Today eCargo (ASX:ECG) Started Trading on the Australian Stock Exchange
Sydney, Nov 28, 2014 AEST (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;
- eFulfillment
- eOperation
- eCommerceIT
- eSupport
- eMarketing
Drivers/Growth
- 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.
Competitive strengths
- 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.
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.
About eCargo Holdings Ltd
eCargo Holdings Ltd (ASX:ECG) is a China-based eCommerce technology and specialist execution group of companies, with operating companies in China and Australia trading under the Amblique and eCargo brands, providing on-demand digital commerce technology development and related execution capabilities for retailers and fashion brands.
Amblique is a leading digital commerce consultancy providing retail strategy, eCommerce platform implementation and optimisation services in Australia and New Zealand. eCargo acts as a "one-stop" enabling partner for designer fashion, branded apparel and retail companies seeking to sell their products online in China, Australia and around the world by providing integrated online and offline technology and supply chain solutions.
ECG connects consumers with brands online and offline through the development and marketing of eCommerce platforms, brand site transactional platforms and major marketplace platforms in China such as Alibaba Group's Tmall, Tencent's WeChat and JD.com.
About Investorlink Group
Headquartered in Sydney Australia, Investorlink Group is a global specialist provider of financial, advisory investment, immigration and funds management services.
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