U.S. Stock IPO Outlook | Performance Returns to Growth Track, Comprehensive Logistics Solutions Become Wodetong's "Lifeline"?

The escalation of the global trade war in 2025 has impacted the cross-border logistics industry. While companies are adopting diversification strategies to cope with uncertainties, they are also preparing ample cash flow to engage in a "protracted battle." Wuhan's World Road Supply Chain Technology Co., Ltd. aims to raise "provisions" through the capital market.

According to the observation of Zhitong Finance APP, World Road Supply Chain Technology Co., Ltd.'s holding company, World Road Inc (hereinafter referred to as: World Road), submitted its public prospectus to the SEC for the first time on May 16, applying for a listing on NASDAQ under the code "WODO," but the number of shares to be issued and the price range have not yet been announced.

In terms of performance, World Road's revenue for the fiscal year 2024 (ending March 31, 2024) was approximately 130 million (RMB, the same below), a year-on-year decline of 63.17%. However, during this period, the net profit turned from a loss of 1.599 million to a profit of 190,000. In the first half of the fiscal year 2025 (ending September 30, 2024), World Road's revenue was 224 million, a year-on-year surge of 573.32%, with a net profit of 5.675 million, compared to a loss of 1.373 million in the same period of the fiscal year 2024.

It can be seen that although World Road's profitability has improved, the company's revenue has fluctuated significantly. Why does its performance show such a torn differentiation? The company's prospectus provides insights into this.

Strategic Transformation and Business Structure Adjustment Lead to Significant Revenue Fluctuations

Founded in 2020, World Road is an end-to-end integrated logistics solution provider focused on cross-border logistics and smart warehousing. The company strategically focuses on connecting China with global markets through cross-border freight services, providing comprehensive logistics solutions for its clients.

According to the prospectus, World Road has established regional hubs in major cities such as Shanghai, Wuhan, and Shenzhen, which play a crucial role in the company's cross-border logistics business. At the same time, World Road has established close cooperative relationships with a wide network of suppliers, including ocean and air port operators, ocean and air carriers, customs brokers, e-commerce platforms, and domestic and international logistics service providers, engaging in stable cooperation with over 100 clients and suppliers over the past four years.

While providing services to domestic clients, World Road also serves clients located in countries such as the United States, the Middle East, and Southeast Asia. The company's clients are mainly large e-commerce platforms or key enterprises serving e-commerce platforms.

From a business model perspective, World Road's services are mainly divided into two categories. The first is modular freight forwarding, which covers a range of services including transportation, customs clearance, warehousing, and distribution. Clients can choose certain services individually or select a combination of services. The modular combination makes the company's freight services flexible and diverse, capable of meeting various client needs.

The second is integrated logistics solutions, which provide seamless end-to-end services by integrating various cross-border processes along the booked transportation routes, covering the entire transportation process from the point of origin to the destination, achieving a one-stop, end-to-end solution throughout the logistics process Behind the significant fluctuations in Wode Tong's revenue is actually the company's adjustment of its business structure, which has resulted in this apparent presentation. According to the prospectus, Wode Tong's revenue for the fiscal year 2024 dropped sharply by 63.3% to 130 million yuan, mainly due to the company's strategic reduction of low-margin traditional modular agency business, which caused the revenue from modular agency freight services to plummet by 82% during the reporting period, with its proportion of total revenue directly falling from 93.1% to 45.5%.

While the revenue from modular freight agency services saw a significant decline, comprehensive logistics solutions, as an end-to-end service, have become increasingly popular among e-commerce sellers. In the fiscal year 2024, the number of packages delivered by Wode Tong increased from 480,000 to 1.12 million, a surge of 133.3%, which drove the revenue from comprehensive logistics solutions to grow by 188.6% to 70.8 million yuan, with this business's proportion of total revenue skyrocketing from 6.9% to 54.5%.

After the significant increase in the revenue share of high-margin comprehensive logistics solutions, Wode Tong's gross margin improved significantly, rising from 1.1% in the fiscal year 2023 to 7.1%, an increase of 6 percentage points. This led to a substantial increase in gross profit for the fiscal year 2024, up 127.7% to 9.242 million yuan. Following the sharp increase in gross profit, Wode Tong also turned a profit in the fiscal year 2024, recording a net profit of 190,000 yuan.

In the first half of the fiscal year 2025, Wode Tong's revenue from modular freight agency business continued to decline, decreasing by 19.2% year-on-year to 19.881 million yuan, with its proportion of total revenue dropping to 8.9%. Meanwhile, the comprehensive logistics solutions service continued to make remarkable progress, with the number of packages handled by the company during the reporting period increasing by 3650.2%, leading to a staggering 2267% increase in revenue from comprehensive logistics solutions. This business's share of total revenue rose from 25.9% to 91.1%, resulting in a total revenue increase of 573.3% for Wode Tong during the reporting period. Following this revenue surge, Wode Tong recorded a net profit of 5.675 million yuan, compared to a loss of 1.373 million yuan in the same period of the fiscal year 2024.

It can be seen that although Wode Tong's revenue fluctuated significantly during the adjustment of its business structure, the continuous increase in the revenue share of the highly popular end-to-end comprehensive logistics solutions has led to significant growth in both revenue and profit, indicating the correctness and effectiveness of the company's strategic shift from traditional freight agency business to comprehensive logistics solutions services

Transformation Shows Results While Facing Multiple Operational Challenges

However, while Wardton's transformation is showing results, the company also faces numerous operational challenges. The first is intense market competition and the potential risk of a price war. The price competition in the cross-border logistics industry has evolved from "red ocean slaughter" to a "negative profit survival battle." If companies want to break through, they need to escape the low-price competition by building competitive barriers through technological innovation (such as AI scheduling), service value-added (such as supply chain integration), and compliance capabilities. The transformation of Wardton towards comprehensive logistics solution services is essentially about the service value-added behind supply chain integration, but the competition in this market is currently fierce, which is clearly reflected in the company's profit statement.

In the first half of the 2025 fiscal year, although the number of packages handled by comprehensive logistics solutions increased by 3650.2%, driving a revenue surge of 2267%, it is important to note that this is the result of Wardton "exchanging price for volume," as it reduced the unit price of each package by 36.9% during the reporting period to seek rapid expansion capabilities in a highly competitive logistics environment.

After lowering the unit price of each package, the gross margin of Wardton's comprehensive logistics solutions in the first half of the 2025 fiscal year plummeted from 38.8% to 6.2%, which caused the company's overall gross margin to drop from 10.6% to 5.8%, a decrease of 5 percentage points. If the price war continues or intensifies in the future, it will inevitably affect Wardton's profitability.

Secondly, the high concentration of customers is not conducive to the long-term healthy development of the company. According to the prospectus, in the 2024 fiscal year, the revenue share of Wardton's top four customers accounted for 66%, and by the first half of the 2025 fiscal year, this share had risen to 92.4%, with the largest customer accounting for as much as 41.3%. Clearly, Wardton's customer concentration continues to rise, which is directly related to its entry into the overseas freight supply chain of domestic large e-commerce platforms through low-priced comprehensive logistics solutions.

In a fiercely competitive market, a high customer concentration can put Wardton in a weak position, making it difficult for the company to raise prices. Additionally, if demand from major customers decreases or if they increase other suppliers, it will significantly impact Wardton's business operations.

Furthermore, the uncertainty of U.S. global tariff negotiations places greater pressure on small and medium-sized enterprises in the cross-border logistics industry. Due to resource limitations, small and medium-sized enterprises often have a higher dependence on a single market, and their diversification is significantly weaker than that of leading companies, resulting in relatively weaker risk resistance. If a company has a high revenue share from the U.S. market, the extent of its business operations being affected may be relatively large. In April 2025, the cargo volume from China to U.S. West Coast ports temporarily dropped to zero, but after policy easing in May, it rebounded rapidly, leading to a frenzy of stockpiling in the U.S. market. However, the ongoing uncertainty in tariff negotiations still leaves companies primarily targeting the U.S. market with concerns In the current unpredictable context, diversified development has become a compulsory course for cross-border logistics companies, and it remains to be seen what kind of answer Wode Tong will deliver