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Wednesday, June 23, 2021

Shares of BEST Inc. (BEST) were declining in Pre-Market? Why did it happen?

BEST Inc. (BEST), a leading smart supply chain integrated service provider, reported its unaudited fourth quarter and fiscal year 2020 financial results on March 10, 2020, after which the BEST stock price saw a decline of 8.55% to drop at $2.14 in the Thursday’s pre-market as of this writing. The BEST stock was up by 1.74% at the time of the previous closing. Let’s explore earning report to understand this bearish sentiment.


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What’s happening?

BEST earnings report reflects that the company’s revenue and profit margins were less than the previous year, due to which the stock is now facing the bearish sentiment. Here is the summary of the fourth quarter and fiscal 2020 results.

Fourth-Quarter results

  • Revenue was decreased by 8.9%YoY to drop at RMB9,255.4million due to reduced average selling price per parcel in Express Business.
  • Gross profit wasRMB50.1 million with by 91.1% yearly decrease compared toRMB561.5 million of the same tenure of the prior year. The gross margin reflected a 5% yearly decrease.
  • Net loss was MB492.9 million as compared to RMB132.6 million net income of the same period of 2019. Non-GAAP Net Loss was RMB475.7 million while RMB146.8 million non-GAAP net income was recorded in the same period of 2019.
  • Diluted EPS of the fourth quarter of 2020 was negative RMB1.26 compared to RMB0.36 in the fourth quarter of 2019.
  • EBITDA and Adjusted EBITDA in the fourth quarter were negative RMB305.2 million and negative RMB288.0 million respectively compared to RMB245.9 million and RMB259.2 million respectively same period of the prior year.

The fiscal Year 2020 results

  • Revenue was decreased by 7.3%YoY to drop at RMB29,995.0 million due to a decline in average selling price per parcel in Express Business.
  • Gross profit was RMB238.1million with an 85.5% yearly decrease compared to RMB1,637.3million of the prior year. The gross margin reflected a 0.8% yearly decrease.
  • Net loss was RMB1,683.1million as compared to RMB172.7million net income of 2019. Non-GAAP Net Loss was RMB1,569.3million, while RMB253.9 million non-GAAP net income was recorded in 2019.
  • Diluted EPS and Non-GAAP Diluted EPS of 2020 was negative RMB4.28 and negative RMB3.98, respectively, compared to RMB0.49 and RMB0.70 years.
  • EBITDA and Adjusted EBITDA of 2020 was negative RMB1,046.1 million and negative RMB935.1 million, respectively, compared to RMB652.9 million and RMB730.4 million in 2019.

BEST Inc has projected its 2021 total revenue to be between RMB34 billion and RMB36 billion based on the current scenarios and market conditions.

Conclusion:

The BEST stock price is in red during the pre-market after low performance reflected by its earnings report. The company’s management is focused on strengthening network stability, quality services, and optimizing products and cost structure to put back BEST stock on the path to growth and profitability. Hence investors need to do a lot of homework before adding BEST stock to their portfolio.

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