RLG has reported a strong H1 FY23 result, positioning itself for booming consumer demand in China as the country re-opens after prolonged COVID-19 restrictions.

RooLife Group (ASX:RLG) saw its cash receipts from operating activities increase 31% to $7.39 million in H1 FY23.

Other key numbers for the half include:

  • Cash payments for operating activities reduced 4% to $7.95 million
  • Net cash used in operating improved by 79% to $556k

RLG is a cross-border platform that matches Chinese consumer demand with international brands and products.

The company identifies trends in consumer demand in China, secures distribution rights for international products that fit consumer needs and provides the tech and sales infrastructure for brands to sell at scale into China.

However, the e-commerce business is not simply limited to China with customers in seven countries globally.

Coping with Covid

RLG said during the H1 FY23 it responded to COVID conditions, including restrictions in China and supply chain disruptions with tactical product and brand selection.

The company has also increased its focus on lucrative high-growth health, wellbeing, and food products, while pursuing higher margin sales.

Gross Profit on product sales increased by 4% in H1 FY22 compared to the comparable period the year before.

During H1 FY23, COVID-19 restrictions and lockdowns in China adversely impacted its business operations with restricted deliveries in Chinese cities and retail outlets and ports closed for extended periods.

At the end of the half with removal of China’s restrictions, RLG reported an immediate uplift in demand for RLG’s health and wellbeing products.

Partnerships for growth

RLG has worked significantly on expanding customer reach, securing partnerships for future growth.

During H1 FY23 RLG launched the first New Zealand over the counter (OTC) without prescription online pharmacy store in China.

The company was also chosen by Santander Bank as a partner for its customers to enter China.

Santander has an established global banking footprint and more than 150 million customers with its Navigator program fitting perfectly with RLG’s Marketplace platform to assist UK businesses to enter new markets such as China.

RLG also appointed Jebsen Group, which had annual revenue exceeding US$2.4billion in 2021, as distribution partner in China for Remedy Drinks.

The company has established multiple new partnerships established, including with the Food Drinks Export Association (FDEA) UK.

Launch of VORA

RLG recently launched its own health and wellness brand – VORA – under the tagline “Good for You, Good for the Planet. Good Business”, targeting the growing global demand for healthy, sustainable food products.

The brand is launching vegetable protein products to service high-demand and high growth markets in China and South East Asia – leveraging the high regard for Aussie agricultural and foot products.

Furthermore, RLG has secured a $1 million finance facility to drive further sales.

Positioning for China growth

In Q3 RLG appointed premium new marketing and sales channels to strategically position RLG for strong growth as China reopens from the COVID-19 pandemic.

The company said improving trade relations between Australia and China is anticipated to be beneficial for e-commerce in China.

RLG said Deloitte China is reporting removal of China’s COVID-19 restrictions are expected to drive online and in-market spending with strong pent up consumer demand and “revenge” consumption.

Furthermore, strong global demand for agricultural and food related products aligns with RLG’s product offering.

The company said demand for plant based and environmentally conscious foods is forecast to experience particularly high growth.

In FY22, 73% of RLG’s revenue was derived from the food, health, and wellbeing sectors, positioning the company to benefit from higher growth.

 

 

 

This article was developed in collaboration with RLG Group, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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