FAST NEWS: Linklogis Third-Quarter Profit Plunges as Clients Suffer Covid Hit

The latest: Supply chain financing solutions provider Linklogis Inc. (9959.HK) said Tuesday it expects to record an adjusted profit of approximately 153 million yuan ($21.6 million) for the first nine months of the year, down 37% year-on-year.

Looking up: Linklogis said that expanded up-front investments in new business opportunities and new customers resulted in an increase in its up-front expenditure for research and development, sales and marketing for the period. But it expects such expenditures will translate into long-term growth opportunities.

Take Note: The company recorded an adjusted profit of just 25 million yuan in the third quarter, down more than 70% from 91 million yuan a year earlier, mainly due to disruptions its clients suffered as a result of measures to control repeated Covid-19 outbreaks in China during the period.

Digging Deeper: Founded in 2016, Linklogis has become a leading supplier of supply chain financing technology and listed on the Hong Kong Stock Exchange last April. It helps other companies automate their supply chain financing processes, often using large enterprises’ credit to enable their suppliers to get low-cost financing by providing their accounts receivables at a discount to lenders. The company recently announced its number of anchor enterprise customers jumped 50% to 327 in the first three quarters of this year. But that didn’t improve its profit performance, probably due to lower client fees.

Market Reaction: Linklogis shares initially rose 4.3% on Wednesday, but later gave back all of those gains and closed down 1.8% at HK$3.85 by the midday break. It currently trades near the lower end of its 52-week range.

Translation by Jony Ho

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