An Underestimated Chinese Commodities Service Provider

Summaries:

  1. The market has undervalued China's commodity supply chain which those leading companies with a tendency to digitize and connection of the upstream and downstream chains should enjoy higher valuations.
  2. TD Holdings is a still-growing Chinese commodity supplier company whose valuation is expected to move all the way up as its performance is turning around.

Significant earnings growth in the second quarter

TD Holdings (Nasdaq: GLG) achieved total revenue of $59,839,600 in the second quarter of 2021, compared to $1,942,400 in the same quarter last year, an increase of nearly 30 times year-over-year. Viewing the performance over the previous few quarters, TD Holdings has seen visible growth in income. In total, it achieved annual revenue of $89,421,900 for the year ended June 2021, up 2,714% year-over-year, and gained net income of $357,800, a turnaround that compared to a loss of $5,462,400 for the same period last year.

The cost of purchasing non-ferrous metal products covered a big part of the company’s cost of revenue. For the three months ended June 30, 2021, it bought $57.93 million of non-ferrous metal products from 15 third-party suppliers and $1.53 million from five related party suppliers.

According to the announcement, the increase in the company’s revenue in the second quarter was primarily the result of the booming global commodities market that had propelled the price to rise and the demand to increase.

The undervalued commodity supply chain industry

According to Frost & Sullivan's data, China’s commodities market transactions grew from $3.7 trillion to $9.05 trillion from 2009-2019. The actual market size will be even larger as commodities trade from upstream to downstream theoretically includes a variety of businesses such as commodity procurement, sales, logistics, and finance. According to the China Federation of Logistics and Purchasing (CFLP), the total sales of commodities in China reaches around $12.356 trillion in 2020, with an average growth rate of 5.9% over five years.

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Disclaimer: This article is prepared by Mentor Finance (the "Company") and by certain qualified investors (such as professional investors). By reading this article, you agree to keep ...

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