Over 10 billion in revenue with net profit declining by over 60%, why does Aoke Co. see increased revenue but no profit growth?

Ask AI · Why Has Aoji Logistics Gotten Trapped in a Cycle of “Expanding More and Losing More”?

As one of the “Four Young Masters of South China City” among cross-border e-commerce companies, Aoji Holdings (02519.HK), a leading player in going overseas, released its 2025 annual report at the end of March 2026. According to the annual report and publicly available estimates, the company’s full-year revenue was RMB 8B, up 27.91%, setting a new record for its scale; however, attributable net profit to shareholders was only RMB 161 million, down sharply by 68.05% year over year. Meanwhile, its overall gross margin fell from 30.8% to 26.3%, showing a typical pattern of “higher revenue but not higher profits.”

Against the backdrop of intensifying industry competition, higher overseas tariffs, and soaring logistics and marketing costs, this cross-border giant—just recently listed on the Hong Kong Stock Exchange—has entered a critical game between expanding scale and restoring profitability, and its performance has also become an important example for observing China’s cross-border e-commerce transformation.

A Three-Dimensional Expansion of Categories, Markets, and Channels Solidifies a Billion-CNY Base

In 2025, Aoji Holdings with over RMB 10 billion in revenue continued the high-growth momentum after listing, maintaining its position in China’s cross-border e-commerce first tier. As the last company among the “Four Young Masters of South China City” to complete its listing, Aoji has built a stable base of over RMB 10 billion in revenue, driven by a successful transformation from 3C electronics into furniture, home furnishings, and electric tools.

Optimizing the category structure became the core support for scale growth. The company has fully completed its track switching: furniture and home appliances became the first growth curve. Full-year revenue was RMB 1.06B, up 12.9%, accounting for 55.6% of total revenue, keeping it among the top ranks of global home B2C e-commerce; electric tools performed strongly, with revenue of RMB 4.12B, up 43.1% year over year, becoming the second growth engine.

At the same time, revenue from its logistics solutions business jumped to RMB 8B, up 68.6% year over year. Its share increased to 30.1%, and the company’s supply-chain service capabilities continued to strengthen.

In terms of market layout, North America remains the core base. Revenue from the United States and North America was RMB 8B, up 12.8%, accounting for 86.2%. The European market became the biggest highlight: revenue was RMB 8.26B, up 49.8% year over year, accounting for 11.7%. This effectively reduces dependence on a single market and significantly improves regional resilience against risks.

Channel structure has also continued to improve. Online sales still mainly rely on Amazon, with revenue of RMB 5.81B, up 14%, accounting for about 61.16% of product sales—down noticeably from the previous over 80% reliance. The home vertical platform Wayfair generated revenue of RMB 1.1B, up 20.3%, highly aligned with the company’s home category. Revenue from emerging platforms such as TikTok and Temu surged 102.3%. The multi-platform strategy is starting to show results, while platform risk remains increasingly diversified.

With Costs Soaring and Logistics Warehouses Expanding Yet Still Losing Money, Profit Gets Cut in Half

On the other hand of rapid revenue growth is the “cut in half” of profitability. In 2025, Aoji’s attributable net profit to shareholders fell 68.05% year over year. Gross margin dropped by 4.5 percentage points to 26.3%. Behind the situation of “higher revenue but not higher profits,” the core pressure comes from a dual squeeze on the cost side and the external environment.

The pressure on the profitability side stems from a combination of multiple factors, among which is a contradiction in the logistics business: the larger the scale, the harder it is to make money. Although Aoji’s logistics segment revenue growth rate is close to 70%, its gross margin has dropped sharply.

To build a global supply-chain network, according to available information, in 2025 alone, the overseas warehouse added area of its (Aoji’s West-Post Smart Warehousing) reached 1.264 million square feet. Heavy-asset investments lead to surging rent, depreciation, and operating costs. Revenue growth cannot cover the increases in costs, putting the company into a “the more it expands, the more it loses” predicament.

Meanwhile, the rise in tariffs and operating costs further squeezes gross margin. In 2025, the U.S. imposed a 25% tariff on furniture and home furnishings and also added steel and aluminum tariffs on home appliances. Combined with increases in ocean freight costs for the initial leg, this directly hits the profitability of core categories.

Selling expenses rose to RMB 1.26M, up 21.29%, mainly due to higher advertising spend, platform commissions, overseas warehouse rentals, and labor costs. Research and development expenses were RMB 182 million, up 40.08%, used for AI operations, new product R&D, and building new platforms; short-term investment has not yet generated effective profit returns.

In addition, furniture and home furnishings are large-sized goods with characteristics such as large volume and high weight, high logistics costs, and high return rates. During cycles of rising tariffs and shipping rates, the available profit space is compressed further, becoming an important reason for the decline in gross margin.

From “Competing on Scale” to “Competing on Profitability,” A New Question for Billion-CNY Cross-Border Giants

Aoji has attracted significant industry attention not only because of its billion-level revenue, but also because of its benchmark status among the “Four Young Masters of South China City.” As an early representative of Shenzhen’s cross-border e-commerce industry, it ranks alongside Secoo Times, With a Tree, and Tongtuo Technology. It has witnessed the entire process of the industry moving from barbaric growth to a standardized transformation. After listing on the Hong Kong Stock Exchange in November 2024, Aoji became a key example to observe the capital market’s cross-border e-commerce and high-quality development.

The company is currently in a deep-water zone of strategic transformation: on one hand, category upgrading, diversification of markets and channels, and heavy-asset logistics deployment lay a foundation for long-term growth; on the other hand, short-term profitability faces pressure, revealing challenges in expansion pacing, cost control, and responding to external risks. Whether in 2026 it can reverse the plunge in profits mainly depends on three points: first, improving operating efficiency in the logistics business and getting out of the difficult challenge of “the more it expands, the more it loses”; second, strictly controlling sales and finance costs to ease fee erosion on profits; third, responding to tariff fluctuations and stabilizing gross margin for core categories.

From an industry perspective, Aoji’s predicament is not an isolated case, but a microcosm of how cross-border e-commerce is shifting from prioritizing scale to prioritizing profitability. In the new normal of tighter platform regulation, increased overseas trade barriers, and rising traffic costs, simply chasing revenue growth is no longer sustainable. Refined operations, supply-chain efficiency, and global risk management will become core competitiveness.

Written and compiled by: Nandu · Bay Finance and News, reporter Chen Yingshan