Cogobuy Announces 2016 Fourth Quarter and Annual Results

HONG KONG, March 21, 2017 /PRNewswire/ --

Highlights of the annual results for the year ended December 31, 2016: 

• The Group's Gross Merchandise Value ("GMV") was approximately RMB21.65 billion, an increase of 55.8 % year-on-year ("YoY")
• Online transaction customers¹ as at December 31, 2016 reached 20,705, up 104.4% YoY
• Non-GAAP profit attributable to equity shareholders² of the Company was approximately RMB526.7 million, up 36.3% YoY
• INGDAN.com platform registered over 20.0 million followers and more than 20,000 IoT project entries

Highlights of the fourth quarter of 2016 ended December 31, 2016:

• The Group's GMV was RMB6,629.5 million, an increase of 52.5% YoY
• Non-GAAP profit attributable to equity shareholders² of the Company was approximately RMB151.6 million, up 45.1% YoY
  

Cogobuy Group ("Cogobuy" or the "Company", stock code: 400.HK; with its subsidiaries (the ''Group'')), the largest e-commerce platform serving the electronics manufacturing industry in China, is pleased to announce its unaudited operation summary for the fourth quarter and audited consolidated results for the year ended December 31, 2016 (the "Period").

Financial Highlights of the Full Year of 2016

During the Period, the Company's three major businesses achieved robust growth. The total GMV of the Company's operations was approximately RMB21.65 billion, representing an increase of 55.8% YoY; with 59.3% derived from direct sales value, 27.4% from transaction value in online marketplace and 13.3% from supply chain financing business. In total, 36.8% of the GMV was derived from blue chip customers while 63.2% was derived from small and medium enterprise ("SME") customers.

During the Period, increasing numbers of new customers, mainly from SMEs, and incremental sales generated by monetization of INGDAN.com contributed to the strong results. As at December 31, 2016, the number of online transaction customers¹ reached 20,705, of which approximately 0.9% are blue chip customers and 99.1% are SME customers. This was an increase of 104.4% from 10,131 as at December 31, 2015. The number of registered customers reached 96,733, an increase of 86.0% from 52,016 as at December 31, 2015.

During the Period, the Company recorded total revenue of RMB12,932.8 million, representing a YoY increase of 36.8%. Profit attributable to equity shareholders of the Company grew significantly to approximately RMB478.8 million, a YoY increase of 39.6%. Non-GAAP profit attributable to equity shareholders² of the Company was approximately RMB526.7 million, a YoY increase of 36.3%.

Cash and cash equivalents and pledged deposits amounted to RMB3,478.0 million as at December 31, 2016. Inventory turnover days and trade receivables turnover days were 30.8 days and 47.4 days, respectively. As at December 31, 2016, the basic common shares outstanding was 1,501,272,732, the diluted common shares outstanding was 1,389,098,000.

Financial Highlights of the Fourth Quarter of 2016

For the three months ended December 31, 2016, the Company's total GMV was RMB6,629.5 million, representing an increase of 52.5% YoY; with 57.5% derived from direct sales, 28.9% from online marketplace platform, and 13.6% from the supply-chain financing business line. In total, 39.3% of the GMV was derived from blue chip customers while 60.7% was derived from SME customers.

INGDAN.com, the largest Internet of Things (''IoT'') innovation business platform for intelligent hardware in China, has attracted many new customers and generated good results during the Period with an ecosystem for smart hardware developed. As at December 31, 2016, INGDAN.com attracted over 20.0 million followers and more than 20,000 IoT project entries. GMV contributed by the INGDAN.com platform was RMB1.9 billion, 28.4% of the total GMV in the fourth quarter of 2016. As at March 15, 2017, the platform registered more than 23.8 million followers and nearly 24,000 IoT project entries.

For the three months ended December 31, 2016, the Company recorded a total revenue of RMB3,846.5 million, a YoY increase of 43.5%. Gross margin was 8.2%. Net profit attributable to equity shareholders of the Company grew significantly to approximately RMB142.2 million, a YoY increase of 61.0%. Non-GAAP profit attributable to equity shareholders² of the Company was approximately RMB151.6 million, a YoY increase of 45.1%. Non-GAAP operating expenses³ were RMB128.0 million. Non-GAAP operating margin⁴ was 4.9%. The Group's effective tax rate was 14.2% and its non-GAAP effective tax rate⁵ was 13.8%.

For the three months ended December 31, 2016, the Group generated positive non-GAAP operating cash flow⁶ of approximately RMB25.8 million. Inventory turnover days⁷ and trade receivables turnover days⁸ of the Company were 35.3 days and 41.9 days, respectively.

Business Highlights

• Leveraging its vast network with leading technology companies worldwide, Cogobuy has built a leading Artificial Intelligence ("AI") -related product chain in the industry. The Company expanded its supply chain to include voice-controlled smart products, and now provides a full portfolio of components, modules, and end-product brands. The Company also launched a strategic cooperation with Haier, a leading home appliance brand that incorporates voice recognition into its products, jointly taking the lead in the voice-controlled home appliance industry. Meanwhile, INGDAN.com is developing an integrated ecosystem comprised of core AI software and service providers, as well as high quality suppliers of chips, modules, and assembled products. Enabling traditional electronic manufacturing enterprises to upgrade their products to smart devices, the ecosystem serves as a platform that encourages a large number of those enterprises to become Cogobuy's customers.
• As an important strategic partner of global top-tier chip suppliers, Cogobuy is well positioned to further increase its market share of telecommunications in the PRC. The Company is capturing business opportunities resulting from PRC carriers' new investment cycle in Optical Transport Network ("OTN") upgrades and 4.5G/5G construction. The increasing market demand, together with Cogobuy's market position, is enhancing Cogobuy telecom business volumes significantly.

Outlook

Mr. Jeffrey Kang, CEO of Cogobuy Group, said: "Since our IPO in 2014, developments in the Cogobuy and INGDAN.com platforms have quickly evolved the Company from an e-commerce business that provided IC components, into a comprehensive electronics-manufacturing ecosystem.

"Cogobuy's business model is unique in that we built a community of enterprise decision makers and launched targeted marketing directly to these potential customers' decision makers. Based on marketing data, we have been able to effectively and accurately provide products and services to fulfill their needs. Cogobuy's distinctive business model has increased the Company's marketing accuracy and driven higher transaction volumes through its 'social + E-commerce' design. 

"In 2016, we implemented INGDAN.com's monetization strategy, comprised of 'Online marketing'  and 'Offline services'. For the 'Online marketing,' INGDAN.com's online platform brought in a large number of customers, demands, and data to both Cogobuy and INGDAN.com. INGDAN.com's monetization strategy consists of three parts: the first is monetization through IC component transaction on Cogobuy's platform, the second is through transactions of non-IC products related the supply-chain, and the third is through enterprises services transactions. As a result, INGDAN.com contributed RMB 5,184.7 million of GMV to Cogobuy, accounting for approximately 24.0% to the whole of 2016.  

"Looking ahead to 2017, we see a strong growth in optical communications, data centers, auto electronics, and other areas. Furthermore, AI technology, a growing field with wide applications across the electronics industry, will become a major growth driver for the Company. We have already seen this in voice recognition technology and its increasing adaptation into home appliances. The trend has enabled many traditional home appliance enterprise clients significantly increase purchase volume over our platforms, making the consumer electronics market a high growth market to us.

"We are confident in the continuation of our growth momentum in 2017. We believe that our ability to attract new customers will remain a cornerstone for growth, and the rapid growth of the INDAN.com platform will continue to be the Group's growth driver. Furthermore, we will establish a new business unit - IngFin Financing Services. With our supply chain financing products as the core, we will increase investments in the big-data based enterprise financing business. Following the success of INGDAN.com, we expect IngFin Financing Services to become another rapidly growing platform. Lastly, in the face of the multi-trillion-RMB IC components and electronic manufacturing enterprise services market, we are confident that the innovative model of Cogobuy Group will continue to maintain accelerated growth in the coming years. "

¹                   Customers who had completed at least one online transaction during the current period and had completed at least one other online transaction in the previous fiscal year.

²                   Net profit attributable to equity shareholders add share-based compensation costs, amortization of intangible assets and its related deferred taxation effect.

³                   Total operating expenses less share-based compensation costs and amortization of intangible assets.

⁴                   Non-GAAP operating margin is non-GAAP profit of the period divided by revenue for the period. Non-GAAP profit is gross profit less non-GAAP operating expenses of the period.

⁵                   Non-GAAP effective tax rate is income tax expense less deferred taxation related to amortization of intangible assets divided by income before tax less share-based compensation costs and amortization of intangible assets.

⁶                   Non-GAAP operating cash flow is operating cash flow of the period plus amount of loan to third parties for investment initiatives for the period.

⁷                   The average of the opening and closing balances of inventories of the period divided by cost of sales of the period and multiplied by 92 days.

⁸                   The average of the opening and closing balances of trade receivables for the period divided by revenue of the period and multiplied by 92 days.

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 the largest e-commerce service platform serving the electronics manufacturing industry in China. Through the e-commerce platform, which includes 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 a platform dedicated to connecting global intelligent hardware entrepreneurs and China-based supply chain resources. The platform provides information on hardware innovation, supply chain data, and supply chain demand docking for global IoT innovators and 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