FAST NEWS: Linklogis Adjusted Profit Rises 50% on Improving Operations

The latest: Supply chain financing solutions provider Linklogis Inc. announced a loss of 12.99 billion yuan ($2.04 billion) last year, 17 times the 720 million yuan loss it reported in 2020, equating to a loss of 7.78 yuan per share, according to its 2021 financial results released late Tuesday.

Looking up: The company’s latest big loss was mainly due to a 13.09 billion yuan loss related to fair value changes for some of its financial liabilities. Excluding that non-operating activity, it reported an adjusted profit of 289 million yuan last year, up 50.4%, on a non-IFRS basis, as it continued to optimize its product mix and recorded faster growth in higher gross margin business segments.

Take Note: The company said that 39% of its new customers were referred by existing customers or partners last year. But its existing customer retention rate decreased by two percentage points to 97% from 99% in 2020, and its customer revenue net expansion rate decreased by 19 percentage points to 93%.

Digging Deeper: Founded in 2016, Linklogis has become a leading supply chain financial technology solutions provider in China and listed on the Hong Kong Stock Exchange last April. But it has not been able to make a profit so far. The company helps other companies automate their supply chain financing processes using artificial intelligence, blockchain and big data. One example sees it use large enterprises’ credit to enable their suppliers to transfer their accounts receivable to financial institutions at a discount, and then obtain financing through the financial institutions that allows those suppliers to receive cash advances on better terms than they would get on their own. The business model is in line with the Chinese State Council’s request to support the development of supply chain finance in order to reduce costs and improve services for enterprises.

Market Reaction: Linklogis’ stock jumped as much as 7% on Wednesday morning, before closing up by a milder 1.3% at HK$6.89 at the midday break. It now trades at the low end of its 52-week price range, and 61.3% below its HK$17.58 offer price from April last year.

Translation by Jony Ho

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