宝尊电商(09991) - 2021 - 中期财报

Company Overview and Shareholding Structure Information on Weighted Voting Rights The company operates under a Weighted Voting Rights (WVR) structure, granting co-founders significant voting control for long-term strategic implementation despite not holding a majority economic interest - The company's share capital includes Class A ordinary shares (1 vote per share) and Class B ordinary shares (10 votes per share)[8] - The beneficiaries of the Weighted Voting Rights are co-founders Mr. Qiu Wenbin and Mr. Wu Junhua, who collectively controlled 37.7% of the company's total voting power as of June 30, 2021[9] - The report advises investors that the WVR structure carries potential risks, as beneficiaries' interests may not always align with all shareholders' interests, though their long-term vision and leadership could benefit the company in the long run[9] Financial and Operating Summary Financial Summary For the six months ended June 30, 2021, total net revenue increased by 17.7% to RMB 4.32 billion, while GAAP operating profit and net income attributable to ordinary shareholders declined, but Non-GAAP metrics showed growth Key Financial Data for H1 2021 (GAAP) | Metric | H1 2021 | H1 2020 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Total Net Revenue (RMB millions) | 4,324.6 | 3,675.7 | +17.7% | | Operating Profit (RMB millions) | 159.5 | 173.4 | -8.0% | | Net Income Attributable to Ordinary Shareholders (RMB millions) | 81.0 | 122.0 | -33.6% | | Diluted Net Income per ADS (RMB) | 1.08 | 2.04 | -47.1% | Key Financial Data for H1 2021 (Non-GAAP) | Metric (Non-GAAP) | H1 2021 | H1 2020 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Operating Profit (RMB millions) | 237.4 | 223.9 | +6.0% | | Net Income Attributable to Ordinary Shareholders (RMB millions) | 212.1 | 172.0 | +23.3% | | Diluted Net Income per ADS (RMB) | 2.82 | 2.87 | -1.7% | Operating Summary In H1 2021, the company achieved strong GMV growth, primarily driven by non-distribution GMV and increased contributions from non-Tmall platforms, reflecting successful channel diversification H1 2021 GMV Performance | Metric | Amount (RMB millions) | Year-over-Year Growth | | :--- | :--- | :--- | | Gross Merchandise Volume (GMV) | 28,968.2 | 31.9% | | Distribution GMV | 2,168.3 | 19.1% | | Non-Distribution GMV | 26,799.9 | 33.0% | - GMV generated from non-Tmall transaction platforms and channels increased from 24.2% of total GMV in the prior-year period to approximately 33.0%[23] Detailed Financial Performance Revenue growth in H1 2021 was offset by a faster increase in operating expenses, particularly sales, marketing, and administrative costs, leading to a decline in operating margin, while cash reserves remained substantial - Product sales revenue grew by 19.3% to RMB 1.94 billion, and service revenue grew by 16.3% to RMB 2.38 billion, with service revenue growth partially offset by a decline in sports apparel sales due to the "Xinjiang cotton" incident[29] - Operating expenses significantly increased, with sales and marketing expenses rising due to GMV growth and increased digital marketing services; general and administrative expenses substantially increased due to talent acquisition, M&A professional fees, new headquarters lease expenses, and bad debt provisions[30][31] - As of June 30, 2021, the company's total cash, cash equivalents, restricted cash, and short-term investments amounted to RMB 4.534 billion[36] Share Repurchase Program Update The company initiated a share repurchase program in May 2021, authorizing up to $125 million in repurchases, with approximately $12.5 million already executed by June 30, 2021 - The Board of Directors authorized a 12-month share repurchase program on May 18, 2021, for a total amount not exceeding $125 million[37] - As of June 30, 2021, the company had repurchased approximately $12.5 million worth of ADSs under the program[37] Non-GAAP Financial Measures Non-GAAP Financial Measures The company utilizes Non-GAAP financial measures to assess core operating performance by excluding non-cash and non-core items, providing a clearer view for management and investors, while acknowledging their limitations - The company's management uses Non-GAAP financial measures to evaluate financial operating performance and formulate business plans[41] - Key adjustments include share-based compensation expenses, amortization of intangible assets from business acquisitions, and unrealized investment losses, which are mostly non-cash expenses or not directly related to core business operations[40][41] - The company acknowledges the limitations of Non-GAAP measures, as they do not reflect all income and expense items, and advises investors to evaluate them in conjunction with GAAP financial data[45] Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2021, total assets slightly increased to RMB 10.84 billion, with significant growth in equity investments, intangible assets, and goodwill reflecting M&A activities, while cash and short-term investments decreased Balance Sheet Summary | Item | June 30, 2021 (RMB millions) | December 31, 2020 (RMB millions) | | :--- | :--- | :--- | | Total Assets | 10,844.7 | 10,474.7 | | Cash, Cash Equivalents, and Short-Term Investments | 4,534.2 | 5,179.9 | | Inventories, Net | 991.6 | 1,026.0 | | Goodwill | 213.4 | 13.6 | | Total Liabilities | 4,536.9 | 4,332.1 | | Total Shareholders' Equity | 6,307.8 | 6,133.6 | Condensed Consolidated Statements of Comprehensive Income (Loss) In H1 2021, total net revenue increased by 17.7% to RMB 4.32 billion, but increased operating expenses and an unrealized investment loss led to a 33.6% year-over-year decrease in net income attributable to ordinary shareholders H1 2021 Income Statement Summary | Item (RMB millions) | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Total Net Revenue | 4,324.6 | 3,675.7 | | Operating Profit | 159.5 | 173.4 | | Net Income | 84.0 | 122.7 | | Net Income Attributable to Ordinary Shareholders | 81.0 | 122.0 | - An unrealized investment loss of RMB 54.61 million was recorded in H1 2021, which was a significant factor contributing to the decline in net income[57] - Share-based compensation expenses increased from RMB 49.66 million in the prior-year period to RMB 74.16 million, further pressuring profits[61] Reconciliation of GAAP to Non-GAAP Performance This section details the adjustments from GAAP to Non-GAAP net income attributable to ordinary shareholders for H1 2021, primarily adding back share-based compensation, intangible asset amortization, and unrealized investment losses H1 2021 Net Income Attributable to Ordinary Shareholders GAAP to Non-GAAP Reconciliation | Item (RMB millions) | H1 2021 | | :--- | :--- | | Net Income Attributable to Baozun Ordinary Shareholders (GAAP) | 81.0 | | Add: Share-based compensation expenses | 74.2 | | Add: Amortization of intangible assets from business acquisitions | 3.0 | | Add: Unrealized investment losses | 54.6 | | Less: Tax impact of amortization of intangible assets from business acquisitions | (0.8) | | Non-GAAP Net Income Attributable to Baozun Ordinary Shareholders (Non-GAAP) | 212.1 |