Uquui, the leading brand e-commerce operation service provider in China (02177), has achieved outstanding phased results in areas such as "weight loss and slimming", cost reduction and efficiency improvement, and enhancement of operational quality.

Recently, Uquui disclosed its mid-year performance for 2024. The financial report shows that in the first half of the year, Uquui achieved a revenue of 613 million yuan, and the gross profit reached 184 million yuan, corresponding to a gross profit margin of 30%, an increase of 3.2 percentage points compared to the same period last year. Moreover, the company's net profit in the reporting period was 23.709 million yuan, an increase of 981.1% compared to the same period last year.

The steep profit data curve undoubtedly sends a strong signal of value to the outside world. And now, Uquui, which has undergone a qualitative change in its self-sufficient ability, is undoubtedly welcomed by secondary market investors.

The mid-term performance announcement has various structural highlights.

Looking back at the operating conditions of the macroeconomy in the first half of this year, the pain of structural adjustment in China has not completely dissipated, and there are still factors such as insufficient short-term effective demand and the need to further improve the consumption capacity of residents that constrain economic recovery. In this context, low-priced and internally competitive competition among e-commerce platforms has become more intense.

The more challenging the market environment, the more companies need to exert their subjective initiative to adapt to the new business ecology. Financial IC observed that in the first half of the year, Uquui took the initiative to optimize its existing brand and channel structure, taking targeted measures to reduce the sales proportion of low-gross-profit channels and businesses, and terminated cooperation with some low-gross-profit-rate businesses.

Although the business strategy tends to be more focused on shrinking and defensive, the overall revenue of PDD Holdings has fluctuated. However, thanks to a series of measures relying on the company's active exploration of new directions and cultivation of new momentum, PDD Holdings has made remarkable progress in many sub-sectors. For example, in the first half of the year, PDD Holdings made a breakthrough in the joint incubation of health care products, helping a Canadian health care brand enter the domestic market. In addition, benefiting from PDD Holdings' continued development of Douyin and Pinduoduo channels, it has provided more diversified omni-channel services to brand partners. The revenue from these two channels has accounted for 11.1% of the company's total business income.

Compared with the performance on the revenue side, the biggest highlight of PDD Holdings' financial data in the first half of the year naturally focused on the profit indicators. As mentioned earlier, the company's gross margin increased by 3.2 percentage points to 30% year-on-year. This is not only due to the increase in the sales proportion of high-margin products, the improved efficiency of promotional activities, and the improved trading conditions with brand partners but also due to the active optimization of inventory structure and the improvement of commodity turnover efficiency.

At the same time, PDD Holdings' net profit indicators also saw a breakthrough, which is naturally closely related to the company's operational strategy of reducing costs and increasing efficiency. The financial report shows that in the first half of the year, PDD Holdings improved the efficiency of promotional and advertising spending, resulting in a 40.6% decrease in corresponding expenses. The extensive application of AIGC, RPA, and others improved productivity, leading to a 15.6% decrease in human resource costs. In addition, through actively reducing borrowing levels and increasing deposit income, the company's profit was also increased to some extent.

Lightening the load to cultivate new growth momentum

As we turn the clock to the second half of the year, the complexity and severity of the external environment is still increasing, while the trend of internal economic improvement is becoming more evident. In the current market environment, where uncertainty continues to accumulate, 'certainty' naturally becomes a universal pursuit.

And looking at PDD Holdings again through the mid-year performance announcement for 2024, the Zhitong Finance and Economics APP believes that the company's 'certainty' is actually rapidly increasing.

In addition to the core financial data mentioned earlier pointing to the continuous strengthening of PDD Holdings' self-'hematopoietic' ability, the company's 'deleveraging' efforts are also continuing to increase. Data shows that as of June 30, PDD Holdings' total borrowings amounted to 0.156 billion yuan, a significant decrease of 66.881 million yuan from the end of the previous year's 0.223 billion yuan.

At the same time as the effective reduction of liabilities, the 'ammunition' in the hands of PDD Holdings is becoming more abundant. At the end of June, the company's cash and cash equivalents on hand were 36.5 billion yuan, a year-on-year increase of 32.4%, and an 8.0% increase compared to the end of the previous year.

Between the decrease in liabilities and the increase in cash on hand, it is foreseeable that PDD Holdings will be able to better focus on the development of its main business. According to the financial report, PDD Holdings will continue to make multidimensional efforts in the second half of the year, striving to achieve higher quality development:

Firstly, on the business level, PDD Holdings will continue to promote the incubation of its own and co-created brands in the health food and skincare categories, achieving growth in the second curve;

Secondly, at the channel level, PDD Holdings will continue to explore its potential on the Douyin platform, increase investment in this channel, and strive to leverage excellent content to drive traffic conversion, drive consumer growth, and increase consumer stickiness;

Finally, PDD Holdings will also make great efforts to consolidate its existing business scale and take various measures to solidify its business foundation, continuously improve its profitability through refined operation, cost reduction, data empowerment, and optimization of asset structure.

It is not difficult to see that in the face of the challenging future, PDD Holdings will not only continue to solidify its foundation, but will also increase investment in new business and new channels in order to open up new growth opportunities.

In addition, it is worth mentioning that PDD Holdings is now paying more attention to shareholder returns. The mid-year performance announcement shows that the company plans to distribute a mid-year dividend of 0.25 Hong Kong dollars per share. This also means that PDD Holdings, whose profit performance is gradually improving, is committed to continuously and steadily rewarding investors with its profit distribution policy. Apparently, the increasingly forward-looking and value-returning PDD Holdings also indicates a growing investment value, and the company's turning point in value may have already emerged.