Legrow Shares (stock code: 300729.SZ) has released its semi-annual report for the year 2024. The report indicates that in the first half of 2024, the company achieved a revenue of 2.427 billion yuan, a year-on-year increase of 44.64%, and a net profit of 107 million yuan attributable to the shareholders of the listed company after deducting non-recurring gains and losses, representing a year-on-year growth of 29.95%. The net profit attributable to the shareholders of the listed company was 160 million yuan, a decrease of 63.86% compared to the same period last year, primarily due to the sale of overseas warehouses in January 2023, which generated significant non-recurring income and increased the profit from asset transfers before deducting transfer gains tax by approximately $73.52 million.

Regarding the reasons for the performance growth, Legrow Shares stated that it was mainly due to three aspects: the growth of public overseas warehouse business exceeded expectations, the continuous enrichment of smart home and healthy office product categories, the initial success in expanding product categories, and the continuous enhancement of the brand's independent influence, with the independent station showing a bright performance. Driven by these multiple factors, Legrow Shares maintained a relatively fast growth in performance in the first half of 2024.

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Policy Support, High Prosperity in Cross-Border E-Commerce Industry, and Public Overseas Warehouse Business Growth Exceeding Expectations

The Third Plenary Session of the 20th Central Committee of the Communist Party of China reviewed and passed the "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Promoting Chinese-style Modernization." The decision proposes that improving a high-level open-to-the-outside system and mechanism must adhere to the basic national policy of opening up to the outside world, insist on promoting reform through openness, rely on the advantage of China's super-large-scale market, enhance the ability to open up in expanding international cooperation, and build a new system of a higher level of open economy.

As an important driver of China's external development, cross-border e-commerce has been highly valued by governments at all levels and has been a key focus of national industrial policies. In 2023, China's cross-border e-commerce export scale reached 1.1 trillion US dollars, accounting for 33% of China's total goods export volume. Galaxy Securities forecasts that by 2028, the cross-border e-commerce export scale will reach nearly 2 trillion US dollars, accounting for about 38.1% of China's total goods export volume.

Faced with a broad market space, Legrow Shares seized policy opportunities and deeply deployed cross-border e-commerce public overseas warehouse business. As early as 2013, Legrow Shares began operating overseas warehouses to serve its own cross-border e-commerce business. To this day, Legrow's overseas warehouses have explored and accumulated rich experience.

As of the end of the reporting period, Legrow's overseas warehouses have served more than 778 overseas enterprises, including listed companies. In the first half of 2024, they processed more than 4 million packages, a year-on-year increase of over 120%. In 2023, Legrow's overseas warehouses became one of FedEx's top 100 global customers. With the increase in the number of customers served by Legrow's overseas warehouses and the annual volume of shipments, the scale advantage continues to highlight, and a symbiotic effect between smart home cross-border e-commerce business and public overseas warehouse business has gradually formed.

Not only that, but between 2022 and 2023, Legrow Shares also preemptively reserved 5,000 acres of industrial logistics land in the core port areas of the United States at a relatively low price to meet future self-built warehouse needs. It has been calculated that the holding cost of self-built overseas warehouses is one-third to one-half of the cost of renting overseas warehouses. In the future, Legrow Shares will form a unique competitive barrier by gradually promoting the construction of self-built overseas warehouses.

The basic disk of smart home business is developing steadily, and the brand and channel show resilience

In recent years, with the continuous improvement of living standards and the deep-rooted awareness of healthy consumption, people's demand for healthy office and smart home continues to increase, the market scale continues to expand, and the penetration rate continues to rise. The smart home and healthy office furniture industry is presenting a pattern of contention among many heroes, promoting the wider application of related products and services in family and office fields. According to IMARC data, the global office furniture market scale in 2022 was 60.8 billion US dollars, and it is expected to grow to 77.4 billion US dollars by 2028, with a compound annual growth rate of about 4.05%.As a leader in the vertical track of linear drive consumer goods, Legrow Shares has gradually highlighted its scale effect after years of layout. During the reporting period, Legrow Shares' linear drive lifting system products achieved sales of 783,800 sets and a sales amount of 1.02 billion yuan, a year-on-year increase of 10%, with continuous expansion of sales scale.

Public information shows that as of now, Legrow Shares' annual production capacity for linear drive lifting system products exceeds 2 million sets, and the company has 4 manufacturing bases globally, located in Ningbo, Guangxi, and Vietnam, which can achieve zero-tariff export to the United States. With its leading production scale advantage and global manufacturing layout, Legrow Shares has a high bargaining power and supply chain integration ability in procurement, and also has efficiency and cost advantages that competitors in domestic and foreign markets find hard to replicate.

At the same time, relying on its scale and channel advantages, Legrow Shares has further enriched its product categories. While maintaining the advantages of its main lifting desk products, Legrow Shares has launched categories such as electric sofas and ergonomic chairs. In the first half of 2024, against the background of overall favorable consumer demand in Europe and America, the steady increase in e-commerce penetration, and the continuous rise in the penetration rate of healthy office and intelligent lifting home products, the sales revenue of new categories accounted for about 8%. It can be seen that expanding categories has初见成效.

Good product strength and brand strength are also important guarantees for the growth of Legrow Shares' business income. The company's own overseas brand "FlexiSpot" has won the BrandZ China Globalization Brand 50 for two times, ranking first in the furniture category, and its domestic independent brand "LOCTEK Legrow" has also maintained the first market share on many domestic platforms for many years, with its product value widely recognized by the market.

Regular reports show that in the first half of 2024, the sales revenue of Legrow Shares' independent brand products accounted for 68.93% of the main business income (excluding overseas warehouse income). Among them, the sales revenue of cross-border e-commerce was 915 million yuan, a year-on-year increase of 20.36%; the sales revenue of independent stations was 369 million yuan, a year-on-year increase of 20.87%, and the growth rate was higher than last year's full year, laying a solid foundation for the company's long-term development.

Looking forward, with the recovery of the global economy and the continuous expansion of market demand, coupled with the continuous promotion of domestic policies, Legrow Shares may rely on its years of professional field experience and early layout, through deep cultivation of linear drive consumer goods, with public overseas warehouses as incremental business, to further build a "booster" for performance growth, and achieve sustainable and stable development of the enterprise.