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Public company info - UNQ Holdings Limited , 02177.HK
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UNQ Holdings Limited, 02177.HK - Company Profile
Chairman WANG Yong
Share Issued (share) 166,000,000
Par Currency Hong Kong Dollar
Par Value 1.0E-4
Industry E-Commerce & Internet Services
Corporate Profile Business Summary: The group is a leading brand e-commerce retail and wholesale solutions provider in China, strategically focused on Japanese-branded fast-moving consumer goods, or FMCG, consisting of, among others, beauty products and personal care products. Performance for the year: During the Track Record Period, the group’s total revenue was RMB2,541.0 million, RMB2,781.7 million and RMB2,800.8 million, in 2018, 2019 and 2020, respectively, and the group’s gross profit increased from RMB616.3 million in 2018 to RMB803.5 million in 2019, and further to RMB888.1 million in 2020. Business Review According to the CIC Report, the group ranked first among brand e-commerce solutions providers in China in terms of GMV for Japanese-branded FMCG sold through e-commerce channels in China in 2019, with a market share of 5.5%.2 As Japanese FMCG brands have grown in popularity and become important players in the Chinese e-commerce business, the market size of the Japanese FMCG brand e-commerce service market increased at a CAGR of 43.1% from RMB12.2 billion in 2014 to RMB73.3 billion in 2019. It is expected to further increase by 12.6% to RMB82.5 billion in 2020, and to RMB111.4 billion by 2024 at a CAGR of 8.7% from 2019 to 2024, according to the same source. The group act as the bridge between brand partners, e-commerce platforms and consumers in China. The group operate the group’s business primarily under distribution method and service fee method. Under the distribution method, the group purchase products from selected brand partners, manage domestic and cross-border supply chains, identify and reach target consumers through omnichannel marketing, and sell products to consumers through online marketplace stores operated by us, which the group refer to as the group’s business-to-consumer or B2C model, or to e-commerce platforms or other distributors which in turn sell to consumers, which the group refer to as the group’s business-to-business or B2B model. Under the service fee method, as a supplement to the B2C and B2B models, the group also provide solutions to brand partners or other customers for service fees, usually at a pre-agreed amount, and/or performance-based service charge. In operating the group’s B2C and B2B businesses, the group assist the group’s brand partners in developing their e-commerce strategies and offer integrated solutions encompassing various operations in the e-commerce value chain, including brand analysis, online store operations, digital marketing, customer service, and logistics management. The group also contribute to e-commerce platforms’ efforts to attract new international brands. Together with the group’s brand partners and the e-commerce platforms, the group is dedicated to bringing curated, fun and quality branded products from around the globe to consumers in China who are in pursuit of a stylish and healthy lifestyle. The group believe the value provided for brand partners by the group’s services or solutions for establishing their online presence, promoting their product popularity, operating their distribution channels and increasing their online sales volume, which do not generate direct revenue, is embedded in the price spread the group earn from product sales to the group’s customers. The following diagram illustrates the group’s relationship with brand partners and the group’s business. The group launched the group’s cross-border brand e-commerce solution in 2015, and, according to the CIC Report, the group were among the first to commence a cross-border import brand e-commerce solution business shortly after Tmall Global was established. Cross-border e-commerce facilitates the direct import and sales of products that are usually the same as those sold in the country of origin, and simplifies the usually complex and time-consuming entry requirements of general trade. It is particularly suitable for introducing to China personalized and high-quality overseas FMCG in a cost-effective manner, especially for overseas brands seeking to enter the Chinese market. Compared to general trade, under which typically the brand partners are responsible for handling customs-related regulations, serving cross-border e-commerce usually requires more sophisticated supply chain management and better coordination among participants in the supply chain. The group took advantage of UNQ Japan and UNQ HK as part of the group’s cross-border e-commerce solutions, and accumulated knowledge and experience in handling customs-related regulations and policies in China, Japan and Hong Kong. Therefore, the group is able to provide the group’s brand partners with optimal strategies and solutions, taking into consideration factors such as their product characterization and applicable regulatory requirements. As an early mover in cross-border e-commerce, the group have formed well-established cross-border supply chain management operations. In order to better identify products suitable for consumers in China, the group have built up a localized team in Japan that is principally responsible for business development, as well as liaising with potential brand partners and supply chain management. During the Track Record Period, the group increased efforts to grow the group’s cross-border brand e-commerce business, from which the revenue generated as a percentage of the group’s total revenue for the same periods increased from 34.4% in 2018, to 40.1% in 2019 and to 42.7% in 2020. In particular, the number of stores operated by us on Tmall Global for cross-border e-commerce increased rapidly, from 12 as of December 31, 2018, to 19 as of December 31, 2019 and to 26 as of the Latest Practicable Date. As to the transaction model, cross-border e-commerce grew, and is expected to grow, at a much higher rate than other e-commerce models according to the CIC Report. The market size of the cross-border import brand e-commerce service market in China increased at a CAGR of 89.8%, from RMB4.0 billion in 2014 to RMB97.6 billion in 2019, and is expected to achieve RMB124.3 billion by 2020 at a growth rate of 27.4% from 2019 to 2020, and further grow to RMB217.9 billion by 2024 at a CAGR of 17.4% from 2019 to 2024, according to the CIC Report. As of the Latest Practicable Date, the group provided brand e-commerce solutions to 28 brand partners with 66 brands, among which 58 brands were from Japan. The group strategically focus on Japanese-branded products, which are widely recognized in China and are considered by consumers to be of high quality. The group have developed long-term relationships with the group’s brand partners, covering 40 brands which are Japanese brands that have cooperated with us for more than three years, such as Shiseido, Unicharm and Kose. The group also proactively identify and incubate up-and-coming brands, such as Koh Gen Do, Attenir, Bioeffect and Kobayashi, to enable them to quickly establish a brand presence in China, and position them for growth, leveraging the group’s broad sales channels and omnichannel marketing capabilities. While the group focus on beauty and personal care products, the group strive to diversify the group’s brand and product portfolio by expanding into high-growth areas identified through data analytics, such as Japanese health products, in particular OTC drugs, where the group’s established operational capabilities in Japan give us a competitive edge. The group have assisted four Japanese brand partners in establishing the presence of their e-commerce health product business lines in China during the Track Record Period, and in March 2019 the group opened the Taisho flagship store on Tmall Global, which was the first cross-border import OTC drug online retail store on Tmall Global that is specialized in OTC drugs, according to the CIC Report. The group believe the group is the trusted partner of the group’s brand partners and their preferred choice for executing their e-commerce strategies in China, capitalizing on the group’s comprehensive e-commerce capabilities, broad sales channels, omnichannel marketing capabilities and ability to innovate and adapt to the fast-changing e-commerce market. The group were one of a few brand e-commerce service providers rated with five stars or higher both by Tmall and Tmall Global in 2019 and 2020. The group were a Tmall Global five-star service provider in 2018 and 2019 and a Tmall Global purple-star service provider from July to December 2020, a Tmall five-star service provider in 2018, 2019 and 2020, a Tmall Global Ecosystem-Partnership five-star service provider from January to March 2020, and received the 2019 JD Best JDP Operation Jingmei Award, a testament to the group’s all-round e-commerce service capabilities. The group have strategically cooperated with both established e-commerce platforms such as Tmall Platforms, JD Platforms and Kaola Platforms, and emerging social e-commerce platforms such as Pinduoduo Platforms and Xiaohongshu Platforms, to reach a large and diversified consumer base. As of the Latest Practicable Date, the group operated 88 online stores on Principal E-commerce Platforms, consisting of Tmall Platforms, JD Platforms, Xiaohongshu Platforms, Kaola Platforms and Pinduoduo Platforms, and nine stores on other e-commerce platforms. During the Track Record Period, the number of paying consumers of the online stores operated by us increased from approximately six million as of December 31, 2018 to approximately 10 million as of December 31, 2019, and further grew to approximately 12 million as of December 31, 2020. The group also sell products to various e-commerce platforms and other distributors. Leveraging the group’s broad and balanced sales channels, the group is capable of strategically selling products to different channels in response to the group’s brand partners’ e-commerce objectives. Through the group’s wholly owned subsidiary, Shanghai Fuli, which specializes in marketing and event planning, the group provide a wide spectrum of marketing and advertising services to brand partners. In addition, the group have established the group’s social media e-commerce team and multichannel network (MCN), and incubated KOLs with influences on Taobao, Xiaohongshu, Douyin and other popular social media platforms. The group’s ability to introduce curated, fun and quality branded products from around the globe to consumers in China is based on the group’s understanding of consumers’ demands. The group have derived and accumulated extensive and valuable transaction and operational data through the group’s operations and gained access to them through the services of e-commerce platforms, which, together with the group’s strong data analytics capabilities, allow us to effectively identify and predict consumers’ needs and preferences and to create more targeted and insightful e-commerce strategies for the group’s brand partners. The group established a digital marketing division responsible for the operation of the group’s data-driven business and digital marketing. The group’s deep understanding of Chinese consumers and the market also enables us to spearhead the overall sales, marketing and pricing initiatives and strategies for the group’s brand partners. Prospects: Strengthen the group’s leading position by broadening and diversifying the group’s brand portfolio Expand the group’s product lineup beyond beauty and personal care categories Optimize the group’s business mix and add more value to the services the group provide to the brand partners Continue to invest in technology infrastructure and data analytics Further enhance the group’s digital marketing, logistics management and customer service capabilities to provide services to third party brands Selectively pursue strategic alliance and acquisition opportunities

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