Day: September 2, 2021

Joy Spreader’s H1 financial results were impressive, with both gross profit  and net profit doubling:

• Gross profit (excluding foreign exchange gains or losses) for the period grew 105.15 per cent YoY to HK$214 million (approx. US$27.4 million).
• Net profit for the period increased 102.26 per cent YoY to HK$137 million (approx. US$17.5 million).

Of note is that profit grew significantly faster than revenue, indicating that the profit margins continued to improve. The impressive profitability was attributable to two drivers:

One was the improvement in the gross profit margin of the interactive entertainment product marketing business. The H1 financial report shows that the Group booked a gross profit of HK$214 million (approx.US$27.4 million) for the first half of 2021, an increase of 105.15 per cent year-on-year. Gross profit from interactive entertainment products rose to HK$149 million (approx.US$19.2 million), an increase of 92.58 per cent, while that of the e-commerce marketing business soared HK$65.28 million (approx.US$8.4 million), an increase of 143.31 per cent. Gross margin of interactive entertainment products increased significantly from 22.1 percent to 30.05 per cent.

Joy Spreader’s high profitability was also attributable to the increasing share of the higher margin short form video (SFV)-based e-commerce marketing business. Launched in 2018 followed by nearly three years of high growth, it has become the firm’s main growth driver. In the first half of 2021, the business posted a rise of 285.24 per cent in revenue, surging to HK$129 million (approx. US$16.5 million).

In recent years, the most significant change brought about by the rapid development of the mobile web is the explosive growth seen by new media platforms such as WeChat and Douyin. Changes in media forms, especially the trend towards decentralization, has meant a new round of changes on the marketing side. New marketing practices replace old ones, reshaping China’s new media commercialization market.

Benefiting from the booming SFV-based e-commerce sector, Joy Spreader’s e-commerce marketing business with a strong focus on leveraging SFVs on the Douyin platform supported the firm’s rapid pace of growth. With an increasing share of the e-commerce marketing business devoted to Douyin, Joy Spreader’s profitability is expected to see further improvement.

Going forward, Joy Spreader plans to further its efforts in expanding its overseas e-commerce business. Historically, the gross margin of similar businesses overseas has usually been higher than that within China, thanks to the relatively relaxed competitive environment in overseas markets. With the continued transfer of business focus to high-margin products and solutions, Joy Spreader expects profitability to further improve, enhancing the firm’s shares as an attractive choice for value investing.

For more information about Joy Spreader Group Inc., please visit here.

BEIJING, Sept. 2, 2021 /PRNewswire/ — Joy Spreader Group Inc. (HKG:6988, “the Group”, “Joy Spreader”), a leading marketing technology company listed in Hong Kong, recently announced its interim results for the first six months ended June 30, 2021. Joy Spreader achieved revenue of HK$624 million (approx. US$79.8 million) during the first half of 2021, an increase of 62.37 per cent from the same period of the previous year. The Group has opted for a cost-per-sale (CPS) approach as its main business model. During the first half of the year, CPS-based revenue accounted for 92.71 per cent of the firm’s total.

The firm, a Chinese technology leader mainly engaged in mobile new media-based intelligent performance marketing, maintained rapid growth during the first half of 2021. Gross profit and net profit excluding extraordinary items for the period also grew 105.15 per cent and 102.26 per cent year on year to HK$214 million (approx. US$27.4 million) and HK$137 million (approx. US$17.5 million), respectively.

Deploying this model in tandem with its professional services and competence in technologies, the company has helped corporate clients win new customers and orders by addressing their challenges with and expectations from Joy Spreader’s Direct to Consumer (DTC) model. Joy Spreader then negotiates a compensation model with each client based on several performance indicators, with sales being one of the most important.

Joy Spreader’s financial results were closely associated with two indicators: the number of covered marketing points and average gross merchandise value (GMV) of products at the marketing points as the firm’s sales of products are calculated by multiplying the number of such points by the average GMV of products sold.

As of June 30, 2021, the number of covered marketing points included in Joy Spreader’s marketing ecosystem had risen to 1.5616 million, up 208.65 per cent from a year prior. Of the marketing points, 689,500 are active in nature, up 126.32 per cent. Average GMV of products of covered marketing points showed a year on year gain of 10.1 per cent to HK$3504.26 (approx. US$448.5). Of note, the average GMV of e-commerce products sold at active marketing points on the popular Douyin e-commerce platform surged 15.24 per cent to HK$9920.44 (approx. US$1,269.80) while the GMV of interactive entertainment products at premium locations on WeChat Channels rose 1.63 per cent to HK$2833.77 (approx. US$362.70).

The spurt in growth of the number of active marketing points for product placement, along with the increase in average GMV of products sold, has facilitated the rapid improvement in Joy Spreader’ interim results.

Joy Spreader is continuing its efforts to expand its presence on the Douyin platform. As of June 30, 2021, the number of the Group’s covered marketing points on the platform hiked 720.23 per cent year on year to 657,300. Of those 65,200 are active, an increase of 215.93 per cent. The firm’s short-form video (SFV)-based e-commerce business is expected to have huge growth potential as a result of the possible conversion of many of its covered marketing points to active ones.

With the conversion of an increasing number of Joy Spreader’s non-premium covered marketing points on Douyin to active ones, alongside the continued rise in the average GMV of products placed there, the Group’s SFV-based e-commerce marketing business is expected to grow rapidly, further driving the rapid growth of the firm’s overall results.

Going forward, Joy Spreader plans to further expand the SFV-based e-commerce business outside of China. With the advantages in technologies that the Group has already built in the domestic market, the firm fully expects to be successful in the effort.

For more information about Joy Spreader Group Inc., please visit here.