FAST NEWS: Zibuyu’s profit skyrockets on higher revenue, cost cuts
The Latest: Cross-border e-commerce trader Zibuyu Group Ltd. (2420.HK) said Thursday it expects to report a net profit of 87 million yuan ($12 million) to 97 million yuan for the first half of 2024, 7.4 times to 8.4 times higher than the year-ago period.
Looking Up: The profit growth owed to strong revenue growth, coupled with cost cutting measures such as inventory reduction and adjustment of the company’s talent structure.
Take Note: The big first-half profit surge was made possible by a low base in the year-ago period. The latest profit still trails the company’s first-half earnings of 114 million yuan in 2021.
Digging Deeper: Founded in 2011, Zibuyu started as a seller of women’s clothing on Alibaba’s (BABA.US; 9988.HK) popular Tmall online marketplace. It shifted its focus to cross-border e-commerce in 2014, targeting buyers in Europe and America, mostly using third-party e-commerce platforms such as Amazon (AMZN.US), Wish and eBay (EBAY.US). Since then it has grown into one of China’s largest cross-border e-commerce companies. The company was listed on the Hong Kong Stock Exchange in 2022, but swung to the red the following year, mainly due to losses related to inventory provisioning, pressure on sales, and increased employee costs.
Market Reaction: Zibuyu’s shares showed muted reaction in Friday morning trade, closing unchanged at HK$4.01 by the midday break. The stock now trades in the middle of its 52-week range.
Translation by A. Au
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