eCargo Holdings (ASX:ECG) sells Amblique

eCargo Holdings Limited (ASX:ECG) Group CEO Lawrence Lun discusses the rationale for the sale of digital consultancy company Amblique, how the proceeds will be used, and the roadmap for the coming months.

Tim McGowen: We're talking today with Mr Lawrence Lun, who is the Group CEO for eCargo Holdings (ASX:ECG). If you don't know the company — ASX code ECG, market cap around $11 million. eCargo is an eCommerce and offline sales enabler that provides holistic solutions to brands across the spectrum, from high-end fashion to consumer goods, beauty and healthcare and other products. The company has offices in Sydney, Hong Kong, Shenzhen, Shanghai and London. Lawrence, thanks for your time. Welcome.

Lawrence Lun: Hi, Tim. Always a pleasure to be here.

Tim McGowen: Now, you recently announced the sale of the eCargo's digital commerce consultancy business. What was the reason for divesting?

Lawrence Lun: Amblique has always been part of our portfolio business, since 2015 when we acquired it. And, since then, it's really been focusing on helping Australian and New Zealand retailers with their localised eCommerce platform builds. When we saw an opportunity to divest the business and realise the value for Amblique, we basically took it, because for eCargo, since I've returned, a little bit more than 18 months ago, I've always been on the path to revalue our value proposition to our brands and retailer partners and how to actually build their business a lot quicker in Asia. So, that strategy has always been in our DNA now for eCargo, and Amblique currently no longer fits that strategy, hence we divested it.

Tim McGowen: The sale of that digital consultancy business for 5 million US, that's a lot of money considering your market cap's around 11 million Aussie. How do you plan to invest the proceeds?

Lawrence Lun: Well, really, there's three areas that we're looking to invest the proceeds from the sale. Number one is we're moving upstream in the value chain. So, what that means is, over the last few months, we've really fine-tuned our services in our foundational. So, basically we know how to get a brand and a retailer up and quickly operating in Asia, especially in China, to drive their sales. But we've always been a service partner, right? So, we want to move upstream and start owning the brands, because we've seen the brand partners that we're working with and how their business have grown. But, as a service provider, we can't really realise as much of the value except from the revenue that we generate from sales. So, when we're moving upstream, what that means is we're looking to invest into Australian brands, owning a piece of it, or outright a hundred per cent ownership. And that way, we know what brands that we're working with, we can realise more value for eCargo as a business.

Second area is we've always been a technology-enabled business. So, we've launched our B2B eCommerce trading platform called JJX last year. We've also launched a cross border fine wine platform called PJF Wines. And there's a number of other platforms that we're looking to complete our ecosystem of services that we can really drive sales on behalf of our brands of retailers in Asia. So, we're looking to reinvest some of the proceeds into the development of these platforms.

And then lastly, of course, is to continue growing our team in Australia because there are a number of brands that we serviced in the region, and we need to continue growing our team, whether from business development, all the way to operations. So, that's where our proceeds are planned to be used.

Tim McGowen: Lawrence, the sale, of course, means revenue drops by around 40 per cent. How will eCargo replace this revenue?

Lawrence Lun: So Amblique's made about 40 per cent of our revenue last year in 2021. Primarily it's driven because of the reseller agreement that we have with Salesforce, which concluded late last year. So, Amblique's revenue source no longer applies to its business. Hence why the sale wouldn't have much of an effect in terms of our top-line revenue for this year. But, however, there is still a gap, and where we plan to make that gap is through additional brand partnerships that we've signed on this year. That's going to generate more significant revenue on the top-line basis. We signed on two new brands late last year. This year, we're already on top of about three to four. So, these will replace that revenue loss from that aspect. Second is because of our technology platforms I mentioned before, JJX, PJF Wines, have been growing quite nicely over the last 12 months, and that will come in with the revenue to meet that gap that we lost from Amblique.

Tim McGowen: And following the sale of the company, eCargo is obviously cashed up. What are some of the milestones you expect moving forward that shareholders can look forward to?

Lawrence Lun: I think there's a couple of things. We're in an interesting period. I mean, first off, you'll see our interim results coming out in a few weeks' time. That's number one. Number two is, in the coming months, you'll see new, in terms of brand partnerships, that will be signed on over the last six months, we'll be announcing, as well as some new technology platforms that we're pushing out very shortly this year. So, all these will be new milestones that our investors can expect to see in the coming months.

Tim McGowen: Lawrence, always nice to talk to you. Thanks for your time.

Lawrence Lun: Thank you, Tim. Take care.

Source: Finance News Network