Jayud Global Logistics Ltd annual report, Q4 FY2022

Jayud Global Logistics Limited — Form 20-F Summary

Business context and reporting period

This Form 20-F reports audited consolidated results for the fiscal year ended December 31, 2022, prepared under U.S. GAAP. The filing is an annual report, not a quarterly Q4 filing. Jayud is a Cayman Islands holding company whose operations are primarily conducted through subsidiaries in mainland China and Hong Kong. Its principal activities are cross-border freight forwarding, supply chain management, international trading, customs brokerage, warehousing and logistics technology services.

The company completed its Nasdaq Capital Market IPO in April 2023 under the symbol JYD. The 2022 financial statements reflect the pre-IPO period, with subsequent IPO, share-split and listing events disclosed as subsequent events.

Key financial metrics

Metric	2022	2021	Change
Revenue	RMB651.99 million (US$93.62 million)	RMB545.59 million	+19.5%
Gross profit	RMB37.39 million (US$5.37 million)	RMB34.50 million	+8.4%
Gross margin	5.8%	6.3%	Down 50 bps
Operating profit	RMB0.70 million (US$0.10 million)	RMB12.81 million	Down 94.5%
Net income	RMB1.38 million (US$0.20 million)	RMB10.22 million	Down 86.5%
Net income attributable to ordinary shareholders	RMB3.89 million (US$0.56 million)	RMB10.31 million	Down 62.3%
Operating cash flow	Used RMB15.23 million (US$2.19 million)	Provided RMB4.24 million	Material deterioration
Cash and restricted cash	RMB28.44 million (US$4.08 million)	RMB40.27 million	Down 29.4%

Revenue was predominantly generated from freight forwarding, which contributed RMB577.57 million, or 88.6% of total revenue. Integrated cross-border logistics revenue was RMB444.34 million, fragmented logistics revenue was RMB133.23 million, supply chain management revenue was RMB69.02 million, and other value-added services revenue was RMB5.40 million.

Freight forwarding gross margin declined to 6.1% from 6.5%. Supply chain management gross margin fell to 0.7% from 3.0%, while other value-added services gross margin increased to 36.0% from 27.9%. The filing attributes margin pressure primarily to higher fuel and freight costs, COVID-related route and handling costs, carrier indemnities and weaker international trading margins.

Balance sheet, debt and liquidity

Total assets were RMB125.42 million at December 31, 2022, compared with RMB170.84 million at December 31, 2021.
Accounts receivable, net declined to RMB30.91 million from RMB87.55 million. The reported allowance for doubtful accounts was RMB1.19 million against gross receivables of RMB32.10 million.
Total liabilities declined to RMB94.52 million from RMB154.07 million. Shareholders’ equity increased to RMB30.90 million from RMB16.77 million, partly reflecting shareholder capital contributions and equity financing activity.
Short-term borrowings were RMB14.80 million and long-term borrowings, including current maturities, totaled RMB5.00 million. Total bank borrowings were therefore approximately RMB19.80 million.
Contractual obligations included RMB32.96 million of operating lease payments and RMB19.80 million of bank borrowings, for total disclosed obligations of RMB52.76 million. Amounts due within one year totaled RMB34.48 million.
Management stated that working capital was approximately RMB0.4 million and believed it was sufficient for the next twelve months. However, 2022 operating cash flow was negative and the company expects it may require additional equity or debt financing for expansion or other needs.

Material changes versus the prior comparable period

Revenue grew 19.5%, driven mainly by freight forwarding and new chartered airline freight routes. A new chartered airline service for a single client represented 18.9% of total revenue.
Customers increased from 1,299 to 1,879, while average revenue per customer declined from approximately RMB420,000 to RMB347,000. Customer acquisition costs increased 88.7% to RMB13.5 million.
Operating expenses increased 69.1% to RMB36.68 million, including a 79.0% increase in selling expenses and a 64.6% increase in general and administrative expenses.
Foreign exchange results improved from a RMB0.49 million gain to a RMB4.41 million gain, materially supporting 2022 pre-tax results. This gain is potentially non-recurring and contributed to the difference between operating profit and income before tax.
Income tax expense increased to RMB2.58 million, and the effective tax rate rose to approximately 65.2% from 14.3%.
Operating cash flow turned negative primarily because the company paid down accounts payable, including related-party payables, and lease liabilities. Related-party accounts payable declined from RMB60.98 million to RMB7.43 million.
Operating right-of-use assets increased approximately 386% to RMB31.40 million, reflecting new subsidiaries, branches and leased facilities. Lease expense increased to RMB10.93 million from RMB3.50 million.
Investing cash use increased to RMB5.73 million, including a RMB3.60 million acquisition prepayment and RMB2.15 million for property, equipment and intangible assets.

Outlook, management commentary, risks and unusual items

The filing does not provide quantitative revenue, earnings or margin guidance. Management expects operating expenses and capital requirements to increase as the company expands its logistics network, hires personnel, develops warehouses and invests in technology. Management also indicated that warehouse management may help diversify the business and reduce exposure to fuel-price volatility.

COVID-19 disruptions, particularly in the second half of 2022, increased transportation times and costs and negatively affected profitability. The filing states that future effects remain uncertain.
Fuel prices, freight rates, trade restrictions, geopolitical tensions, the Russia-Ukraine conflict, carrier capacity and macroeconomic conditions may affect demand, costs and margins.
Customer concentration is material: the five largest customers represented approximately 45.5% of 2022 revenue according to the operating review; two individual customers represented approximately 18.0% and 11.3% of total revenue.
Supplier concentration and related-party transactions are significant. Purchases from related parties were RMB123.3 million in 2022, including RMB121.46 million from Cargo Link Logistics HK Company Limited. Two suppliers represented approximately 20.0% and 19.8% of 2022 purchases.
The company identified three material weaknesses in internal control over financial reporting involving formal control and risk-assessment processes, U.S. GAAP and SEC-reporting resources, and information-technology general controls. Remediation was in progress, and the filing states that disclosure controls were not effective as of December 31, 2022.
PRC regulatory, data-security, cybersecurity, foreign-exchange, tax and overseas-listing requirements may restrict operations, fund transfers, dividends or future capital raising. The company stated that it had obtained material operating licenses as of December 31, 2022, but additional permissions may be required in the future.
The company does not expect to pay dividends on its ordinary shares in the foreseeable future. PRC subsidiaries are subject to statutory reserve requirements and restrictions on distributions.
Subsequent events included a February 2023 reverse share split, a March 2023 forward share split, the April 2023 IPO, approximately US$4.86 million of reported net IPO proceeds, issuance of underwriter warrants, and formation of a U.S. subsidiary.

Investor verification priorities

Reconcile the differing IPO net-proceeds disclosures in the filing: approximately US$4.86 million is reported in the business and subsequent-event sections, while approximately US$3.4 million appears in the use-of-proceeds section.
Assess whether negative operating cash flow, limited working capital and substantial near-term lease and debt obligations are consistent with management’s liquidity assessment.
Evaluate the sustainability of 2022 profitability excluding the RMB4.41 million foreign-exchange gain and considering the 65.2% effective tax rate.
Review customer and supplier concentration, including dependence on the chartered airline route serving one client and transactions with related-party suppliers.
Track remediation of the three material weaknesses and determine whether subsequent filings report effective internal controls.
Verify the status, terms and recoverability of the RMB3.60 million acquisition prepayment and the expected acquisition completion referenced for mid-2023.
Monitor PRC regulatory developments affecting data security, CSRC filings, foreign-exchange transfers, dividend capacity and Nasdaq listing risk.