(Yicai) Nov. 23 -- Shares of ATRenew, which owns China's largest consumer electronics recycling chain Aihuishou Recycle, dropped despite the company banking its best-ever operating profit in the third quarter.

ATRenew [NYSE: RERE] closed down 3.9 percent at USD1.71 a share in New York yesterday, reducing its market capitalization to USD382 million.

Based on non-generally accepted accounting principles, operating profit soared seven-fold from a year earlier to CNY73.8 million (USD10.1 million) in the three months ended Sept. 30, the firm said in trading results released yesterday.

Net revenue jumped 28 percent to CNY3.26 billion, exceeding ATRenew’s CNY3.25 billion forecast. The firm’s operating loss narrowed to CNY28 million (USD3.8 million) from CNY110 million.

“Our quarterly results surpassed expectations,” founder Kerry Chen said on an earnings conference call. “This was primarily attributable to the growing scale of the recycling and resale business, which consistently drives industry expansion.

The “second-hand industry continues to thrive with more people choosing to trade in and buy high-quality premium products for new lifestyles,” he added.

The Shanghai-based company operated 1,950 offline stores in 273 Chinese cities as of Sept. 30.

“Our 1P business is thriving, maintaining a consistent year-over-year growth rate of over 30 percent in product revenues,” Chen, who is also chairman and chief executive, said in a statement accompanying its trading report. “This success was driven by sustained user demand for recycling and trading in used items for new ones.

“At the same time, our multi-category recycling business grew rapidly as consumers demonstrated heightened enthusiasm for exchanging used luxury products, gold, and other high-value idle items for cash at AHS Recycle,” he added.

As the main source of profit, net product revenue from ATRenew's 1P business soared 31 percent to CNY2.9 billion thanks to an increase in the sales of pre-owned consumer electronics through its online and offline channels. 

Net service revenue rose 7.3 percent to CNY332.8 million, mainly due to the recovery of its business-to-customer Paipai marketplace and business-to-business PJT marketplace after the negative impact of the Covid-19 pandemic last year.

For this quarter, ATRenew expects revenue of between CNY3.73 billion and CNY3.83 billion (USD522.6 million and USD536.7 million).

“During the festive fourth quarter, bolstered by JD.Com support and our inclusion in Apple's official trading program, the outlook for our overall revenue growth in 2023 is increasingly clear,” Chen said.

Editor: Martin Kadiev