NXT-listed QEX Logistics says annual gross margins wider than anticipated

Monday 23rd April 2018

NXT-listed QEX Logistics, which joined the small-cap board in February, says annual gross margins were wider than anticipated, spanning a period when exports to China hit a quarterly record.

When it listed, Auckland-based QEX forecast revenue of $26 million in the 2018 March year at a gross margin of 14.3 percent, but today said its early review of the trading results showed it was likely to exceed that margin by more than 10 percent, implying gross profit of at least $4.1 million. The company will give more detail in its fourth-quarter market update on April 27.

QEX was founded by chief executive Ronnie Xue, who owns 80 percent of the firm, and his wife Doreen Wu in 2010, and facilitates the storage, supply, packaging, customs clearance and delivery of New Zealand products bought from stores, online and e-commerce sites by individual consumers from China.

The value of New Zealand exports to China has risen to $10.4 billion in the June 2017 year from $4.1 billion in 2010 and imports from China have climbed to $10.52 billion from $6.12 billion. Quarterly exports to China were a record $3.81 billion in the final three months of 2017.

The firm's customers include SKY Distribution Ltd, the brand marketing firm for Fonterra's Anmum infant formula, Munchkin formula maker, and Fonterra's Anchor brand.

The company joined the NXT market in a compliance listing with the shares priced at 25 cents apiece, spiking to 45 cents in its first trade, and have since climbed to 79 cents, valuing the firm at $39.7 million.

QEX raised $2.6 million from wholesale investors in December and January ahead of the listing. Those funds will go towards entering Australia and developing a logistics bridge between China and the trans-Tasman nations.

NZX's NXT market was launched in 2015 with lower disclosure obligations than the main board as a means to attract smaller firms. However, like its predecessor the NZ Alternative Market (NZAX), NXT struggled to kick on and the stock market operator will abandon the bourse when it streamlines the market, with plans for a six-month transition period for smaller firms to opt-in.

(BusinessDesk)

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