Hong Kong Pharma Digital Technology Holdings Limited Reports Financial Results for the Six Months Ended September 30, 2024

Rhea-AI Summary

Hong Kong Pharma Digital Technology (NASDAQ: HKPD) reported strong financial results for H1 2024 (ended September 30), with net revenues reaching $11.09 million, up 58.9% year-over-year. The growth was primarily driven by:

• Supply Chain Services revenue: $6.33M (+36.3% YoY)
• Procurement and Distribution: $4.76M (+102.7% YoY)
• Consignment Sales: $2,210 (down from $15,327)

The company's gross profit increased 42.6% to $1.91M, while total expenses rose to $10.07M. Despite higher costs, net income surged 232.6% to $828,559, demonstrating operational efficiency and successful market expansion in the OTC pharmaceutical cross-border e-commerce sector.

Positive

• Net revenue surge of 58.9% YoY to $11.09M
• Procurement and Distribution revenue grew 102.7% YoY
• Supply Chain Services revenue increased 36.3% YoY
• Net income jumped 232.6% YoY to $828,559
• Gross profit improved 42.6% YoY to $1.91M

Negative

• Total expenses increased significantly to $10.07M from $6.67M YoY
• Consignment Sales declined sharply to $2,210 from $15,327

Insights

Financial Analyst

HKPD's financial results reveal impressive growth metrics across core business segments. The $11.09 million in revenue represents a 58.9% year-over-year increase, with net income surging by 232.6% to $828,559. This substantial bottom-line growth significantly outpaces revenue expansion, indicating improved operational efficiency despite higher expenses.

The revenue breakdown reveals strategic strength in diversifying income streams. Supply chain services grew by 36.3%, while procurement and distribution services showed exceptional growth of 102.7%. This suggests the company is successfully expanding its procurement segment as a strategic growth driver.

However, I note some potential caution signals. Gross profit margin appears to have compressed slightly from approximately 19.1% to 17.2%, and total expenses increased substantially to $10.07 million. Management attributes this to marketing investments and workforce expansion, which are typically front-loaded costs that can drive future growth if executed properly.

For a company with just a $13.75 million market cap generating over $11 million in semi-annual revenue and demonstrating strong profitability growth, these results indicate significant value potential. The management's emphasis on maintaining "disciplined cost structure" while scaling suggests awareness of balancing growth with profitability - a critical factor for sustainable performance.

Business Strategy Expert

HKPD's financial performance demonstrates effective execution of its OTC pharmaceutical cross-border e-commerce strategy. The company appears to be successfully capitalizing on two complementary business models - digital supply chain services and direct procurement/distribution - with both segments showing robust growth.

The stand-out metric is the 102.7% growth in procurement and distribution revenue, signaling a potential strategic pivot toward this higher-growth segment. Meanwhile, the near-elimination of consignment sales (dropping to just $2,210) appears to be a deliberate strategic decision to focus resources on more scalable, higher-margin business lines.

The 232.6% increase in net income while scaling operations demonstrates operational leverage, suggesting the business model can support profitable expansion. The increased expenses ($10.07 million, up from $6.67 million) reflect typical growth investments that should be monitored for ROI in coming quarters.

For a small-cap company ($13.75M), achieving this level of revenue growth while simultaneously improving profitability is uncommon. The sharp disparity between revenue growth (58.9%) and net income growth (232.6%) indicates the company has likely crossed an operational threshold where fixed costs are now being distributed across a larger revenue base, creating significant marginal profitability as sales increase.

HONG KONG, March 28, 2025 /PRNewswire/ -- Hong Kong Pharma Digital Technology Holdings Limited (NASDAQ: HKPD) ("HKPD" or the "Company"), a leading provider of over the counter ("OTC") pharmaceutical cross-border e-commerce supply chain services in Hong Kong, today announced its unaudited financial results for the six months ended September 30, 2024.

Financial Highlights for the Six Months Ended September 30, 2024:

• Net Revenues: The Company reported net revenues of $11,091,189, an increase of 58.9% compared to $7,009,209 for the same period in 2023.
• Revenue Breakdown:

		Six Months ended September 30, 2024				Six Months ended September 30, 2023
Supply chain services		$	6,329,678			$	4,646,951
Procurement and distribution			4,759,301				2,346,931
Consignment sales and other revenue			2,210				15,327
Total Revenue		$	11,091,189			$	7,009,209

 

               - Supply Chain Services: $6,329,678, up 36.3% from $4,646,951 for the same period in 2023.
               - Procurement and Distribution: $4,759,301, a 102.7% increase from $2,346,931 for the same period in 2023.
               - Consignment Sales and Other Revenue: $2,210, down from $15,327 for the same period in 2023.

• Gross Profit: The gross profit for the period was $1,905,603, a 42.6% increase from $1,335,988 for the same period in 2023.

Total Expenses

• Total Expenses: Increased to $10,066,706 for the six months ended September 30, 2024, up from $6,667,999 for the same period last year.

 

		Six Months ended September 30, 2024				Six Months ended September 30, 2023
Changes in inventories of merchandised goods		$	4,513,873			$	2,171,361
Storage cost			530,012				463,412
Transportation cost			2,619,599				1,046,455
Consumption of packing material			514,714				515,594
Depreciation and amortization			30,153				31,727
Labor cost			1,318,041				1,589,164
Outsourcing expenses			328,755				202,169
Others			211,559				648,117
Total cost of sales, selling, general and administrative expenses		$	10,066,706			$	6,667,999

 

Net Income

• Net Income: The Company achieved a net income of $828,559, a 232.6% increase compared to $249,037 in the same period last year.

Management Commentary

Lap Sun Wong, Chief Executive Officer of HKPD, stated, "The Company has delivered a strong performance for the six months ended September 30, 2024, demonstrating our ability to grow in a competitive and evolving market. The significant increase in net revenues reflects the effectiveness of our strategic initiatives to enhance our supply chain and procurement services. Despite the rise in expenses due to increased marketing efforts and workforce expansion, our net income reflects our focus on profitability and operational efficiency."

Man Bun Kwok, Chief Financial Officer, added, "While we are pleased with our financial progress, we remain mindful of the importance of maintaining a disciplined cost structure as we scale operations. Our investment in marketing aims to capture additional market share in the OTC pharmaceutical supply chain sector, and we believe these efforts will continue to drive growth in the coming periods."

About Hong Kong Pharma Digital Technology Holdings Limited

Hong Kong Pharma Digital Technology Holdings Limited offers two main categories of services: (i) OTC pharmaceutical cross-border e-commerce supply chain services through its Hong Kong subsidiary, Joint Cross Border Logistics Company Limited ("Joint Cross Border"), and (ii) OTC pharmaceutical cross-border procurement and distribution through its Hong Kong subsidiary, V-Alliance Technology Supplies Limited.

Through its engagement with OTC pharmaceutical suppliers, logistics companies, and merchants on Chinese e-commerce platforms, Joint Cross Border provides a convenient one-stop solution for Mainland Chinese customers seeking access to OTC pharmaceutical products outside Mainland China.

Joint Cross Border's comprehensive service offerings include pre-consultation, product information review, procuring overseas OTC pharmaceutical products, enlisting products with the Hong Kong Department of Health, obtaining import and export permits, storing products, packaging, and arranging logistics and end-to-end delivery services for customers.

For more information, please visit the Company's website: www.9zt.hk.

Forward-Looking Statements

All forward-looking statements, expressed or implied, in this release are based only on information currently available to us and speak only as of the date on which they are made. Investors can find many (but not all) of these statements by the use of words such as "approximates," "believes," "hopes," "expects," "anticipates," "estimates," "projects," "intends," "plans," "will," "would," "should," "could," "may" or other similar expressions in this release. Except as otherwise required by applicable law, we disclaim any duty to publicly update any forward-looking statement to reflect events or circumstances after the date of this release. These statements are subject to uncertainties and risks, including, but not limited to, the uncertainties related to market conditions, and other factors discussed in our filings with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's filings with the SEC. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov.

For investor and media inquiries please contact:

Hong Kong Pharma Digital Technology Holdings Limited
Media Contact: pr@9zt.hk
Investor Relations: ir@9zt.hk
Telephone: +852 2618-9289

 

HONG KONG PHARMA DIGITAL TECHNOLOGY HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME  
(Expressed in U.S. dollar, except for the number of shares)

 

						For the Six Months Ended September 30,
		Note				2024 unaudited				2023 unaudited
Revenues			7			$	11,091,189			$	7,009,209
Cost of revenues			8				(9,185,586)				(5,673,221)
Gross profit							1,905,603				1,335,988
Other income			9				804				427
Operating expenses:
Selling, general and administrative expenses			8				(881,120)				(994,778)
Other gains/(losses), net			10				1,751				(32,817)
Total operating expenses							(879,369)				(1,027,595)
Operating profit							1,027,038				308,820
Financial income			11				1,078				156
Finance costs			11				(49,254)				(34,812)
Finance costs, net							(48,176)				(34,656)
Profit before income taxes							978,862				274,164
Income tax expense			12				(150,303)				(25,127)
Net profit for the year			13				828,559				249,037
Less: profit attributable to non-controlling interests							-				-
Profit attributable to owners of the Company							828,559				249,037
Other comprehensive income
Foreign currency translation adjustments							20,032				227
Comprehensive income attributable to the Company's shareholders						$	848,591			$	249,264
Earnings per share
Basic and diluted *			15			$	0.083			$	0.036
Weighted average number of shares outstanding
Basic and diluted *							10,000,000				6,843,000

 

HONG KONG PHARMA DIGITAL TECHNOLOGY HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in U.S. dollar, except for the number of shares)

 

				September				March 31,
		Note		30, 2024 unaudited				2024 audited
ASSETS
NON-CURRENT ASSETS:
Property and equipment, net		16			119,407				103,242
Intangible assets, net		17			89,299				31,825
Right of use assets, net		25			1,073,857				730,451
TOTAL NON-CURRENT ASSETS					1,282,563				865,518
CURRENT ASSETS:
Deferred IPO costs		21			2,161,496				1,260,075
Inventories		18			555,522				933,299
Trade receivables, net		19			4,880,309				3,698,757
Other receivables and prepayments		19			902,406				1,262,351
Amount due from related parties		23			14,755				19,971
Restricted cash					401				7,682
Cash and cash equivalents		20			364,990				619,575
TOTAL CURRENT ASSETS					8,879,879				7,801,710
TOTAL ASSETS				$	10,162,442			$	8,667,228
LIABILITIES AND EQUITY
NON-CURRENT LIABILITIES:
Lease liabilities non-current portion		25			200,759				117,836
Longterm bank loan non-current portion		24			1,005,610				1,119,276
TOTAL NON-CURRENT LIABILITIES					1,206,369				1,237,112
CURRENT LIABILITIES:
Trade and other payables		22			1,801,047			$	1,416,182
Tax payable		12			345,742				218,831
Contract liabilities		7			74,877				191,066
Due to related parties		23			239,802				500,677
Lease liabilities – current portion		25			910,714				634,504
Current portion of long-term bank loan		24			231,641				180,493
Short-term bank loan		24			-				34,704
TOTAL CURRENT LIABILITIES					3,603,823				3,176,457
TOTAL LIABILITIES					4,810,192				4,413,569
COMMITMENTS AND CONTINGENCIES					-				-
EQUITY:
Ordinary shares, 50,000,000 shares authorized, consisting of 49,501,000 Class A ordinary shares of $0.001 par value per share and 499,000 Class B ordinary shares of $0.001 par value per share *
Class A ordinary shares, 9,501,000 and 6,843,000 shares issued and outstanding at September 30, 2024 and March 31, 2024, respectively *		26			9,501				9,501
Class B Ordinary shares, 499,000 and nil shares issued and outstanding at September 30, 2024 and March 31, 2024, respectively *					499				499
Additional paid in capital		26			3,017,409				3,017,409
Subscription receivable		26			(50,000)				(300,000)
Retained earnings		27			2,359,667				1,531,108
Accumulated other comprehensive (loss) income		27			15,174				(4,858)
TOTAL SHAREHOLDERS' EQUITY					5,352,250				4,253,659
TOTAL LIABILITIES AND EQUITY				$	10,162,442			$	8,667,228

 

 

 

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SOURCE Hong Kong Pharma Digital Technology Holdings Limited

FAQ

What was HKPD's revenue growth in H1 2024?

HKPD's net revenues grew 58.9% to $11.09 million in H1 2024 compared to $7.01 million in the same period of 2023.

How much did HKPD's procurement and distribution segment grow?

HKPD's procurement and distribution revenue increased by 102.7% to $4.76 million compared to $2.35 million in the same period last year.

What was HKPD's net income for H1 2024?

HKPD achieved a net income of $828,559, representing a 232.6% increase from $249,037 in the same period of 2023.

How did HKPD's expenses change in H1 2024?

HKPD's total expenses increased to $10.07 million from $6.67 million, due to increased marketing efforts and workforce expansion.

What was HKPD's gross profit margin for H1 2024?

HKPD reported a gross profit of $1.91 million, representing a 42.6% increase from $1.34 million in the same period of 2023.