Creative Global Technology(CGTL) - 2024 Q4 - Annual Report

Executive Summary & Financial Highlights CGTL's strategic shift in FY2024, prioritizing higher-margin orders, led to decreased revenue but significantly improved gross profit and net income Company Overview & Strategic Focus Creative Global Technology Holdings Limited (CGTL) specializes in reselling recycled consumer electronics, strategically shifting to higher-margin orders in FY2024 - CGTL's core business involves sourcing and reselling recycled consumer electronic devices[1] - The company strategically focused on enhancing market share and prioritizing higher-margin orders in FY2024[3] - This strategic shift resulted in a decrease in total revenue but an increase in gross profit and gross margin[3] Fiscal Year 2024 Key Financial Highlights FY2024 saw a 29.2% revenue decrease to $35.6 million, yet gross profit rose 27.5% to $6.3 million, and net income increased 34.4% to $4.3 million Fiscal Year 2024 Key Financial Highlights | Metric | FY2024 (USD) | FY2023 (USD) | Change (%) | | :---------------------- | :----------- | :----------- | :--------- | | Total Revenue | $35.6 million | $50.3 million | -29.2% | | Gross Profit | $6.3 million | $5.0 million | +27.5% | | Gross Profit Margin | 17.8% | 9.9% | +7.9 pp | | Income from Operations | $5.2 million | $3.8 million | +36.7% | | Net Income | $4.3 million | $3.2 million | +34.4% | Detailed Financial Performance Analysis This section provides an in-depth analysis of CGTL's FY2024 financial performance, highlighting trends in revenue, cost, profit, and operating expenses Revenues Total revenue for FY2024 decreased by 29.2% to $35.6 million, a strategic outcome of prioritizing higher-margin orders Revenues | Metric | FY2024 (USD) | FY2023 (USD) | Change (%) | | :--------------- | :----------- | :----------- | :--------- | | Total Revenue | $35.6 million | $50.3 million | -29.2% | | Wholesale Revenue | $35.6 million | $50.2 million | -29.0% | - The decrease in revenue was a strategic outcome of prioritizing higher-margin orders[4][7] - All revenues were generated from Hong Kong[7] Revenue by Product Category Smartphones remained the largest revenue contributor despite a decreased share, while laptops and other products saw increased share and improved gross profit margins Revenue by Product Category | Product Category | 2024 Revenue (USD million) | 2024 % of Total | 2023 Revenue (USD million) | 2023 % of Total | | :--------------- | :------------------------- | :-------------- | :------------------------- | :-------------- | | Smartphones | 26.3 | 73.8% | 41.1 | 81.8% | | Tablets | 2.6 | 7.3% | 3.6 | 7.3% | | Laptops and others | 6.7 | 18.9% | 5.5 | 10.9% | | Total | 35.6 | 100% | 50.2 | 100.0% | - Smartphone revenue share decreased, with units sold dropping from 149,032 to 67,448 due to the higher-margin strategy, leading to increased average unit cost ($248 to $319) and selling price ($272 to $390)[3][8] - Laptops and other products' revenue share increased, with units sold rising from 61,617 to 65,703, boosting gross profit margins from 8.3% to 17.8%[10] Cost of Revenues Cost of revenues decreased to $29.3 million in FY2024, primarily driven by a 35.7% reduction in acquisition volume Cost of Revenues | Metric | FY2024 (USD) | FY2023 (USD) | Change (%) | | :---------------- | :----------- | :----------- | :--------- | | Cost of Revenues | $29.3 million | $45.3 million | -35.3% | | Acquisition Volume | 164,217 units | 255,252 units | -35.7% | - The decrease in cost of revenues was mainly due to lower acquisition volume, despite increased acquisition cost for smartphones[11] Gross Profit Gross profit increased 27.5% to $6.3 million, with margin improving to 17.8%, reflecting the strategic focus on higher-margin orders Gross Profit | Metric | FY2024 (USD) | FY2023 (USD) | Change (%) | | :---------------- | :----------- | :----------- | :--------- | | Gross Profit | $6.3 million | $5.0 million | +27.5% | | Gross Profit Margin | 17.8% | 9.9% | +7.9 pp | - The increase in gross profit margin was primarily due to intentionally selecting higher-margin orders[12] - Gross profit margins for smartphones, tablets, and laptops improved to 18.1%, 14.5%, and 17.8% respectively, from 10.1%, 9.4%, and 8.3% in FY2023[4] Operating Expenses Selling and marketing expenses slightly decreased due to cost control efforts, while general and administrative expenses remained stable Operating Expenses | Expense Category | FY2024 (USD) | FY2023 (USD) | Change (%) | | :----------------------- | :----------- | :----------- | :--------- | | Selling & Marketing | $32,738 | $34,132 | -4.1% | | General & Administrative | ~$1.1 million | ~$1.1 million | Stable | - Selling and marketing expenses decreased due to the company's efforts to control expenses[13] Net Income Net income grew 34.4% to $4.3 million in FY2024, primarily driven by higher gross profit and reduced operating expenses Net Income | Metric | FY2024 (USD) | FY2023 (USD) | Change (%) | | :--------- | :----------- | :----------- | :--------- | | Net Income | $4.3 million | $3.2 million | +34.4% | - The increase in net income was mainly driven by higher gross profit and reduced expenses[5][15] Recent Developments This section outlines key recent corporate activities, including the successful completion of the company's Initial Public Offering Initial Public Offering (IPO) CGTL completed its IPO on November 27, 2024, raising $5 million in gross proceeds, with an additional $0.75 million from the over-allotment option - Completed IPO on November 27, 2024, raising $5 million in gross proceeds[16] - Exercised over-allotment option for an additional $0.75 million, totaling $5.75 million in gross IPO proceeds before expenses[16] Company Information This section provides an overview of Creative Global Technology Holdings Limited, its mission, forward-looking statements, and investor relations contacts About Creative Global Technology Holdings Limited CGTL promotes a circular economy by recycling and reselling consumer electronics, expanding into retail sales and device rentals in Hong Kong - Dedicated to extending the life of consumer electronics through recycling, supporting a sustainable circular economy[17] - Specializes in sourcing and reselling recycled smartphones, tablets, and laptops, moving devices from affluent markets to developing regions[17] - Expanded into retail sales and device rentals for Hong Kong residents[17] Forward-Looking Statement This section cautions against undue reliance on forward-looking statements, which are not guarantees of future performance and involve inherent risks and uncertainties - The press release contains forward-looking statements that are not guarantees of future performance and involve risks and uncertainties[18] - Investors are cautioned not to place undue reliance on forward-looking statements due to market conditions and other risk factors[18] - The Company undertakes no obligation to publicly revise these forward-looking statements[18] Investor Relations Contact details for investor relations inquiries are provided through WFS Investor Relations Inc - Investor relations contact information is provided through WFS Investor Relations Inc. for inquiries[19] Consolidated Financial Statements This section presents CGTL's consolidated balance sheets and statements of income and comprehensive income for the fiscal year Consolidated Balance Sheets As of September 30, 2024, total assets increased 43.3% to $16.3 million, driven by accounts receivable, with total shareholders' equity rising 46.3% to $13.46 million Consolidated Balance Sheets | Balance Sheet Item | FY2024 (USD) | FY2023 (USD) | Change (USD) | Change (%) | | :------------------------- | :----------- | :----------- | :----------- | :--------- | | Total Assets | $16,319,951 | $11,388,573 | +$4,931,378 | +43.3% | | Current Assets | $15,315,253 | $10,818,433 | +$4,496,820 | +41.6% | | Cash and equivalents | $443,322 | $4,305,577 | -$3,862,255 | -89.7% | | Accounts receivable, net | $10,491,664 | - | +$10,491,664 | N/A | | Inventories, net | $3,842,072 | $5,750,381 | -$1,908,309 | -33.2% | | Total Liabilities | $2,859,735 | $2,189,016 | +$670,719 | +30.6% | | Taxes payable | $2,676,376 | $1,757,908 | +$918,468 | +52.2% | | Total Shareholders' Equity | $13,460,216 | $9,199,557 | +$4,260,659 | +46.3% | Consolidated Statements of Income and Comprehensive Income FY2024 revenues were $35.6 million, with gross profit at $6.3 million and net income at $4.3 million, resulting in $0.21 basic and diluted net income per share Consolidated Statements of Income and Comprehensive Income | Income Statement Item | FY2024 (USD) | FY2023 (USD) | FY2022 (USD) | | :------------------------------------------ | :----------- | :----------- | :----------- | | Revenues | $35,611,761 | $50,278,937 | N/A | | Cost of revenues | ($29,275,274) | ($45,309,410) | N/A | | Gross Profit | $6,336,487 | $4,969,527 | N/A | | Income from operations | $5,185,532 | $3,794,326 | N/A | | Net income | $4,282,368 | $3,155,321 | N/A | | Net income per share - basic and diluted | $0.21 | $0.16 | N/A |