Once upon a time, the four young masters of South China City emerged as a dark horse with a distribution model, took advantage of the dividends of the times to create a myth of getting rich quickly, and were unrivaled for a time. However, with the evolution of the industry, the limitations of the extensive distribution strategy relied on by the "Four Young Masters" have gradually been exposed . At the fork in the road of the account ban wave in 2021, the fate of the four young masters of South China City soon went their separate ways: some transformed their brands and successfully upgraded, some kept a low profile and rushed to go public, some were burdened with debts and on the verge of bankruptcy, and some changed their ways and sold themselves to turn losses into profits... Tongtuo was the one that chose to sell itself to Huakai Yibai and turned losses into profits. It is learned that recently, Huakai Yibai released its third quarter report for 2024. The financial report shows that in the first three quarters of 2024 , Huakai Yibai achieved operating income of 6.115 billion yuan , a year-on-year increase of 28.75%, and a net profit of 189 million yuan , a year-on-year decrease of 36.74%. In the third quarter of 2024, Huakai Yibai achieved operating income of 2.596 billion yuan, a year-on-year increase of 47.72%, and a net profit of 54.7496 million yuan, a year-on-year decrease of 40.01%. Among them, Yibai Network achieved operating income of 1.697 billion yuan in the first quarter of 2024, 1.824 billion yuan in the second quarter, and 1.912 billion yuan in the third quarter, with a quarterly increase of 4.86% in operating income ; in the first quarter of 2024, the company achieved a net profit attributable to shareholders of 102 million yuan, a net profit of 82.9627 million yuan in the second quarter, and a net profit of 71.0052 million yuan in the third quarter, with a quarterly decrease of 14.41% . From the financial report, Huakai Yibai's revenue growth in this reporting period was mainly due to its multi-channel layout and exploration of diversified businesses : Temu platform achieved operating income of 91.58 million yuan, Tik Tok platform achieved operating income of 109 million yuan, and WalMart platform achieved operating income of 101 million yuan. Sales in the third quarter showed a rapid growth trend. - The number of cooperative merchants of Yimai ecological platform has expanded to 263, with operating income of 724 million yuan.
The decline in net profit was mainly due to the increase in warehousing costs, labor costs, promotion costs, and management costs . Taking the increase in warehousing costs caused by stocking up for the peak sales season as an example, at the end of the third quarter, Huakai Yibai's overall inventory size increased by 139.06% compared with the beginning of the year. Among them, Yibai Network's warehousing costs were 105 million yuan, a year-on-year increase of 72.15%. It is worth mentioning that judging from the financial report, Huakai Yibai's net profit was under pressure due to multiple factors related to the acquisition of Tongtuo Technology : on the one hand, the agency fees for the acquisition of Tongtuo Technology increased management expenses, and the increase in new M&A loans and loan interest expenses increased financial expenses; on the other hand, the increase in warehousing costs was also affected by the increase in Tongtuo Technology's inventory. However, judging from Tongtuo’s third-quarter performance, Huakai Yibai seems to have gradually resolved the “mess” left by Tongtuo. Most of Tongtuo’s “mess” were left over from the period of “the first sale”. It is understood that Tongtuo Technology, founded in 2004, was merged into the listed company Huading Shares at a sky-high price of 2.9 billion yuan in 2017. However, after the merger, Tongtuo failed to achieve the performance indicators of the gambling agreement for three consecutive years, and was also hit hard by the Amazon account blocking wave in 2021 and the Paypal account fund deduction in 2022. Some senior sellers pointed out that the reason why Tongtuo's performance has been declining is that, on the one hand, Tongtuo itself has "bad luck" and has been hit by a series of negative events, but on the other hand, after being acquired by Huading Co., Ltd., the conflict between the two parties is also a major factor : Tongtuo's cross-border e-commerce business operation operator has no real power and needs to report to Huading Co., Ltd., but there are no cross-border e-commerce related talents within the Huading Co., Ltd. team. The more the performance declines, the more irreconcilable the conflict between the two parties becomes. Affected by the epidemic, 2021 was once the period of fastest development of cross-border e-commerce, but at that time Tongtuo Technology was troubled by a series of problems such as fund handling and store freezing, which eventually led to the "first sale" ending with an inability to recover losses. Huakai Yibai's own senior background in cross-border e-commerce distribution to a certain extent foreshadows the difference in Tongtuo's second sale. It is learned that according to the latest report of Huakai Yibai, on July 2, 2024, Huakai Yibai completed the acquisition of 100% equity of Tongtuo Technology, and officially incorporated Tongtuo into the financial statements in July. In the third quarter of 2024, Tongtuo Technology has achieved operating income of 677 million yuan, successfully turning losses into profits. In this regard, Huakai Yibai pointed out that during the reporting period, Tongtuo Technology turned losses into profits mainly because of the company's comprehensive optimization and integration, and quickly improved its financial situation through measures such as improving operational efficiency, strengthening cost control, and optimizing resource allocation . Specifically, in terms of improving operational efficiency , Huakai Yibai's information system has helped to realize the automation and intelligent transformation of operational processes; in terms of strengthening cost control , Huakai Yibai's data-based operations and systematic operations have effectively controlled warehousing costs and reduced the risk of unsalable inventory; and in terms of optimizing resource allocation , Huakai Yibai has accumulated huge supply chain resources and can rely on the procurement management system to achieve efficient response in the logistics and distribution links. It can be speculated that for Tongtuo Technology, which had a large number of accounts and goods piled up due to the pressure of the gambling agreement when it was sold for the first time, the series of "cross-border e-commerce internal skills" that Huakai Yibai had already cultivated was just the right remedy. Therefore, Tongtuo was able to successfully improve its financial situation and turn losses into profits within just one quarter after being acquired. However, for now, Huakai Yibai has not yet announced the specific performance of Tongtuo Technology (such as the net profit data for the third quarter, etc.). Risks such as inventory depreciation, exchange rate fluctuations, and overseas demand falling short of expectations still exist. Whether Tongtuo Technology can further develop and continue to make profits in the future, the answer will have to wait and see. What do you think of the future development of Tongtuo Technology after its acquisition? Welcome to discuss in the comment area~
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