Revenue surged by 42.1%, rare mid-term high dividend of 40% among newly listed stocks, EDA highlights allocation value.

In the current volatile market environment, high-dividend investment targets have gained significant favor among investors due to their excellent risk resistance capabilities, and the new "National Nine Articles" further enhance this advantage. In the Hong Kong stock market, there is also a high-dividend, newly listed stock with promising long-term incremental capital: the overseas warehouse leader EDA Group Holdings (02505.HK).

After the market closed last Friday, $EDA GROUP HLDGS(02505.HK) released its first interim earnings report since listing, delivering an "outstanding report card with revenue surging 61.6% and profits soaring 42.1%."

Amid steady earnings growth, the company announced plans to implement an interim cash dividend, with a distribution plan of HKD 0.035 per share. Based on the current share capital, the total interim dividend amounts to HKD 15.4 million, with a payout ratio as high as 40%.

Beyond its financial performance, EDA has once again demonstrated its long-term investment value, injecting a strong dose of confidence into the market.

Global Rapid Expansion of Smart Cloud Warehouse Network, Collaboration with Huawei, Sustained Earnings Explosion

The high dividend payout by EDA reflects management's confidence in the company's development, and the interim earnings further validate this view. The financial report shows that in the first half of 2024, EDA achieved revenue of RMB 745 million, a year-on-year increase of 61.6%, and adjusted net profit of RMB 56.6 million, up 42.1% year-on-year, showcasing robust growth capabilities.

Here’s an explanation of why adjusted net profit is used to evaluate the profitability of newly listed stocks rather than net profit. EDA Group Holdings went public in May 2024, incurring one-time expenses such as listing fees and non-cash share-based payments. Excluding these non-operational, one-time expenses provides a fairer reflection of the company's intrinsic profitability.

In fact, since 2020, benefiting from the boom in cross-border e-commerce exports, EDA has entered a "fast lane" of growth. This year's performance continues the upward trend, surging by another 42.1%.

Over the past three years, the company has maintained a gross margin as high as 16%, with the gross margin for last-mile fulfillment services exceeding 20%, a standout performance in the industry.

The return on equity (ROE) has exceeded 20% for three consecutive years, thanks to the company's innovative adoption of the smart overseas cloud warehouse model. This "digital overseas warehouse + smart logistics + cloud system" model, powered by EDA's built-in SaaS cloud platform, optimizes warehouse turnover efficiency on a large scale, enabling unified inventory management, faster warehouse turnover, and enhanced pricing power for services. Additionally, the leverage effect under the asset-light model has contributed to even more impressive net profits.

Beyond financial metrics, EDA's other operational highlights are equally noteworthy. As the "first stock in overseas warehousing," EDA has delivered frequent positive news on the business front this year.

In the first half of 2024, EDA actively expanded its global smart overseas warehouse network, adding six new warehouses in the U.S., Canada, Germany, and Australia, with a total additional area of approximately 100,000 square meters. For example, branded warehouse networks in Toronto, Vancouver, and Montreal in Canada, along with a new 35,000-square-foot warehouse in Germany, have been successfully established. Leveraging AI systems, EDA has implemented intelligent monitoring models for processes such as "inbound, shelving, picking, and outbound delivery," using algorithms to minimize irregular occupancy costs. Guided by its "SkyNet" system, the company ensures 99.99% on-time fulfillment for fragmented orders, tapping into the Canadian and European markets.

In April this year, EDA Cloud became an officially certified warehouse for Temu, successfully completing seamless integration between its self-developed digital supply management SaaS platform and Temu's system. Through this integration, authorized sellers can automatically synchronize order information to EDA's WMS system, accelerating the shipping process. EDA Cloud has demonstrated outstanding performance in last-mile delivery, achieving a delivery success rate of over 99% within 1 to 5 days, far exceeding Temu's requirements and showcasing EDA's excellence in logistics services.

On the technology front, on August 16, EDA and Huawei joined forces, signing a comprehensive cooperation agreement to explore new methods, businesses, and models. They aim to empower enterprises with digital technology for smart global expansion, jointly promoting the application of AI in cross-border e-commerce and building digital infrastructure for global trade, which will further enhance EDA's market share and revenue growth.

Rare Mid-Year Cash Dividend for a Newly Listed Stock, High Payout Highlights Investment Value

Regarding dividends, EDA's interim payout ratio of 40% indicates not only strong profitability but also a willingness to share operational results with shareholders.

What’s more noteworthy is that while high-quality stocks in various sectors of the Hong Kong market, such as HSBC, pay annual dividends, it is rare for a newly listed stock like EDA to distribute dividends so soon. Typically, multiple annual payouts are the hallmark of blue-chip stocks, and interim dividends are especially rare among newly listed stocks. Thus, EDA stands out not only for its high growth potential but also for its exceptional investment value.

From an opportunity cost perspective, the current highest annualized 3-month HKD fixed deposit rate is about 3%, meaning the holding period return for three months is only around 1%. In contrast, investors holding EDA since its IPO would have received a dividend yield of 1.57% (HKD 0.035/share ÷ IPO price of HKD 2.28), 1.5 times higher than the six-month fixed deposit rate, highlighting its long-term investment appeal.

From an investment logic standpoint, in a volatile market environment, investors increasingly value stable cash flow and consistent shareholder returns from listed companies. High-dividend assets, with their high certainty, have become a hot spot for investors, and EDA is no exception. Given the attractiveness of high-dividend-yield assets, EDA's investment value is further underscored.

In summary, although EDA's stock price has faced short-term pressure and temporary sideways movement, the company's unexpectedly large interim dividend payout and commitment to rewarding shareholders with high dividends are highly commendable.

Therefore, investors should rationally view stock price fluctuations, focusing not only on short-term volatility but also on long-term value potential. Key attention should be paid to EDA Cloud's fundamentally sound performance and the vast growth prospects of the cross-border e-commerce industry. EDA has already achieved significant profitability in the first half of the year, which is expected to support its market capitalization. Patience will be rewarded.