Creative Global Technology Holdings Limited Announces Financial Results for Fiscal Year 2024
MWN-AI** Summary
Creative Global Technology Holdings Limited (CGTL) recently reported its financial results for the fiscal year ending September 30, 2024. The Hong Kong-based firm, which specializes in sourcing and reselling recycled consumer electronics, demonstrated a mixed performance for the year, largely influenced by strategic revenue decisions. Total revenue dipped by 29.2% to $35.6 million from $50.3 million in the previous year, primarily due to a significant reduction in wholesale revenue as the company focused on capturing higher-margin orders.
Despite the decrease in revenue, CGTL achieved a gross profit of $6.3 million, marking a substantial 27.5% increase from $5.0 million in 2023. Gross profit margins improved dramatically from 9.9% to 17.8%, driven by enhanced margins across all key product categories: smartphones, tablets, and laptops. Income from operations also saw a favorable increase of 36.7%, rising to $5.2 million, while net income increased by 34.4% to $4.3 million, reflecting a strong control over operational expenses amid reduced revenues.
CEO Shangzhao (Cizar) Hong emphasized the company’s commitment to prioritizing higher-margin products, resulting in a reduced volume of smartphone sales but increased profitability per unit sold. The average unit cost surged alongside the selling price, indicating a deliberate shift towards more profitable transactions.
Looking ahead, CGTL plans to further expand profitability through diversification of its product offerings, enhanced marketing efforts, and cost optimization strategies. The company aims for sustainable growth within the electronics recycling sector, which is increasingly significant given global environmental concerns. The recent IPO, securing $5.75 million in gross proceeds, positions CGTL to invest in its strategic initiatives effectively.
MWN-AI** Analysis
Creative Global Technology Holdings Limited (CGTL) recently reported its fiscal year 2024 financial results, revealing a mixed but resilient performance. Despite a significant decline in total revenue—down 29.2% to $35.6 million from $50.3 million—the company achieved notable improvements in gross profit and net income. Gross profit surged 27.5% to $6.3 million, while net income rose 34.4% to $4.3 million, reflecting CGTL's strategic shift towards higher-margin products.
This strategy—selectively focusing on higher-margin orders—transformed the company’s gross profit margin to 17.8%, a substantial improvement from 9.9% the previous year. Although total revenue declined largely due to a dip in wholesale sales, the focus on smartphone sales and other product segments resulted in better profit margins across the board. Particularly encouraging is the performance of laptops and miscellaneous products, which increased their contribution to total revenue.
Investors should be cautious regarding CGTL's revenue volatility but may find opportunities for investment given the company's strategic redirection to enhance profitability and margin growth. The continued investment in marketing high-margin segments and product diversification can bolster CGTL's market position, particularly as it explores sustainable solutions in the recycling and resale of consumer electronics—a market with growing demand.
CGTL has also completed its IPO, raising $5.75 million, bolstering its liquidity and capacity for future growth initiatives. This additional capital could be instrumental in funding its plans to expand product offerings and optimize operations, thereby enhancing profitability moving forward.
Overall, while CGTL faces challenges with declining revenues, its strategic pivot towards profitability, market share expansion, and sustainability positions it well for potential growth. Investors should monitor its next quarterly earnings closely, looking for signs that the company can capitalize on its strategic initiatives to restore revenue growth and continue enhancing profitability.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
- Gross profit of $6.3 million, up 27.5% and net income of $4.3 million, up 34.4%, both reaching a historical high since 2022
HONG KONG, Jan. 30, 2025 (GLOBE NEWSWIRE) -- Creative Global Technology Holdings Limited (the “Company” or “CGTL”), a Hong Kong-based company sourcing and reselling recycled consumer electronic devices, today announced the financial results for the fiscal year ended September 30, 2024.
Fiscal Year 2024 Financial Highlights:
- With total of 164,217 consumer products distributed to our customers, the total revenue for the year ended September 30, 2024 was US$35.6 million, decreased by 29.2% from US$50.3 million for the year ended September 30, 2023. The decrease was mainly due to the decrease in wholesale revenue as the Company strategically established its market share and selected higher margin orders, which led to a decrease in revenue but increased gross profit during the period.
- Gross profit increased by 27.5%, from $5.0 million to $6.3 million for the year ended September 30, 2024. Gross profit margin was 17.8% and 9.9% for the years ended September 30, 2024 and 2023, respectively. Gross profit margins for all product categories smartphones, tablets and laptops improved to 18.1%, 14.5% and 17.8%, respectively, from 10.1%, 9.4% and 8.3%, respectively, for the year ended September 30, 2023.
- Income from operations increased by 36.7%, from $3.8 million to $5.2 million for the year ended September 30, 2024.
- Net income increased by approximately 34.4% to US$4.3 million for the year ended September 30, 2024, from US$3.2 million for the year ended September 30, 2023.
Shangzhao (Cizar) Hong, CEO of the Company commented: “For the fiscal year ending September 30, 2024, our total revenue declined from US$50.3 million to US$35.6 million, primarily due to a drop in wholesale revenue from US$50.2 million to US$35.5 million. Despite this, we strategically focused on enhancing market share and prioritizing higher-margin orders, which grew our gross profit from US$5.0 million in 2023 to US$6.3 million in 2024, and improved our gross margin from 9.9% in 2023 to 17.8% in 2024.”
“Our Smartphone product category, contributing the most of our revenue, decreased from 81.8% to 73.8% of total revenue, reflecting a significant drop in units sold from 149,032 to 67,448. This shift resulted from our strategy to emphasize higher-margin products, leading to an increase in average unit cost from $248 to $319 and selling price from $272 to $390.”
“Consequently, the Company achieved a net income of US$4.3 million for the year ending September 30, 2024, a significant 34.4% increase from US$3.2 million for the year ending September 30, 2023, driven by higher gross profit and reduced expenses.”
“Looking ahead, we plan to further enhance profitability by expanding our product offerings, investing in marketing for high-margin segments, and optimizing our acquisition channels to reduce costs. These strategies will position us for sustainable growth and improved financial performance in the coming years.”
Financial Results for Fiscal Year 2024
Revenues
For the years ended September 30, 2024 and 2023, the Company’s total revenue was US$35.6 million and US$50.3 million, respectively. The decrease was mainly due to the decrease in wholesale revenue from US$50.2 million in the year ended September 30, 2023 to US$35.6 million in the year ended September 30, 2024.
During the year ended September 30, 2024, the Company established its market share and intentionally selected higher margin orders, this resulted in decreased revenue but increased gross profit with higher profit margin over its products. All revenues were generated from Hong Kong.
The following table presents the Company’s revenues disaggregated by product category for the years ended September 30, 2024 and 2023:
| million in USD | 2024 | 2023 | ||||||||||||
| Smartphones | 26.3 | 73.8 | % | $ | 41.1 | 81.8 | % | |||||||
| Tablets | 2.6 | 7.3 | % | 3.6 | 7.3 | % | ||||||||
| Laptops and others | 6.7 | 18.9 | % | 5.5 | 10.9 | % | ||||||||
| Total | $ | 35.6 | 100 | % | $ | 50.2 | 100.0 | % |
Smartphones
For the years ending September 30, 2024 and 2023, smartphone revenue represented 73.8% and 81.8% of total revenue, respectively. The decline was due to a drop in units sold from 149,032 to 67,448 as a result of a strategy prioritizing higher-margin orders. This led to an increase in average unit cost from $248 to $319 and in selling price from $272 to $390.
Tablets
Tablet revenue remained steady at about 7.3% of total revenue for both years. Units sold decreased from 44,603 to 31,066, driven by a lower market demand. The average cost per unit fell from $74 to $71, while the selling price slightly rose from $82 to $83.
Laptops and Others
Revenue from laptops and other products increased from 10.9% to 18.9% of total revenue. Units sold rose from 61,617 to 65,703, fueled by the market demand and the Company’s focus on higher-margin orders, boosting gross profit margins from 8.3% to 17.8%. This increase in revenue was due to higher sales amid a reduced total revenue amount.
Cost of Revenues
For the years ended September 30, 2024 and 2023, the cost of revenues was US$29.3 million and US$45.3 million, respectively.
The decrease is mainly due to the decrease in acquisition volume by 35.7% from 255,252 units to 164,217 units, respectively, offset by an increase in acquisition cost for smartphones as explained above.
Gross Profit
Gross profit for the years ended September 30, 2024 and 2023 was US$6.3 million and US$5.0 million, respectively, of 17.8% and 9.9%, respectively, of operating revenue. The increase of gross profit margin was mainly due to the Company’s intentional selection of higher margin orders after building up its market share during the year ended September 30, 2024.
Selling and marketing expenses
For the years ended September 30, 2024 and 2023, selling and marketing expenses were US$32,738 and US$34,132, respectively. The decrease is mainly attributable to the Company’s efforts to control the expenses in the sales department for the year ended September 30, 2024.
General and administrative expenses
For the years ended September 30, 2024 and 2023, the general and administrative expenses remained stable, both at approximately US$1.1 million.
Net income
As a result of the above discussed, the Company recorded a net income of US$4.3 million for the year ended September 30, 2024, growing by about 34.4% from US$3.2 million for the year ended September 30, 2023. The increase was mainly driven by increase in gross profit.
Recent Development:
On November 27, 2024, the Company completed its initial public offering (“IPO”) and raised gross proceeds of US$5 million before deducting underwiring discounts and other offering expenses. On the same day, the Company also closed the sale of an additional 187,500 ordinary shares, pursuant to the full exercise of the underwriter’s over-allotment option granted in connection with its IPO. As a result, it has raised gross proceeds of US$0.75 million, in addition to the previously announced IPO gross proceeds of US$5 million, for total gross proceeds of US$5.75 million raised in its IPO before deducting underwriting discounts and offering expenses.
About Creative Global Technology Holdings Limited
Creative Global Technology Holdings Limited is dedicated to extending the life of consumer electronics through effective recycling, supporting a sustainable circular economy and reducing electronic waste. The Company connects supply and demand for pre-owned devices, maximizing their utility. Specializing in sourcing and reselling recycled smartphones, tablets, and laptops, CGTL facilitates the flow of retired devices from affluent markets like the U.S. and Japan to developing regions in need of affordable technology. With a lean inventory and efficient logistics, CGTL ensures quick inspection and availability for clients. CGTL has also expanded into retail sales and device rentals, providing Hong Kong residents access to quality recycled electronics and meeting short-term needs. For more information, please visit: http://www.cgt-recycle.com ; https://ir.cgt-recycle.com/ .
Forward-Looking Statement
This press release contains forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These forward-looking statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and other factors discussed in the “Risk Factors” section of the Form 20-F filed with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov . The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
For more information, please contact:
Investor Relations
WFS Investor Relations Inc.
Janice Wang, Managing Partner
Email: services@wealthfsllc.com
Phone: +86 13811768599
+1 628 283 9214
| CREATIVE GLOBAL TECHNOLOGY HOLDINGS LIMITED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2024 AND 2023 | |||||||
| 2024 | 2023 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and equivalents | $ | 443,322 | $ | 4,305,577 | |||
| Accounts receivable, net | 10,491,664 | - | |||||
| Prepayments, other receivables and other current assets | 538,195 | 762,475 | |||||
| Inventories, net | 3,842,072 | 5,750,381 | |||||
| Total current assets | 15,315,253 | 10,818,433 | |||||
| Non-current assets: | |||||||
| Property, plant and equipment, net | 26,568 | 15,920 | |||||
| Deferred offering costs | 854,684 | 554,220 | |||||
| Right-of-use assets, net | 123,446 | - | |||||
| Total non-current assets | 1,004,698 | 570,140 | |||||
| Total Assets | $ | 16,319,951 | $ | 11,388,573 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Current Liabilities: | |||||||
| Taxes payable | $ | 2,676,376 | $ | 1,757,908 | |||
| Other payables and accrued liabilities | 56,207 | 428,678 | |||||
| Lease liabilities – current | 108,227 | — | |||||
| Total current liabilities | 2,840,810 | 2,186,586 | |||||
| Non-current liabilities: | |||||||
| Deferred tax liabilities | 266 | 2,430 | |||||
| Lease liabilities – non current | 18,659 | — | |||||
| Total non-current liabilities | 18,925 | 2,430 | |||||
| Total liabilities | 2,859,735 | 2,189,016 | |||||
| COMMITMENTS AND CONTINGENCIES | |||||||
| SHAREHOLDERS’ EQUITY | |||||||
| Ordinary shares: USD $0.001 par value per share, 500,000,000 authorized; 20,000,000 shares issued and outstanding | 20,000 | 20,000 | |||||
| Accumulated other comprehensive income (loss) | (15,584 | ) | 6,125 | ||||
| Retained earnings | 13,455,800 | 9,173,432 | |||||
| Total shareholders’ equity | 13,460,216 | 9,199,557 | |||||
| Total liabilities and shareholders’ equity | $ | 16,319,951 | $ | 11,388,573 |
| CREATIVE GLOBAL TECHNOLOGY HOLDINGS LIMITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME YEARS ENDED SEPTEMBER 30, 2024, 2023 AND 2022 | ||||||||
| 2024 | 2023 | |||||||
| Revenues | $ | 35,611,761 | $ | 50,278,937 | ||||
| Cost of revenues | (29,275,274 | ) | (45,309,410 | ) | ||||
| Gross Profit | 6,336,487 | 4,969,527 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing | (32,738 | ) | (34,132 | ) | ||||
| General and administrative | (1,118,217 | ) | (1,141,069 | ) | ||||
| Total operating expenses | (1,150,955 | ) | (1,175,201 | ) | ||||
| Income from operations | 5,185,532 | 3,794,326 | ||||||
| Other income (loss): | ||||||||
| Other income | 5,290 | 30,541 | ||||||
| Other expenses | (2,726 | ) | — | |||||
| Interest income, net | (2,446 | ) | 10,269 | |||||
| Total other (loss) income, net | 118 | 40,810 | ||||||
| Income before income tax expenses | 5,185,650 | 3,835,136 | ||||||
| Income taxes | (903,282 | ) | (679,815 | ) | ||||
| Net income | 4,282,368 | 3,155,321 | ||||||
| Other Comprehensive Loss | ||||||||
| Foreign currency translation adjustment | (21,709 | ) | 24,697 | |||||
| Total Comprehensive Income | $ | 4,260,659 | $ | 3,180,018 | ||||
| Net income per share attributable to ordinary shareholders - basic and diluted | 0.21 | 0.16 | ||||||
| Weighted average number of ordinary shares used in computing net income per share - basic and diluted | 20,000,000 | 20,000,000 |
FAQ**
What strategies did Creative Global Technology Holdings Ltd. CGTL implement to achieve a 27.5% increase in gross profit, despite a significant revenue decline of 29.2% in the fiscal year ended September 30, 2024?
How did Creative Global Technology Holdings Ltd. CGTL manage to improve its gross profit margin from 9.9% to 17.8% over the last year, and what specific product categories contributed most to this increase?
With a net income rise of 34.4% to US$4.3 million, what cost control measures did Creative Global Technology Holdings Ltd. CGTL employ to enhance profitability while strategically focusing on higher-margin orders?
Going forward, how does Creative Global Technology Holdings Ltd. CGTL plan to utilize the proceeds from its recent IPO to sustain growth and further improve gross profit margins in the competitive market of recycled consumer electronics?
**MWN-AI FAQ is based on asking OpenAI questions about Creative Global Technology Holdings Ltd. (NASDAQ: CGTL).
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