Loctek(300729)2025-01-15 07:33Key Points Industry/Company Involved - Company: LeGe Electric Appliance Co., Ltd. (LeGe) - Industry: Smart Home Products, E-commerce, Overseas Warehouse Core Views and Arguments - Performance in 2024: - Net profit decreased by 50% due to high non-recurring income in 2023 and challenges in cross-border e-commerce, such as intense competition, increased marketing expenses, and rising sea freight costs. - Adjusted net profit decreased by about 20% after excluding non-recurring income. - The sale of a major warehouse in 2023 generated approximately 120 million yuan in income, while the sale of smaller warehouses in 2024 is expected to be lower. - The expansion of overseas warehouses in 2024 exceeded expectations, but the utilization rate was only about 70%. In 2025, the focus will be on utilizing existing capacity and cautiously controlling expansion, which is expected to improve profit margins. - B2B distribution business is in its early stages and contributes little to current profits, but the company is optimistic about its long-term potential to expand sales channels and boost performance. - The impact of the US-China trade war on LeGe is yet to be fully assessed, but the company has transferred some production capacity to Vietnam to mitigate potential risks. - In 2025, LeGe expects cross-border e-commerce business profitability to recover, mainly due to lower sea freight costs and the launch of new products. Overseas warehouse business will rely on improving utilization rates and fine management to enhance profit margins. - The company is actively responding to industry competition by raising prices, improving management, and investing in automation and information technology to enhance profitability. The focus will be on profit rather than scale expansion, and customer selection strategies will be adjusted based on market conditions. - Cross-border E-commerce Impact: - Intense competition, increased marketing expenses, and rising sea freight costs have put pressure on profits. - The rapid expansion of overseas warehouses in 2024, with a new warehouse area of over 400,000 square meters, increased costs significantly. - New warehouses are unprofitable until utilization rates reach 50% or higher, impacting profit margins. - B2B Distribution Business: - The business model connects suppliers (factories) and end customers (including live-streaming e-commerce and distributors) through a platform. - Currently in its early stages, with limited output and profitability. - The company is optimistic about its long-term potential to expand sales channels and boost performance. - US-China Trade War: - The impact of the trade war on LeGe is yet to be fully assessed. - The company has transferred some production capacity to Vietnam to mitigate potential risks. - There is a trend of transferring production capacity of cross-border e-commerce customers to overseas regions. - 2025 Outlook: - LeGe expects cross-border e-commerce business profitability to recover in 2025, mainly due to lower sea freight costs and the launch of new products. - Overseas warehouse business will rely on improving utilization rates and fine management to enhance profit margins. - The company will focus on profit rather than scale expansion and adjust customer selection strategies based on market conditions. - Industry Trends: - The US-China trade war will eventually lead to a new balance point in the industry, with some companies exiting the market and improving the profitability of remaining companies. - Industry competition will promote the elimination of the weak and the survival of the strong, improving overall efficiency and profitability. Other Important Points - Overseas Warehouse Development: - The expansion of overseas warehouses in 2024 exceeded expectations, but the utilization rate was only about 70%. - In 2025, the focus will be on utilizing existing capacity and cautiously controlling expansion. - The profit margin is expected to improve in 2025. - B2B Distribution Business: - The business is in its early stages and contributes little to current profits. - The company is optimistic about its long-term potential to expand sales channels and boost performance. - US-China Trade War: - The impact of the trade war on LeGe is yet to be fully assessed. - The company has transferred some production capacity to Vietnam to mitigate potential risks. - Industry Trends: - The US-China trade war will eventually lead to a new balance point in the industry, with some companies exiting the market and improving the profitability of remaining companies. - Industry competition will promote the elimination of the weak and the survival of the strong, improving overall efficiency and profitability.