Yunji (YJ) Q3 Earnings call transcript Nov 21, 2024

In Yunji's recent third quarter 2024 earnings call, the company showcased a strategic pivot towards health and wellness as a key pillar of its 10-year strategy. The call, led by Chairman and CEO Shanglue Xiao, highlighted several initiatives aimed at democratizing access to healthy living, particularly in the organic food space.

Strategic Investment in the Yunji Innovational Center

The call began with the announcement of the groundbreaking of the new Yunji Innovational Center, a 15-floor facility designed to bring together marketing, training, R&D, and operational teams under one roof. This strategic investment not only serves as a new office space but also as an incubator for expanding health and beauty brands. The location in the economic and technology development zone aligns with Yunji's strategy of strategic asset diversification to strengthen its market position.

Focus on Health and Wellness

The call emphasized Yunji's commitment to health and wellness as a strategic priority, with a particular focus on organic food. By leveraging its procurement expertise, Yunji has managed to make these products more affordable without compromising on quality. The company has also implemented a robust quality control process through its health certification system, which includes random inspections of certified products even after they receive certification. These initiatives have garnered positive feedback from consumers, with Yunji's autumn moon pairs becoming a popular choice among parents.

Offline Expansion and Strategic Synergy

Yunji also reported significant progress in its offline expansion, with the launch of its first offline store featuring traditional Chinese medicine practices. This initiative has helped tap into the growth demographic for customers aged 41 to 55, demonstrating Yunji's commitment to addressing the needs of an aging economy. The company plans to integrate online sales and services with its offline wellness business, creating a synergy that will deliver exciting opportunities for curated and health-focused business lines.

Financial Highlights and Outlook

Despite facing market challenges, Yunji reported a notable improvement in its comparables, underscoring its effective cash management. The company successfully narrowed its operating and net losses, reflecting its commitment to sustainable growth. Yunji's financial position remains strong, with a total of RMB 268.4 million in cash and cash equivalents, sufficient to cover payable obligations. The company is dedicated to improving operational efficiencies and adjusting strategies to navigate the changing market landscape.

Investor Questions and Management's Response

During the Q&A session, Ethan Yu of First Trust asked about Yunji's plans for expanding offline activities and the synergy between online and offline businesses. Shanglue Xiao responded by highlighting the extension of Yunji's existing customer base into the key demographics for offline wellness services. The company plans to integrate online sales and services with its offline wellness business, creating a synergy that will deliver exciting opportunities for curated and health-focused business lines.

Conclusion

Yunji's third quarter 2024 earnings call showcased a strategic pivot towards health and wellness as a key pillar of its 10-year strategy. The company's commitment to democratizing access to healthy living, particularly in the organic food space, is a significant step towards broadening its customer base and providing services for the entire family. With a strong financial position and a strategic focus on offline expansion, Yunji is well positioned for further growth. The company's ability to integrate online and offline businesses will create exciting opportunities for its curated and health-focused business lines, delivering value to its shareholders.