In the first half of the year, the revenue of Zhiou Technology increased by 40.74% year-on-year, while the net income attributable to shareholders decreased by 7.73% year-on-year. In July, the prices of marine transportation on multiple routes continued to rise. Zhiou Technology stated that it adopts long-term agreements to mitigate the risk of rising marine transportation prices eroding net income.
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According to CaiLian News, Zhiou Technology (301376.SZ) achieved revenue growth in the first half of the year due to new products and the expansion of emerging platforms. However, influenced by factors such as the decline in average product prices and the increase in marine transportation costs, the net income of the company decreased year-on-year. In response to the fluctuations in marine transportation prices, Zhiou Technology stated that it has reduced the impact on profits by means such as long-term agreements.
Zhiou Technology released its semi-annual report tonight. In the first half of the year, the company achieved revenue of 3.721 billion yuan, an increase of 40.74% year-on-year; net income attributable to shareholders was 0.172 billion yuan, a decrease of 7.73% year-on-year; non-GAAP net income was 0.16 billion yuan, a decrease of 24.97% year-on-year.
In terms of revenue by region, Europe, North America, Japan, and other regions saw year-on-year growth rates of 41.22%, 41.12%, 30.56%, and 39.35%, respectively. Europe remains the main market, accounting for 62.06% of the revenue.
Zhiou Technology stated that the North American market is its strategic focus. In the first half of the year, a large number of new products were launched, and new platforms such as Temu and Tiktok shop were actively developed, contributing new growth points to the region's performance. The year-on-year growth of the European market is mainly attributed to the company's traditional competitive advantages and the expansion of platforms such as OTTO and Shein.
In terms of channels, Amazon remains the company's main platform, accounting for 69.1% of the revenue, an increase of 42.68% compared to the same period last year. In addition, OTTO and independent online channels achieved year-on-year growth rates of 97.11% and 91.29% respectively.
Zhiou Technology explained the year-on-year decrease in net income. On one hand, the company has implemented a market share improvement strategy, resulting in a decline in average product sales prices and an increase in marketing expenses for new product promotions. On the other hand, influenced by the Red Sea incident, marine transportation costs increased year-on-year. At the same time, the expansion of business scale led to increased self-operated and third-party overseas warehousing services, resulting in increased warehousing costs. In addition, the hedging losses after the implementation of hedging tools, as well as the share-based incentive expenses in 2024, also had an impact on the current net income.
Specifically, in the first half of the year, the company's sales expenses amounted to 0.918 billion yuan, a year-on-year increase of 51.94%; as for the shipping costs, data released by the Ningbo Shipping Exchange shows that the average value of the Ningbo Container Freight Index (NCFI) comprehensive index in the first half of the year was 1745.8 points, a year-on-year increase of 152.9%. Looking at specific routes, the freight rates for Europe and the US-West routes increased by 257.5% and 257.4% respectively compared to the same period last year.
As of July, the prices of shipping fees on multiple routes continued to rise compared to the same period last year. Data from the Ningbo Shipping Exchange shows that the average NCFI value in July was 2732.5 points, a 0.5% increase month-on-month and a 301.9% increase year-on-year; the average price index for the European route was 3632.2 points, a 589.6% increase year-on-year; the average price indices for the US-East and US-West routes increased by 280.9% and 328.6% respectively compared to the same period last year.
The Ningbo Shipping Exchange also mentioned that in the latter half of July, influenced by the Mediterranean Shipping Company's (MSC) strategy of maintaining unchanged freight prices for the US-West route, many shipping companies have successively reduced the freight prices for the Europe-bound routes. As for the North American routes, the market volume decreased in mid-July, prompting shipping companies to lower prices on a weekly basis until the end of the month; the freight rates for the US-West routes have been continuously declining for 4 weeks due to the continuous introduction of new shipping capacity.
In the face of the fluctuating shipping fees, European Technology has stated that it has adopted long-term agreements to mitigate the risk of rising shipping prices eroding net income. The company's home furniture products have a relatively large volume and are shipped in a large quantity of containers, giving them a scale advantage. Additionally, the company has a good cooperative foundation with shipping agents. Therefore, compared to the immediate market prices, the company has reduced the impact of high shipping costs on profits in the short term by obtaining relatively low shipping prices through long-term agreements and other means.