Cogobuy Announces 2014 Fourth Quarter and Annual Results Summary

HONG KONG, March 17, 2015 /PRNewswire/ —

Highlights for the twelve months ended December 31, 2014:

  • The Group’s Gross Merchandise Value ("GMV") was RMB8.4 billion, an increase of 115.4% over the year ended December 31, 2013 year-on-year ("YoY")
  • Non-GAAP profit attributable to equity shareholders of the Company was approximately RMB267.1 million, up 188.8% YoY;
  • Online transaction customers as at December 31, 2014 reached 5,050, up 83.4% YoY.

A leading e-commerce company dedicated to serving China’s electronics manufacturing industry, Cogobuy Group ("Cogobuy" or the "Company", stock code: 400.HK; with its subsidiaries (the ”Group”)) operates the largest transaction-based e-commerce platform for IC and other electronic components in China. Cogobuy is pleased to announce its unaudited results for the fourth quarter of 2014 and audited consolidated results for the year ended December 31, 2014 (the "Period").

Financial Highlights of 2014 Full Year

For the twelve months ended December 31, 2014, the total GMV of the Company’s operations was RMB8.4 billion, representing an increase of 115.4% YoY; with 81.7% derived from direct sales, 15.1% from online marketplace platforms, and 3.2% from the new supply-chain financing business line.

For the twelve months ended December 31, 2014, the Company achieved robust growth driven by increasing numbers of new customers, mainly from small and medium enterprises ("SMEs") as well as average GMV per customer growth. The number of online transaction customers reached 5,050 as at December 31, 2014, of which approximately 2.6% are blue chip customers and 97.4% are SME customers. This represents an increase of 83.4% as compared to that of 2,753 as at December 31, 2013. As at December 31, 2014, the number of registered customers reached 31,528, compare to 19,089 as at December 31, 2013.

For the twelve months ended December 31, 2014, the Company’s total revenue increased 183.3% to RMB6,848 million, of which RMB6,819.7 million from direct sales and RMB28.7 million from our marketplace and supply chain financing business. In total, 51.2% of the GMV was derived from blue chip customers while 48.8% are derived from SME customers. Profit attributable to equity shareholders of the Company grew significantly to approximately RMB194.1 million, representing an increase of 136.4% YoY. Gross profit margin was 7.8%. Non-GAAP profit attributable to equity shareholders of the Company was approximately RMB267.1 million, representing an increase of 188.8% YoY.

Cash and bank balances (including pledged deposits) amounted to RMB1,964.9 million as at December 31, 2014.

Financial Highlights of the Fourth Quarter of 2014

For the three months ended December 31, 2014, the total GMV of the Company’s operations was RMB2,607.9 million, representing an increase of 70.2% YoY; with 78.3% derived from direct sales, 13.7% from its online marketplace platforms, and 8.0% from the new supply-chain financing business line. In total, 54.2% of the GMV was derived from blue chip customers while 45.8% was derived from SME customers.

For the three months ended December 31, 2014, the Company recorded a total revenue of RMB2,053.0 million, representing an increase of 102.9% YoY. Net profit attributable to equity shareholders of the Company grew significantly to approximately RMB72.5 million, representing an increase of 98.6% YoY. Gross margin was 7.9%. Non-GAAP profit attributable to equity shareholders of the Company was approximately RMB81.6 million, representing an increase of 89.3% YoY. Non-GAAP operating expenses were RMB66.7 million. Non-GAAP operating margin was 4.7%. Effective tax rate of the Group was 9.5%.

Cogobuy generated positive operating cash flow of approximately RMB3.9 million for the three months ended December 31, 2014. Cash and cash equivalents and pledged deposits amounted to RMB 1,964.9 million as at December 31, 2014. Inventory turnover days and account receivables days were 25.8 and 32.9 respectively.

Business Highlights

New Supply Chain Financing Business

  • Cogobuy commenced a new supply chain financing business in September 2014. The Company provides credit to its quality customers based on their real time sales orders data. Such loan the Company provided to its customers can only be used for procurement of IC components through Cogobuy. This data driven Internet financing model mainly targets SME customers who have difficulties obtaining loans from commercial banks in China in a timely manner; and
  • During the Fourth Quarter, GMV contributed by the provision of loans under supply chain financing business has reached RMB 208.8 million, accounted for approximately 8.0% of the total GMV of the Company’s operations.

INGDAN.com — a one-stop Internet of Things ("IoT") Innovative business

  • Followers of INGDAN hit 1 million mark, bringing fans economic benefit and power to Cogobuy’s business development. With a large number of INGDAN.com followers, Cogobuy not only helps hardware innovators link to supply chain providers but also promote their new products to target customers while developing their corporate brands. INGDAN creates a win-win situation for both upstream and downstream of the supply chain which creates a B2B2C closed-loop cycle;
  • INGDAN has recently implemented "INGDAN link" and "INGDAN Direct" services. "INGDAN link" connects intelligent hardware innovators with Online to Offline ("O2O") services while "INGDAN Direct" provides one-stop services for them. They both focus on supply chain services;
  • INGDAN cooperates with WeChat to hold first WeChat IoT Innovation Contest; and
  • INGDAN launched in the US to bring US and China IoT elites and innovators together to promote INGDAN as global platform for IoT innovations.

Others

  • Selected as a constituent of the following Hang Seng family of indexes, with effect from March 9, 2015; and
  • Selected as a constituent of the MSCI Global Small Cap Indexes – China Index, with effect from November 25, 2014.

OUTLOOK

Looking forward, Mr. Jeffrey Kang, CEO of Cogobuy Group, said: "In 2014, the total GMV of the Company showed a remarkable increase. Cogobuy’s innovative O2O business model develops huge customer pool and significantly reduces new customer acquisition costs. Therefore, we expect the strong growth driven by new customers to continue in 2015. Currently, we have approximately 80 thousand target customers and more than 30 thousand registered customers while only about 5% of the target customers have been converted into transaction customers. We see ample room of improving conversion ratio as we continue to expand our Stock Keeping Units (‘SKUs’) and other services."

"In the second half of 2014, we have launched the supply chain financing service. It has already contributed 8.0% to our GMV in Q4 2014 and we are looking forward to its geared-up development this year. As we continue to develop new revenue streams, we expect new supply-chain services to be one of our growth drivers to our business. We used IC components sales business as the entry point to establish trade relations with customers while building database in relation to the customers and transactions. Based on these data, we have developed into diversified business expanding from providing hardware to software as well as providing other value added services for enterprises. Our goal is to become the largest supplier chain platform serving three million electronics manufactory enterprise customers."

"With the plan to develop INGDAN.com as the largest IoT platform in 2015, we anticipate that INGDAN.com will continue to reinforce our leading brand position in the industry and help us significantly bring in more customers and suppliers. Currently, our primary target is to build INGDAN.com the largest scale in terms of register IoT projects in the world in 2015, rather than to expect INGDAN.com to provide more revenue now. As soon as the developmental scale of INGDAN.com reach corresponding target, we continue to monitor its growth and will devise a monetization plan in time."

"Looking ahead to 2015, we continue our efforts to expand our e-commerce scale to build an integrated business services platform. With the existing online business model boosting the number of customers, deeper penetration into our existing customers and new revenue streams expansion, we estimate that Cogobuy will sustain high growth in 2015."

Caution Statement

The information contained in this document has not been independently verified. No representation, warranty or undertaking, express or implied, is made by the Company or any of its affiliates, advisers or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions presented or contained herein. The information contained in this document should be considered in the context of the circumstances prevailing at the time, is subject to change without notice and the Company makes no undertaking to update the information in this document to reflect any developments that occur after the date of the presentation. It is not the Company’s intention to provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the Company, or its financial or trading position or prospects. Neither of the Company nor any of its affiliates, advisers or representatives accept any responsibility or have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document.

This document may contain statements that reflect the Company’s current intent, beliefs and expectations about the future as of the respective dates indicated herein. These forward-looking statements are not guarantees of future performance and are based on a number of assumptions about the Company’s operations and factors beyond the Company’s control and are subject to significant risks and uncertainties, and accordingly, actual results may differ materially from those described in these forward-looking statements. Neither the Company nor any of its affiliates, advisers or representatives has any obligation, nor do they undertake, to update these forward-looking statements for any events or developments including the occurrence of unanticipated events that occur subsequent to such dates.

About Cogobuy Group

Cogobuy Group is a leading e-commerce company dedicated to serving the electronics manufacturing industry in China. The Company operates the largest transaction-based e-commerce platform for IC and other electronic components in China as measured by GMV in 2013. Through the e-commerce platform, including a direct sales platform, an online marketplace and a dedicated team of technical consultants and professional sales representatives, the Company provides customers with comprehensive online and offline services across pre-sale, sale and post-sale stages. The Company serves mainly SME electronics manufacturers.

For further information, please refer to the Company’s website at http://www.cogobuy.com/

About INGDAN.com

INGDAN.com is an online and offline platform focusing on the hardware innovation sector. The platform provides information of hardware innovation, knowledge of the supply chain and supply chain demand docking for IoT innovation entrepreneurs. It is a one-stop hardware innovation business platform with its core being the "supply chain".

For further information, please refer to the Company’s website at http://www.ingdan.com/

FINANCIAL INFORMATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended December 31, 2014

2014

2013

RMB ‘000

RMB ‘000

Revenue

6,848,365

2,417,277

Cost of revenue

(6,315,247)

(2,215,191)

Gross Profit

533,118

202,086

Other revenue

6,383

1,406

Other net (loss)/income

(2)

1,037

Selling and distribution expenses

(97,879)

(13,749)

Research and development expenses

(41,815)

(16,144)

Administrative and other operating expenses

(131,640)

(51,996)

Profit from operations

268,165

122,640

Finance costs

(31,160)

(20,192)

Profit before taxation

237,005

102,448

Income tax

(27,035)

(15,883)

Profit for the year

209,970

86,565

Attributable to:

Equity shareholders of the Company

194,118

82,099

Non-controlling interests

15,852

4,466

Profit for the year

209,970

86,565

2014

2013

RMB ‘000

RMB ‘000

Profit for the year

209,970

86,565

Other comprehensive income for the year, 
      net of nil tax

Item that may be reclassified subsequently to
      profit or loss:

–       Exchange differences on translation of 
        financial statements of entities with
        functional currency other than RMB

10,840

7,955

Total comprehensive income for the year

220,810

94,520

Attributable to:

Equity shareholders of the Company

203,241

90,282

Non-controlling interests

17,569

4,238

Total comprehensive income for the year

220,810

94,520

Earnings per share

Basic (RMB)

0.168

0.089

Diluted (RMB)

0.166

0.089

 

UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE HKFRS MEASURES

For the year ended December 31, 2014 and 2013

For the

year ended

December 31, 2014

For the

year ended

December 31, 2013

RMB in million

RMB in million

Net profit

Profit attributable to equity shareholders of the
     Company

194.2

82.1

Share-based compensation expense

35.0

Amortization of intangible assets and its related
     deferred taxation effect

6.3

5.8

Expenses in relation to Global Offering

31.6

4.6

 

Non-GAAP profit attributable to equity
     shareholders of the Company

267.1

 

92.5

Earnings per share — basic

RMB

RMB

 

Earnings per share  — basic

0.168

0.089

Share-based compensation expense per share

0.030

Amortization of intangible assets and its related 
     deferred taxation effect per share

0.005

0.006

Expenses in relation to Global Offering per share

0.027

0.005

Non-GAAP earnings per share — basic

0.230

0.100

Earnings per share — diluted

RMB

RMB

 

Earnings per share  — diluted

0.166

0.089

Share-based compensation expense per share

0.030

Amortization of intangible assets and its related
     deferred taxation effect per share

0.005

0.006

Expenses in relation to Global Offering per share

0.027

0.005

Non-GAAP earnings per share — diluted

0.228

0.100

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31, 2014

December 31,

2014

December 31,

2013

RMB’000

RMB’000

Non-current assets

Property, plant and equipment

1,635

1,216

Intangible assets

23,703

31,291

Goodwill

154,136

154,136

Other non-current assets

14,803

663

194,277

187,306

Current assets

Inventories

501,340

243,800

Trade and other receivables

748,507

656,766

Loans to third parties

208,629

Amounts due from related parties

11,478

105,541

Short term deposits

11,000

Pledged deposits

742,152

233,081

Cash and cash equivalents

1,222,700

281,542

3,445,806

1,520,730

Current liabilities

Trade and other payables

565,564

433,198

Bank loans

1,411,424

929,388

Amounts due to related parties

12,434

1,000

Current taxation

21,792

10,020

2,011,214

1,373,606