Financial Performance - Dmall Inc. achieved a revenue of RMB 1,859,002,000 in 2024, representing a 17.2% increase from RMB 1,585,357,000 in 2023[14] - The gross profit for 2024 was RMB 746,376,000, up 34.6% from RMB 554,701,000 in 2023[14] - The company reported a loss for the year of RMB 2,220,276,000, which is a significant increase from a loss of RMB 655,439,000 in 2023[14] - Adjusted profit from continuing operations for 2024 was RMB 29,795,000, compared to a loss of RMB 276,704,000 in 2023[14] - Total assets as of December 31, 2024, were RMB 1,659,186,000, an increase from RMB 1,377,772,000 in 2023[14] - Total liabilities decreased to RMB 1,018,157,000 in 2024 from RMB 8,142,896,000 in 2023[14] - The net assets improved to RMB 641,029,000 in 2024, recovering from net liabilities of RMB 6,765,124,000 in 2023[14] Market Expansion and Strategy - Dmall Inc. was listed on the Stock Exchange of Hong Kong in 2024, marking a significant milestone for the company[15] - Future strategies include continued focus on digital retail solutions and potential market expansion initiatives[15] - The international business accounted for 8.5% of the total revenue in 2024, driven by significant growth in the Southeast Asian market[21] - The Group's dual-engine strategy focuses on both Chinese and international markets, enhancing collaboration with leading retail enterprises[36] - The Group aims to strengthen its leadership position in the Chinese market while promoting globalization strategies in collaboration with industry leaders[113] Customer Engagement and Retention - The number of customers served by the Group reached 591 in 2024, indicating a growing customer base[16] - The Group's dollar-based net retention rate reached 114% in 2024, indicating strong customer retention and loyalty[95] AI and Technology Innovations - The Group launched ten major innovative AI applications in 2024, enhancing the digital intelligence capabilities across the retail chain[24] - The Dmall Solution 3.0 was successfully launched, incorporating AI technology and introducing cutting-edge applications[31] - The Group's AI agent products include AI Clearance, AI Customer Service, and AI Replenishment, with the AI Replenishment System winning an award in 2024[46] - The AI Clearance program was deployed in over 200 Wumart stores, generating annual profit growth exceeding RMB 1 million for Wumei Group through real-time discount recommendations[50] - AI Customer Service achieved an online resolution rate of 80%, significantly reducing labor costs while maintaining high user satisfaction[50] Operational Efficiency - The Group's intelligent energy efficiency solutions promote energy conservation and emission reduction, contributing to sustainable retail operations[61] - The Dmall store dashboard product has enabled store managers to access key performance indicators in real-time, resulting in an annual saving of RMB 439,000 in store manager working hours[107] - The transportation management system implemented with Sichuan Hongyuan has improved loading efficiency by 10% and increased handover efficiency by 10% through paperless operations[105] Financial Adjustments and Restructuring - Following the restructuring in April 2024, the Group divested all equity interests in Dmall Fresh (Beijing) and ceased operations of the Dmall APP, focusing on retail core service cloud solutions[109] - The Group recorded a loss for the year from continuing operations of RMB2,453.4 million, an increase from RMB749.0 million in the previous year, representing a 227.5% increase[174][176] - The fair value change of convertible redeemable preferred shares increased to RMB 2,275,701 thousand in 2024 from RMB 476,160 thousand in 2023, reflecting a substantial improvement[191] Revenue Breakdown - Revenue for retail core service cloud grew by 39.3% from RMB 1,298.7 million in 2023 to RMB 1,809.5 million in 2024[39] - The retail core service cloud accounted for 97.3% of total revenue in the Reporting Year, with AIoT solutions contributing 55.0% and operating system revenue at 42.3%[117] - E-commerce service cloud revenue plummeted by 98.6% from RMB300.0 million in 2023 to RMB4.3 million in the Reporting Year, as customers shifted to in-house operations[126] Cost Management - The Group's revenue cost increased by 8.0% from RMB1,030.7 million in 2023 to RMB1,112.6 million in the Reporting Year, primarily due to a rise in outsourcing and labor costs from RMB465.5 million to RMB856.5 million[146] - Selling and marketing expenses decreased by 38.8% from RMB150.9 million for the year ended December 31, 2023 to RMB92.4 million for the Reporting Year[161] - General and administration expenses increased by 18.7% from RMB259.4 million for the year ended December 31, 2023 to RMB308.0 million for the Reporting Year[166] Corporate Social Responsibility - The Group is committed to corporate social responsibility, implementing energy efficiency solutions to reduce carbon emissions in retail operations[25] - The Group's intelligent energy efficiency solutions promote energy conservation and emission reduction, contributing to sustainable retail operations[61]

Investment Rating - The report maintains a "Buy" rating for Dmall Group Co., Ltd. (2586 HK) with a target price raised to HKD 16.00, based on a 6.0x price-to-sales ratio for FY25 [1][10]. Core Insights - Dmall achieved breakeven for FY24, with total revenue increasing by 17% year-on-year to RMB 18.6 billion, and adjusted net profit improving to RMB 298 million from a loss of RMB 2.77 billion in FY23, driven by strong growth in core retail services and operational efficiency [1][2]. - The company is focusing on AI retail to capture new growth opportunities, having launched several AI agent products that are expected to contribute to revenue growth in the long term [1][2]. - For FY25, management anticipates revenue growth of 15-20% and further margin expansion, although revenue forecasts for FY25-26 have been adjusted downward due to slower customer acquisition [1][10]. Financial Performance Summary - FY24 revenue reached RMB 18.6 billion, with a year-on-year growth rate of 17% [4]. - The gross profit margin (GPM) improved from 35.0% in FY23 to 40.1% in FY24, while the adjusted net profit margin rose from -14.7% to 1.6% [3][12]. - The retail core service cloud revenue grew by 39% to RMB 1.81 billion, with AIoT solutions seeing a 65% increase to RMB 1.02 billion [2][4]. Revenue and Profit Forecasts - Revenue projections for FY25 are set at RMB 2.19 billion, with expected growth rates of 17.8% for FY26 and 14.1% for FY27 [4][12]. - Adjusted net profit is forecasted to reach RMB 134.4 million in FY25, with significant growth expected in subsequent years [4][12]. - The report indicates a projected increase in adjusted net profit margins to 6.1% in FY25 and 17.6% in FY27 [10][12].

20 Mar 2025 CMB International Global Markets | Equity Research | Company Update Earnings Summary | (YE 31 Dec) | FY23A | FY24A | FY25E | FY26E | FY27E | | --- | --- | --- | --- | --- | --- | | Revenue (RMB mn) | 1,585 | 1,859 | 2,190 | 2,572 | 2,936 | | YoY growth (%) | 19.4 | 17.3 | 17.8 | 17.5 | 14.1 | | Adjusted net profit (RMB mn) | (233.3) | 29.8 | 134.4 | 337.8 | 517.5 | | YoY growth (%) | na | na | 351.0 | 151.4 | 53.2 | | EPS (Adjusted) (RMB cents) | (44.43) | 5.39 | 14.94 | 37.56 | 57.55 | | P/S (x ...

Financial Performance - Revenue for the year ended December 31, 2024, was RMB 1,859,002 thousand, representing a 17.3% increase from RMB 1,585,357 thousand in 2023[6] - Gross profit for the same period was RMB 746,376 thousand, a significant increase of 34.6% compared to RMB 554,701 thousand in 2023[6] - The net loss for the year was RMB 2,220,276 thousand, which is a 238.7% increase from the net loss of RMB 655,439 thousand in 2023[6] - Operating loss decreased to RMB 173,998 thousand from RMB 262,804 thousand in the previous year, indicating improved operational efficiency[9] - The company reported a pre-tax loss from continuing operations of RMB 2,454,388 thousand, compared to RMB 752,308 thousand in 2023[10] - Basic and diluted loss per share for continuing operations was RMB 4.39, compared to RMB 1.31 in the previous year[10] - The total comprehensive loss for the year was RMB 2,220,276 thousand, compared to RMB 655,439 thousand in 2023[10] - The company reported a total comprehensive loss of RMB 2,345,203 thousand for the year, compared to a loss of RMB 763,092 thousand in the previous year, indicating a significant increase in losses[13] - The net loss attributable to equity shareholders for 2024 was RMB 2,195,277 thousand, compared to a loss of RMB 592,361 thousand in 2023, indicating a significant increase in losses[44] - The basic loss per share for continuing operations in 2024 was RMB (4.39), compared to RMB (1.31) in 2023, showing a deterioration in per-share performance[44] Revenue Breakdown - Revenue from major customer A was RMB 1,335,816,000 in 2024, up from RMB 1,139,183,000 in 2023, indicating a growth of about 17.3%[31] - Revenue from the core retail service cloud was RMB 1,809,508,000 in 2024, compared to RMB 1,298,730,000 in 2023, marking an increase of around 39.3%[31] - Revenue from e-commerce service cloud decreased to RMB 4,279,000 in 2024 from RMB 300,006,000 in 2023, a decline of approximately 98.6%[31] - Revenue from overseas customers was RMB 157,626,000 in 2024, up from RMB 123,261,000 in 2023, which is an increase of about 27.8%[34] - The AIoT solutions contributed RMB 1,023.2 million, accounting for 56.6% of the total revenue from the retail core service cloud, up from 47.7% the previous year[99] - Revenue from AIoT solutions in mainland China increased significantly, with total revenue from RMB 1,462.1 million in 2023 to RMB 1,701.4 million in 2024, representing 92.2% and 91.5% of total revenue respectively[104][107] Expenses and Costs - Research and development expenses were RMB 412,751 thousand, while sales and marketing expenses were RMB 92,439 thousand, reflecting a focus on innovation and market presence[9] - Total operating costs increased by 8.0% from RMB 1,030.7 million to RMB 1,112.6 million, primarily due to outsourcing and labor costs rising from RMB 465.5 million to RMB 856.5 million[110] - Sales and marketing expenses decreased by 38.8% from RMB 150.9 million in 2023 to RMB 92.4 million in the reporting year, primarily due to reduced promotional incentives[118] - General and administrative expenses increased by 18.7% from RMB 259.4 million in 2023 to RMB 308.0 million in the reporting year, driven by increased outsourcing and professional service fees[119] - Research and development expenses decreased by 20.8% from RMB 520.9 million in 2023 to RMB 412.8 million in the reporting year, attributed to cost control measures and improved technical capabilities[120] Assets and Liabilities - The company's non-current assets decreased from RMB 533,589 thousand in 2023 to RMB 375,652 thousand in 2024, reflecting a decline of approximately 29.6%[15] - Current assets increased from RMB 844,183 thousand in 2023 to RMB 1,283,534 thousand in 2024, representing a growth of about 51.9%[15] - Cash and cash equivalents rose significantly from RMB 533,171 thousand in 2023 to RMB 801,046 thousand in 2024, an increase of approximately 50.2%[15] - The company's total liabilities decreased from RMB 7,793,601 thousand in 2023 to RMB 918,265 thousand in 2024, a reduction of about 88.2%[16] - The company's current assets as of December 31, 2024, were RMB 1,283.5 million, a 52.0% increase from RMB 844.2 million in 2023[140] - Trade receivables rose from RMB 165.1 million as of December 31, 2023, to RMB 248.2 million as of December 31, 2024, driven by additional revenue from customized digital solutions and business expansion in smart delivery and cleaning services[156] Strategic Initiatives and Market Focus - The company plans to continue focusing on expanding its market presence and enhancing its product offerings in the upcoming year[9] - The company is primarily engaged in providing retail digital solutions for local retailers in China, indicating a focus on market expansion in this region[18] - The company has focused on AI and robotics collaboration to drive innovation in the retail sector[60] - The company aims to leverage AI technology to enhance retail operations and drive revenue growth through innovative applications across the retail value chain[92] - The company plans to focus on strengthening its leadership in the Chinese market while advancing its globalization strategy in collaboration with industry leaders[93] Partnerships and Collaborations - The company has established partnerships with major retail players, including DFI Retail Group and SM Investments Corporation, to enhance international market expansion[58] - The group has expanded its business operations to 10 countries and regions, including Singapore, Malaysia, and Indonesia, contributing to significant growth in international markets[81] - The strategic upgrade in collaboration with "China's retail industry innovation benchmark" Pang Dong Lai, which successfully launched the Dmall OS system in October 2024[88] - Partnership with "retail leader" Bubugao Group to advance the digital transformation of the retail industry, marking a significant shift from self-research to open collaboration[88] Corporate Governance and Compliance - The company has maintained compliance with all applicable corporate governance codes since its listing date until December 31, 2024[173] - The board has established an ESG committee to oversee the company's ESG policies and practices, effective from March 18, 2025[176] - The audit committee has reviewed the audited consolidated financial statements for the reporting year and confirmed compliance with applicable accounting standards and regulations[177] - The company's auditor, KPMG, has agreed that the financial data disclosed in the performance announcement is consistent with the audited financial statements for the year ending December 31, 2024[178] Future Outlook - The company plans to fund future capital expenditures through existing cash balances and operating cash flows[146] - The company is committed to continuous product development and expanding service offerings to existing clients while acquiring new customers[97] - The company aims to deepen cooperation with existing customers while actively seeking new customer types to drive mutual growth[85]