looking up: The company’s gross profit and gross margin increased in the first half, benefiting from optimization of its product structure. The group has also started to optimize its organizational structure and improve operational efficiency to control operating expenses, with results expected to take effect in the second half of the year.

Take Note: Several Covid-19 outbreaks in major cities across China since March have disrupted regional supply chains, affecting supply chain financing activity and reducing demand for Linklogis’ services, dragging down its revenue in the first half of the year.

Digging Deeper: Founded in 2016, Linklogis has become a leading supply chain financial technology solutions provider in China and listed on the Hong Kong Stock Exchange last April. It helps other companies automate their supply chain financing processes using artificial intelligence, blockchain and big data. One example sees it use large enterprises’ credit to enable their suppliers to transfer accounts receivable to financial institutions at a discount, and then obtain financing through the financial institutions that allows those suppliers to receive cash advances on better terms than they would get on their own. The business model is in line with the Chinese State Council’s request to support the development of supply chain finance to reduce costs and improve services for enterprises.

Market Reaction: After falling slightly in early Friday trade, Linklogis recovered its losses and closed up 1.4% at HK$5.17 at the midday break, close to its 52-week low.

Translation by Jony Ho

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