Cogobuy Announces 2016 Second Quarter and Interim Results

HONG KONG, Aug. 18, 2016 /PRNewswire/ -- 

Highlights of the first half of 2016 ended June 30, 2016:

• The Group's Gross Merchandise Value ("GMV") was approximately RMB9.25 billion, an increase of 59.2% year-on-year ("YoY")
• Online transaction customers¹ as at June 30, 2016 reached 14,952, up 99.8% YoY
• Non-GAAP profit attributable to equity shareholders² of the Company was approximately RMB233.1 million, up 31.4% YoY
• INGDAN.com platform registered over 12.5 million followers and more than 13,000 IoT project entries

Highlights of the second quarter of 2016 ended June 30, 2016:

• The Group's GMV was RMB5,360.2 million, an increase of 61.6% YoY
• Non-GAAP profit attributable to equity shareholders² of the Company was approximately RMB132.9 million, up 32.4% 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 second quarter and unaudited consolidated results for the six months ended June 30, 2016 (the "Period").

Financial Highlights of the First Half of 2016

During the Period, the Company's three major businesses achieved robust growth. The total GMV of the Company's operations was approximately RMB9.25 billion, representing an increase of 59.2% YoY; with 60.6% derived from direct sales value, 26.5% from transaction value in online marketplace and 12.9% from loan value in supply chain financing business. In total, 42.0% of the GMV was derived from blue chip customers while 58.0% was derived from small and medium enterprise ("SME") customers.

During the Period, increasing numbers of new customers, mainly from SMEs, contributed to the strong results. As at June 30, 2016, the number of online transaction customers¹ reached 14,952, of which approximately 1.2% are blue chip customers and 98.8% are SME customers. This was an increase of 99.8% from 7,485 as at June 30, 2015. The number of registered customers reached 69,137, an increase of 69.1% from 40,891 as at June 30, 2015.

During the Period, the Company recorded total revenue of RMB5,651.0 million, representing a YoY increase of 31.9%. Profit attributable to equity shareholders of the Company grew significantly to approximately RMB203.4 million, a YoY increase of 22.4%. Non-GAAP profit attributable to equity shareholders² of the Company was approximately RMB233.1million, a YoY increase of 31.4%. During the Period, the Company generated positive operating cash flow of approximately RMB158.5 million.

Financial Highlights of the Second Quarter of 2016

For the three months ended June 30, 2016, the Company's total GMV was RMB5,360.2 million, representing an increase of 61.6% YoY; with 59.7% derived from direct sales, 27.6% from online marketplace platform, and 12.7% from the supply chain financing business line. In total, 41.2% of the GMV was derived from blue chip customers while 58.8% was derived from SME customers.

INGDAN.com, the Company's one-stop Internet of Things (''IoT'') innovation business platform for supply chain services, has attracted many new customers and generated good results during the Period. As at June 30, 2016, INGDAN.com attracted over 12.5 million followers and more than 13,000 IoT project entries. GMV contributed by the INGDAN.com platform was RMB1,198.3 million, 22.4% of the total GMV.

For the three months ended June 30, 2016, the Company recorded a total revenue of RMB3,224.5 million, a YoY increase of 35.6%. Gross margin improved to 8.2%. Net profit attributable to equity shareholders of the Company grew significantly to approximately RMB118.3 million, a YoY increase of 24.9%. Non-GAAP profit attributable to equity shareholders² of the Company was approximately RMB132.9 million, a YoY increase of 32.4%. Non-GAAP operating expenses³ were RMB93.3 million. Non-GAAP operating margin⁴ was 5.3%. The Group's effective tax rate was 15.2% and its non-GAAP effective tax rate⁵ was 14.1%.

For the three months ended June 30, 2016, the Group generated positive operating cash flow of approximately RMB104.3 million. Cash and cash equivalents and pledged deposits amounted to RMB2,640.2 million. Inventory turnover days⁶ and trade receivables turnover days⁷ were 28.5 days and 32.2 days, respectively. For the three months ended June 30, 2016, the number of basic common shares outstanding was 1,338,310,000, the number of diluted common shares outstanding was 1,355,073,000.

Business Highlights

• Cogobuy and INGDAN.com officially entered the robotics industry. INGDAN.com signed a cooperative agreement with Intel to partner in building a robotics ecosystem. Cogobuy also launched EZ-ROBOT.CN an online to offline (O2O) e-commerce platform for industrial robotics and professional community for industrial robot manufacturers, component manufacturers, and system integrators. The site, which also facilitates technical support from industry experts, is designed to support the development of the industrial robotics market.
• INGDAN.com entered a strategic partnership with crowdfunding platforms JD.com, Taobao Marketplace, and Suning Commerce. INGDAN.com will be providing intelligent hardware startups on each platform with e-commerce services such as product launches and B2B distribution.
• INGDAN.com signed a cooperative agreement with The Hong Kong University of Science and Technology to jointly establish an "Internet +" sharing economy-style platform for the electronic materials industry. The university is committed to helping INGDAN.com's several thousand Chinese electronic manufacturing customers match with the top new materials research institutions.

Outlook

Mr. Jeffrey Kang, CEO of Cogobuy Group, said: "A significant increase in new customers and a variation in our monetization strategies helped INGDAN.com deliver strong growth in each of our business lines in the second quarter of 2016. Our customer numbers grew tremendously compared with the previous year. Approximately 15,000 customers conducted online transactions with us, a 99.8% increase over the second quarter of 2015. INGDAN.com also deployed a new supply chain to direct e-commerce monetization strategy at the start of the year. This became a core driver of our GMV growth in the first half of the year, which exceeded market expectations.

"Compared with the first half of 2016, we are optimistic about our ability to deliver even faster growth in the second half of the year. Cogobuy and INGDAN.com have expanded into five new, complementary markets including robotics, smart cars, smart homes, new materials, and etc. We are committed to matching smart hardware innovators around the world with the best Chinese supply chain and marketing resources. These will open new revenue opportunities and further raise our platform's visibility. INGDAN.com currently contributes 22.4% of our total GMV and we expect an increase in the next two quarters.

"The robotics market, valued at USD$71 billion (RMB466 billion), is projected to grow to several trillion RMB in the next few years. INGDAN.com is positioned to capture value from the growth of this industry through its latest partnerships with Intel and several leading Japanese and German robotics key components suppliers. Its co-developed robotics ecosystem with Intel will serve industrial robotics, commercial services robotics, family services robotics, and educational robotics. As a compliment to Cogobuy's electronic manufacturing O2O platform, we also recently launched EZ-ROBOT.CN, an industrial robotics e-commerce platform and professional community for industrial robot manufacturers, component manufacturers, and system integrators. We expect to attract over a thousand new robotics startups and 300 suppliers to our platform in 2016 alone. In the second quarter, we were also pleased to see strong revenues from our cloud and other enterprise services, showing an increase in customer loyalty.

"Earlier this year we announced that Cogobuy had become eligible for the Shanghai-Hong Kong Stock Connect scheme. With the launch of the Shenzhen-Hong Kong Stock Connect scheme, we anticipate further benefits to and a diversification of our shareholder base. Combined with our favorable growth outlooks in the second half of 2016, this will further allow us to generate even greater returns for our shareholders."

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.

As of June 30, 2016