- with Promising Potential Growth
Influenced by the easing cycle of overseas central banks and the continuous release of positive policy signals from the Mainland, investor sentiment in the Hong Kong stock market had markedly improved. The IPO market has also recovered significantly. Recently, large-scale IPOs and “A + H” shares in Hong Kong have emerged one after another and won the favor of investors. On November 8, Hong Kong stocks welcomed another high-quality new stock, AuGroup (HKG: 2519), which officially landed on the Hong Kong Stock Exchange, becoming the “first share of furniture going overseas” in Hong Kong stocks.
According to public information, AuGroup is the world’s leading cross-border e-commerce segment leader, specializing in quality furniture and home furnishings. In terms of GMV in 2023, the Company ranked first in the B2C overseas e-commerce market for furniture and home furnishings by China-based sellers; and ranked fifth in the global B2C e-commerce market for furniture and home furnishings. In this IPO, the Hong Kong public offering of AuGroup was oversubscribed by 17.7 times, with a final offering price of HK$ 15.600.
Deeply Rooted in Furniture and Home Furnishing Cross-border E-commerce Track, with Multi-category and Multi-brand Development Promoting Sustained Growth
AuGroup’s strategy is to focus on the furniture and home furnishings market, one of the fastest growing B2C e-commerce market segments with low return rate. Relying on its strong supply chain capability and comprehensive logistics layout, AuGroup is able to rapidly develop diversified, high-quality products with competitive prices to continuously meet the ever-changing market demand. As a result, it has rapidly established a strong market influence in the furniture and home furnishings market.
At present, AuGroup has owned many exclusive brands such as ALLEWIE, IRONCK, LIKIMIO, SHA CERLIN, HOSTACK and FOTOSOK, which are popular in the global market. In 2023, 11 of the Company’s brands each had over RMB100 million in GMV. According to Frost & Sullivan, the Company ranked first in six categories in terms of GMV on the Amazon U.S. site in 2023. The Company had a market share of over 10% in ten categories on the Amazon U.S. site in terms of GMV in 2023.
It is worth mentioning that, benefiting from diverse offerings, brand equity and strategic market positioning, AuGroup has been able to maintain long-term competitiveness in the unpredictable market, and its risk-resistant capability has been continuously strengthened. In the case of the Amazon Incident, for example, after the loss of results in 2021, AuGroup recovered rapidly from the market impact, with revenue increasing by 22.3% and net profit increasing by 133.1% year-on-year in 2023. In the first four months of 2024, the Company continued its strong rebound trend, with revenue increasing by 16.9% and net profit increasing by 96.2% year-on-year.
Building Global Warehousing and Logistics Capabilities and Opening up the Second Growth Curve
In the field of cross-border e-commerce, logistics is one of the core competitiveness, which is related to cost, efficiency and commodity safety. With years of accumulated industry expertise, AuGroup has established a global multi-tiered warehousing and logistics network that is tailored to medium-to-large goods through Shenzhen Westernpost, and developed proprietary logistics solution management systems to manage and optimize all key stages of the logistics chain, effectively tackling the pain points of high costs and long delivery times associated with logistics solutions for medium-to-large goods.
Through self-built logistics, combined with third-party logistics solutions and e-commerce platform logistics services, AuGroup is able to effectively reduce the cost of logistics by using flexible delivery options according to diverse shipping needs. In 2021, the ratio of cost of sales to revenue of the Company was 79.1%, and in 2023, the ratio dropped to 65.5%.
In addition to providing logistics services to its own e-commerce business, AuGroup also provides logistics solutions globally under the pre-sale stocking model to customers, including domestic consolidation in China, first-mile international freight services, overseas transit, overseas warehousing and order dispatch, to further broaden revenue sources and enhance profitability. From 2021 to 2023, the Company’s revenue from logistics solutions increased from RMB490 million to RMB1,653 million, representing a CAGR of 83.7%, and its revenue share increased from 5.4% to 19.0%. In the first four months of 2024, the revenue from logistics solutions reached RMB583 million, representing a year-on-year increase of 66.8%, and the revenue share further increased to 20.6%, which has formed the second growth curve of the Company.
Thanks to the gradual optimization of cost structure and diversified revenue sources, the profitability of AuGroup continues to rise. From 2021 to 2023, the Company’s gross profit margin increased from 20.9% to 34.5%, representing an increase of 13.6 percentage points.
In terms of industry development, the rapid development of digital economy, the change of consumers’ consumption habits and the rise in the demand for cost-effective furniture and home furnishings will drive the global furniture and home furnishings market to continue to grow rapidly in sales through online channels. As a leading enterprise in the industry, with its own supply chain advantages and global warehousing and logistics capabilities, AuGroup is expected to seize the development opportunities of the industry and promote the continuous growth of its furniture and home furnishing business and logistics solutions. Its performance after listing is worth looking forward to.
