Sydney, Australia, Nov 28, 2014 - (ABN Newswire) - What does eCargo (ASX:ECG) do? ECG is an eCommerce enabler , providing an integrated e commerce outsourced logistics solution, to western designer brands, retailers and fresh food merchants who wish to operate eCommerce businesses primarily in China. ECG's business model is partnering (B2B) with well-known global brands and merchants in their pursuit of the most effective channel to market in the rapidly expanding Chinese e commerce markets. Driven by middle class expansion and satisfying their increasing demand for western brands in the fashion and food sectors. Fashion represents 30% of online sales in China and food 10%. These two sectors have the highest margins for logistics.
eCargo operates out of Hong Kong and its primary market is China with Australia, Europe and North American as secondary markets. The company develops and provides eCommerce technologies, integrated offline and online supply chain operations, and digital retail solutions for merchants seeking to initiate, incubate, or strengthen, their presence in China's booming eCommerce market.
Put simply they provide cutting edge e commerce strategy for international brands who are committed to developing this business in china.
Established with the vision to be a "one-stop" business enabler and solutions provider in the eCommerce market, the business provides five key service capabilities to merchants who enter the China market, namely;
- Booming Chinese e-commerce sector. Biggest in the world.
- China is the biggest market in the world with largest growth rates.
- China consumer spending forecast to be $6.18 trillion in 2016
- Significant demand for western fashion labels and fresh food within China.
- Western brands wanting to enter China however don't know how to do it in the most cost effective and efficient way.
- Increasing number of Chinese consumers and wealth.
- No 18% sales tax payable when good bought online in China
- Chinese government pushing internal consumer growth and spending
- ECG works in a complementary relationship with Alibaba & JD.com etc., working behind the scenes building the engine room for retailers efficient expansion.
- ECG sells/delivers merchants products via market places and branded websites.
Weekly eye balls on Tmall (China's google for clothes Alibaba owned) 103m and JD.com (China's Amazon) 44m so ~ 145m unique weekly viewers.
- World Class management with 40 years' experience in this sector.
- The parent company is the largest independent logistics company in Hong Honk with extensive client relationships.
- Ten tier one clients already on board with a clear pipeline of future clients (30+ CY2015).
- The only "one stop shop" e Commerce service solution in China.
- B2B tailor made solutions for brand principals.
- 28 paying clients as of today.
10 Current Tier 1 clients ( will turnover $1mAUD per month in sales)
Esprit operates more than 900 retail stores worldwide and distributes products to more than 8,500 wholesale locations around the globe. Esprit has more than 1.1 million square meters of retail space in 40 countries.
La Perla is a luxury Italian women's clothing company specializing in lingerie. As well as being stocked in department stores internationally, La Perla has over 150 boutiques globally.
Karen Millen is a British women's clothing retailer, specialising in tailoring, coats and eveningwear. The company has stores throughout the United Kingdom, United States, Indonesia, Europe and China.
Myer is an Australian-owned department store chain which stocks a broad range of products including clothing, footwear and accessories; cosmetics and fragrance; home wares; electrical; furniture and bedding; toys; books and stationery; food and confectionery; and travel goods.
Super Retail Group is one of Australasia's Top 10 retailers and is listed in the Australian Securities Exchange. Home to Amart Sports, Avanti Fitness, BCF Boating Camping Fishing, Goldcross Cycles, FCO Fishing Camping Outdoors, Ray's Outdoors, Rebel, Supercheap Auto, Workout World and Super Retail Commercial, the Group has operations in Australia, New Zealand and China, with more than 600 stores and annualised turnover in excess of $2 billion.
Jeanswest operates over 240 stores across Australasia, the Middle East, Fiji, Russia, Nepal, Indonesia and Papua New Guinea. Jeanswest's parent company, Glorious Sun Group, operates over 3000 Jeanswest stores in China.
New Zealand Post is New Zealand's postal service, providing domestic and international postage, as well as a nationwide courier service (CourierPost), a bank (Kiwibank) as well as a China-based Tmall logistics solution which is outsourced to eCargo.
Catwalk88 is a China-based online retailer of women's fashion apparel. eCargo currently provides eOperation, eFulfilment and eSupport services to Catwalk88.
New Look is a leading international fast-fashion brand, with over 600 stores throughout the UK/Republic of Ireland and over 200 across Europe, China, North Africa, the Middle East and Asia. Newlook.com now ships to over 120 countries worldwide and generates 10% of company revenues.
Nelly.com is Scandinavia's largest online fashion store targeting men and women between 18 and 35. The online store stocks over 850 different brands within clothing, shoes, underwear, swimwear, beauty products, accessories and sports fashion.
18 Tier 2 Merchants (will do $250k-$1m per month in sales)
Americana International Limited, Bright Planet International Limited, Chinabuy Limited, Chinamade.com Hong Kong Limited, Flylink Tech Co. Ltd, Glamour Sales China (Mei.com), Gold Jen International Limited (Rotasole Footwear), Liggy's Cake Company Limited, Liraf B.L.P. (Israel) Ltd (The Limited), Lotus London Limited, Luen Yick Electrical, Mybaby HK Limited, Overland Shoes Limited, Power Brands Ltd (Invicta), Suncraft Company Limited (Japanese Knife Company), Fingershopping Limted (Circle K) and Carnaby Hill.
Why do we like and have such high conviction on this story?
- Investing in eCargo is participating in China's booming e commerce market.
- E enablers make 10-12% of the total e commerce turnover. Huge organic growth
- Out sourced logistics services are sticky fee's and survive through cycles.
- Enormous market potential and global user base expansion.
- A1 management and experience in global logistics.
- eCargo works for brand principals B2B as this is their strength coming from CS Logistics (parent company). Fashion and retail.
- e commerce is all about logistics and this is where eCargo excels with 40+ years' experience from management and CS Logistics.
- Global logistic trend is to outsource to a provider like ECG.
- eFulfillment and eOperation services are critical in eCargo's strengths and once turned on by a client are very difficult to be removed hence a very sticky business going forward.
- eCargo's business model was overseen by Ben Kwan, Transaction Advisory Services Leader, TMT, Greater China, EY Hong Kong. Great vison and seeing China's changing landscape in Logistics, Tech and reatil before most.
- The Lau's have spent 2 years and ~$40m USD of their own money to date to get the company to where it is today(de risked).
- Our estimations have profit in Q2 2015 if not before.
Bottom line eCargo is set for a great 2015 and beyond and has all the ingredients to live up to the expectations of the founder, funder and Executive Chairman Mr John Lau's wish for a $2B + company in a short time. Talking with john on several occasions in all his business life he has never seen an opportunity presented to himself with his skill set where he can capitalise on the opportunity so quickly and create so much wealth. In time we see ECG becoming a takeover target for the larger slower traditional HK/China freight companies like Kerry Logistics or listed e commerce companies such as BABA, eBay Enterprise or JD.com.
With 28 paying clients already signed on we feel eCargo is tracking ahead of management expectations and the business is in great shape.
About Investorlink Group:
Headquartered in Sydney Australia, Investorlink Group is a global specialist provider of financial, advisory investment, immigration and funds management services.
About eCargo Limited:
eCargo Limited (ASX:ECG) is an eCommerce enabler, providing holistic eCommerce solution, to designer brands, retailers and branded manufacturers who wish to operate eCommerce businesses in China.
While eCargo is focused on the China market, it also provides services internationally to Australia, South Africa and the United Kingdom, as well as other countries.
eCargo is considered unique as it is currently the only business operating in the China market that can provide all of these services to its clients in a "one stop shop" service offering.
Investorlink Group T: +61-2-9276-2000 F: +61-2-9247-9977 WWW: www.investorlinkgroup.com
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