© Reuters.
BEST (NYSE:) Inc., a key player in smart supply chain solutions across China and Southeast Asia, reported a notable improvement in its financial performance for the third quarter. The company’s revenue saw an increase to RMB 2.23 billion, up from RMB 2.03 billion in the same period last year, while its gross profit reached RMB 51.8 million, representing a margin of 2.3%.
The net loss for the quarter contracted significantly to RMB 193 million compared to Q3 2022’s RMB 378.9 million. This marked improvement was also reflected in the diluted loss per American Depositary Share (ADS), which bettered from RMB 17.60 to RMB 9.46. Additionally, adjusted EBITDA losses were sharply lower at negative RMB 139.1 million, with an EBITDA margin improvement noted.
Key drivers of this performance included a 10% revenue growth in BEST Freight due to enhanced operating efficiency and increased gross margins in BEST Supply Chain Management bolstered by digital capabilities. BEST Global also reported robust post-pandemic recovery with significant gains in both revenue and parcel volumes, particularly in Vietnam and Malaysia.
Furthermore, the company managed to reduce selling, general & administrative (SG&A) expenses by over 14%, while research & development spending decreased primarily due to reduced personnel costs. Earlier this year, BEST Inc. completed its share repurchase program on September 25th after buying back over $3 million worth of ADSs.
Despite these positive developments, the company’s cash positions decreased to over RMB 2 billion after repurchasing $75 million of Convertible Senior Notes due for 2024, compared with over RMB 3 billion in the previous year.
As of today, BEST Inc.’s Special Committee is carefully reviewing a proposal made on November 3rd with Kroll, LLC acting as financial advisors and Skadden Arps providing legal counsel. The Board has urged shareholders to exercise caution regarding the indeterminate nature of any definitive agreement or transaction that may result from this proposal. However, BEST Inc. has committed to providing legal updates as necessary.
The company’s forward-looking statements fall under safe harbor provisions and indicate that current speculation does not assure historical fact accuracy. These statements acknowledge risks and uncertainties that could affect projected outcomes significantly. BEST Inc.’s strategic plans are subject to change based on various factors including market trends and customer demands in the regions where it operates.
InvestingPro Insights
BEST Inc.’s recent financial performance showcases a company in the midst of a turnaround, with revenue and profit margins improving. InvestingPro data highlights that the company’s market capitalization stands at a modest $50.1 million, reflecting the scale of its operations. The revenue for the last twelve months as of Q2 2023 is reported at $1,083.76 million, although it has experienced a decline of 15.25% from the previous period. This suggests that while the company is growing its revenue, it faces challenges in maintaining consistent growth rates.
From an InvestingPro Tips perspective, two points stand out. Firstly, BEST Inc. is expected to experience net income growth this year, which aligns with the reported reduction in net loss for the quarter. Secondly, analysts anticipate sales growth in the current year, supporting the company’s report of increased revenue and gross profit margins in its recent quarterly results.
For investors looking for more comprehensive analysis and additional insights, InvestingPro offers a plethora of tips—currently on a special Black Friday sale with discounts of up to 55%. Subscribers can access a full list of over 17 InvestingPro Tips, which could provide deeper understanding and aid in making informed investment decisions. Notably, the InvestingPro Fair Value is estimated at $3.73, suggesting potential undervaluation at the previous close price of $2.58.
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