Highlights

• eCargo Holdings Limited (ASX:ECG) registered over 43% revenue growth and 13% increase in gross profit in 2022.
• Growth was driven by soaring demand for imported products in China and sales via the company’s proprietary B2B technology platform.
• The company expects further growth opportunities in 2023 and beyond.

In its recently released FY22 annual results, eCargo Holdings Limited (ASX:ECG) achieved over 43% revenue growth and 13% increase in gross profit. This success was attributed by the company to its proprietary technology platforms and novel exclusive brand partnerships, which drove record growth across all key business metrics over the course of 2022.

eCargo helps brands enter and expand in the Asia market with a prime focus in China. As a full-service commerce partner, eCargo helps brands sell more in Asia through their end-to-end supply chain solutions, distribution, and marketing and sales services.

Impressive Financials
During the year, the company’s group revenue increased by approximately 43.2% to AUD23.6 million in group revenue. The growth in revenue was achieved due to the growing portfolio of strategically-selected brands with increasing demand from Chinese consumers, as well as to the sourcing services provided to brands in new segments. Additionally, the period saw a gross profit of AUD7.6 million, representing a 13.5% increase from FY21’s gross profit of AUD6.7 million.

According to the company, there have been signs of recovery in the brand distribution revenue, which now stands at AUD18.8 million. ECG counts its digital commerce segment as the prime contributor primarily due to lockdowns in China. 

Image source: Company update

The online division has been registering robust momentum, with an increase of about 50.6% to AUD4.8 million. This increase was driven by notable growth of the B2B trading platform, Flow (previously known as JuJiaXuan (JJX)).

Also, the company saw a significant rise in FY22 statutory EBITDA to AUD5.9 million. Its EBITDA from continuing operations has been posted as AUD1.5 million.

Results backed by technology-centric strategy

eCargo was powered to have a sharper focus on investments in proprietary technology platforms using the capital obtained from the sale of its Australian digital consultancy business, Amblique, in 2022. The sale was part of the company’s Asia-focused growth strategy.

One of the company’s proprietary B2B distribution platforms, Flow, registered a monthly compounded growth rate of over 30% in Gross Merchandise Value in 2022.

The company welcomed multiple suppliers in diverse segments, including semiconductor and electronic components, and fashion and apparel which brought in striking growth in revenue.

eCargo’s cross-border online marketplace selling imported fine wines to Chinese consumers, PinJiuFang Wines (PJF Wines) also marked strong growth during the reported period. Leveraging its expertise in eCommerce technology, PJF Wines won prestigious accolades like the Hong Kong Business Technology Excellence Awards 2022 in the Food and Beverage category. It was also recognised as the “Best F&B Start Up” at Asia’s Best eTailing Awards 2022.

The company plans to continue investing in Flow and PJF Wines to keep brands connected with consumers. The prospects include the launch of a new social commerce platform in 2023 to enhance the array of technology platforms serving order and warehouse management, B2B and B2C trading, and marketing.

Tapping Chinese market opportunity
eCargo has witnessed a significant expansion in its brand portfolio following new partnerships with brands from the health & wellness, personal care, and maternal & baby categories. These sectors have been registering strong demand since the COVID-19 pandemic, as consumers are placing greater importance on their health and are willing to pay more for premium imported products.

eCargo believes that it is strategically well-positioned to capitalise on this growing market trend. It has been helping in-demand brands to sell more in the Asian market with a reputation as a comprehensive and reliable commerce partner for brands. 

Drafting the path forward

eCargo is in a strong financial position and able to self-finance its operations to further increase profitability. The company is committed to investing in the development of its current technology portfolio and strengthening its digital platform to become a comprehensive commerce solution for brands.

Data source: ECG annual report

In 2023, the company intends to centre its focus on developing a 360 digital ecosystem enabling brands to connect with consumers directly. eCargo will raise the scale and scope of its capabilities in digital marketing as well as customer acquisition, ahead of introducing a new social commerce platform targeting the Asian market.

Shares up 95% in one year

ECG shares have gained 95% in the last one year, as of 02 May 2023. The shares last traded at AU$0.039 on 02 May 2023.