20-F: New Century Logistics Reports FY25 Net Loss Amid Revenue Decline

New Century Logistics (BVI) Limited reported a significant net loss of $10.73 million for fiscal year 2025, driven by reduced customer orders and increased operating expenses.

Summary

• Reported a net loss of approximately US$10.73 million for the fiscal year ended September 30, 2025, a significant decline from a net income of US$0.22 million in FY2024.
• Total revenue decreased by 15.51% to US$44.08 million for FY2025, down from US$52.18 million in FY2024, primarily due to reduced orders from several major customers experiencing business downturns.
• Gross profit plummeted by 96.17% to US$0.16 million in FY2025 from US$4.24 million in FY2024, resulting in a gross profit margin of 0.37%.
• General and administrative expenses surged by 191.54% to US$11.0 million in FY2025, largely driven by US$6.36 million in share-based compensation expenses and increased payroll.
• Net cash used in operating activities was approximately US$3.42 million for FY2025, a reversal from net cash provided of US$1.43 million in FY2024.
• The company successfully completed its Initial Public Offering (IPO) on December 19, 2024, raising net proceeds of approximately US$4.98 million.
• A 1-for-8 reverse stock split was approved on October 3, 2025, and became effective on November 14, 2025, to address Nasdaq's minimum bid price requirement.
• The company received a Nasdaq notice on August 11, 2025, for non-compliance with the minimum bid price requirement but regained compliance by December 3, 2025.
• A material weakness in internal control over financial reporting was identified, attributed to a lack of adequately skilled staff with U.S. GAAP knowledge for financial reporting purposes.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report due to the significant net loss, substantial revenue decline, and sharp drop in gross profit for FY2025, despite strategic initiatives and a recent IPO. The identified material weakness in internal controls adds to the concern.

Positives

• Successfully completed its Initial Public Offering (IPO) on December 19, 2024, raising net proceeds of approximately US$4.98 million.
• Regained compliance with Nasdaq's minimum bid price requirement by December 3, 2025, following a reverse stock split.
• Established a strategic cooperative relationship with JD Logistics UK for comprehensive logistics services on May 1, 2025.
• Signed a Memorandum of Understanding with Soradynamics Inc. on May 1, 2025, for the design and development of a vehicle-mounted drone logistics system.
• Entered into a Memorandum of Understanding with Silk Way Airlines Limited on May 16, 2025, for joint development of international air freight logistics solutions.
• Maintains long-standing business relationships with its five largest suppliers, averaging around 10 years.
• Benefits from an experienced and motivated management team with over 20 years of expertise in the freight forwarding industry.
• Operates with an established network offering routes to over 140 countries to its customers.

Negatives

• Reported a significant net loss of US$10.73 million for FY2025, a substantial deterioration from the prior year's net income.
• Total revenue decreased by 15.51% to US$44.08 million in FY2025, primarily due to reduced orders from several major customers experiencing business downturns.
• Gross profit declined sharply by 96.17% to US$0.16 million, with the gross profit margin falling to a mere 0.37% in FY2025.
• Air freight gross profit margin decreased due to higher costs incurred for services.
• Revenue from other services decreased by 51.51%, largely due to decreased demand for low-margin palletization and warehousing/distribution services.
• General and administrative expenses increased by 191.54% to US$11.0 million, significantly impacted by US$6.36 million in share-based compensation expenses.
• Net cash used in operating activities was US$3.42 million in FY2025, indicating a negative operational cash flow trend.
• Accounts receivable turnover days increased to approximately 107 days in FY2025, compared to 88 days in FY2024, suggesting potential delays in collections.
• The company does not intend to pay dividends for the foreseeable future, which may disappoint income-focused investors.

Risks

• Revenues, operating income, and cash flows are likely to fluctuate and are subject to uncertainty and potential volatility in demand and supply for cargo space.
• Reliance on a limited number of vendors, with the top 5 suppliers accounting for approximately 51.9% of total cost of sales in FY2025.
• Exposure to cyber-attacks and data breaches, with no cybersecurity insurance to mitigate such risks.
• Operating in a highly competitive industry with numerous small and medium-sized players, as well as global leading mega logistics groups.
• Highly impacted by the socio-economic landscape, including natural disasters, acts of God, wars (e.g., Ukraine), epidemics (e.g., COVID-19), and political instability.
• As a holding company, reliance on dividends and other distributions from subsidiaries to fund cash and financing requirements.
• Exempted from certain U.S. securities law disclosure requirements and Nasdaq corporate governance standards as a foreign private issuer, potentially affording less protection to shareholders.
• Potential delisting from Nasdaq if continued listing requirements are not met, despite regaining compliance with the minimum bid price requirement.
• Failure to implement and maintain an effective system of internal controls or remediate identified material weaknesses in internal control over financial reporting.
• Uncertainties regarding the interpretation and enforcement of PRC laws, rules, and regulations, including cybersecurity review measures, which could impact business operations or listing.
• Ordinary Shares may be thinly traded, leading to significant price volatility, lower trading volume, and less liquidity.
• Fluctuations in exchange rates, particularly between the Hong Kong dollar and the U.S. dollar, could result in foreign currency exchange losses.
• Potential to be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, leading to adverse U.S. federal income tax consequences for U.S. holders.
• Inability to collect receivables from existing customers could adversely affect results of operations and cash flows, with accounts receivable turnover days at approximately 107 days in FY2025.
• Revenue is subject to seasonal fluctuations, with peak season from October to January and lower volumes during Lunar New Year.
• Inadequate or inaccurate external and internal information, including budget and planning data, could lead to inaccurate financial forecasts and inappropriate financial decisions.
• Subject to extensive environmental laws and regulations, with potential for increased compliance costs or penalties for non-compliance.
• Dependence on suppliers, with risks of non-performance, delayed performance, or disruptions in their business activities.
• May not be able to obtain or maintain all necessary licenses, permits, and approvals in multiple jurisdictions.
• A failure in information technology (IT) systems could cause interruptions in services, disrupt business, and damage reputation.
• Inability to protect intellectual property rights or potential exposure to intellectual property infringement claims.
• Increases in labor costs in Hong Kong may adversely affect business and results of operations.
• Principal shareholders have substantial influence over the company, and their interests may not always align with other shareholders.
• Risk of negative publicity involving U.S.-listed Chinese companies, which could harm business operations, stock price, and reputation.
• May be required to recognize impairment charges for long-lived assets, which could materially affect financial results.
• Inability to accept client engagements due to real or perceived relationship issues.
• Claims involving services could harm overall professional reputation and ability to compete and attract business.
• Failure to compete effectively in the highly fragmented freight forwarding industry.
• Inability to retain or secure key executives and personnel for operations.
• Failure to identify shipments which carry goods of dangerous or illicit nature, leading to potential investigations, penalties, or liabilities.
• Insurance coverage may be insufficient to cover all losses associated with business operations and legal proceedings.
• Business development may be hindered if the company is unable to obtain additional funding to expand its business.
• Dependence on leased operational facilities exposes the company to risks related to unpredictable and increasing rental costs and relocation costs.
• Results of operations are affected by international trading volumes, global and regional economic conditions, and trade policies.
• Potential for disintermediation in the logistics industry due to digitization and manufacturers/retailers shipping directly to end customers.
• No assurance that Hong Kong will continue to maintain its position as a logistics hub in Asia, which could adversely affect demand for services.
• Termination of the US-HK Shipping Agreement may increase costs for ocean freight forwarding business.
• The freight forwarding and logistics industries are susceptible to changes in shipping policies, which could have direct adverse impacts on business, results of operations, and profits.
• Political risks associated with conducting business in Hong Kong, including the impact of the Hong Kong National Security Law and the HKAA.
• The company may be affected by the currency peg system in Hong Kong, with potential devaluation of the Hong Kong dollar.

Future Outlook

The company intends to retain all available funds and future earnings for business operation and expansion and does not anticipate declaring or paying any dividends in the foreseeable future. Management anticipates an increase in overall general and administrative expenses, particularly payroll and professional expenses, due to plans for additional personnel and business expansion. Professional fees for legal, audit, and advisory services are also expected to increase as a public company. The long-term business objective is to become a leading one-stop logistics service provider in the freight forwarding and logistics industries in Asia. The company will continue to monitor foreign currency exposure and consider hedging significant foreign currency exposure if the need arises.

Management Comments

• The logistics industry is expanding rapidly as online shopping fuels the need for faster and more secure deliveries.
• The rise of Omnichannel retail has introduced new complexities, with consumers expecting flexible options like store pickup, home delivery from physical stores, and the ability to choose or change delivery preference.
• Meeting these expectations requires tight integration between inventory control, warehousing and fulfilment operations.
• To overcome challenges like increasing transportation costs, labor gaps, and supply chain disruptions, logistics providers are relying more on an advanced technologies and smarter workforce strategies.
• Our long-term business objective is to become a leading one-stop logistics service provider in the freight forwarding and logistics industries in Asia.
• The directors of the Company will keep continuous attention on monitoring the latest announcement of the governments of different countries.
• We value our employees and insurance agents the most and are constantly encouraging innovation, efficiency, and teamwork at the Company.
• Our directors believe that the good condition of machinery and equipment is important to the efficient and smooth performance of our services and to our workplace safety.
• We generated cost and revenue synergies with increased operational efficiencies and cost control through the adoption of best practices and capabilities.
• We are committed to safe and secure operations. We conduct a mandatory driver qualification process, including preparing drivers on safety procedures. We have teams focused on personnel safety, regulatory compliance and adoption of a comprehensive insurance.

Industry Context

StockSavvy.ai notes that the logistics industry is experiencing rapid expansion driven by online shopping and the complexities of omnichannel retail, requiring providers to integrate inventory, warehousing, and fulfillment. The industry is also increasingly relying on advanced technologies and smarter workforce strategies to combat rising transportation costs, labor shortages, and supply chain disruptions. The company's strategic MOUs with Soradynamics for drone logistics and Silk Way Airlines for air freight solutions align with the broader industry trend of technology adoption and network expansion to enhance efficiency and service offerings. However, the highly fragmented nature of the Hong Kong freight forwarding market, with intense competition from global mega logistics groups and local players, presents a significant challenge to the company's market share and profitability, especially given its recent revenue decline.

Comparison to Industry Standards

• The filing indicates that 'Tier-one freight forwarders are generally the global leading mega logistics groups with worldwide logistics network and business coverage,' while 'tier-two freight forwarders are generally local and regional players with networks covering certain focused logistic locations and categories of goods.' The company, based in Hong Kong with routes to over 140 countries, positions itself within this competitive landscape, likely as a tier-two or specialized regional player.
• No specific global benchmarks or comparable companies' projects and results are provided within the filing for a detailed assessment against industry standards.

Management Changes

Corporate Governance

Legal Proceedings

• The company may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business.
• Management's opinion states there were no pending or threatened claims and litigation as of September 30, 2024 and 2025, and through the issuance date of these consolidated financial statements, except for a dispute with Craft Capital Management LLC.
• A dispute with Craft Capital Management LLC regarding an engagement agreement, where Craft Capital alleged breach and demanded US$78,126 in compensation, was settled by the company agreeing to reimburse US$25,000 in legal fees, with no breakup fee payable. Fees were fully settled on December 19, 2024.

Related Party Transactions

• Loan payable to Asia International Securities Exchange Co., Limited (a shareholder) of US$2,430,691 as of September 30, 2024, which was reduced to nil as of September 30, 2025. This loan was interest-free and payable within 180 days from the first trading date.
• Amounts due from related parties (advances to directors Lam Shing Kwan Henry, Ngan Ching Shun, and Ng Yi To Peter) totaled US$783,206 as of September 30, 2024, and were fully repaid in December 2024. These advances were unsecured, non-interest bearing, and due on demand.
• Collateral and guarantee provided by Mr. Lam Shing Kwan Henry and Mr. Ngan Ching Shun for revolving loans from Bank of Communications (Hong Kong) Limited, with an aggregated principal of US$897,435 as of September 30, 2025.
• Collateral and guarantee provided by Mr. Lam Shing Kwan Henry (Second Legal Mortgage on a property) for a bank overdraft from Bank of Communications (Hong Kong) Limited, with an aggregated principal of US$717,306 as of September 30, 2025.
• In FY2023, a dividend of US$7,051,282 was declared, with certain shareholders waiving US$1,057,692, and the remaining US$5.99 million offset against amounts due from founder shareholders. No dividends were declared or paid in FY2024 or FY2025.

Stakeholder Impact

• Shareholders: The significant net loss, revenue decline, and sharp drop in gross profit are likely to negatively impact investor confidence and potentially the share price. The reverse stock split and regaining Nasdaq compliance are mitigating factors, but the lack of anticipated dividends in the foreseeable future may deter income-focused investors.
• Employees: Payroll expenses increased, and the company plans to hire additional personnel, which could be positive for employment. However, the identified material weakness in internal controls suggests potential operational challenges that could affect employee efficiency and morale.
• Customers: Reduced orders from major customers indicate business downturns affecting demand for services. Strategic partnerships with JD Logistics UK, Soradynamics, and Silk Way Airlines aim to enhance service offerings and network, potentially benefiting customers in the long term.
• Suppliers: The company's dependence on a limited number of suppliers (top 5 accounted for 51.9% of cost of sales in FY2025) creates risk if disruptions occur, potentially impacting service delivery and costs.
• Creditors: Increased bank loans and overdrafts, alongside a net loss, could raise concerns about the company's ability to service debt, although related party loans were repaid.

Next Steps

• Implement measures to address the material weakness in internal control over financial reporting, including hiring additional accounting personnel and establishing a financial and system control framework.
• Initiate regular U.S. GAAP and SEC financial reporting training programs for accounting and financial personnel.
• Develop and implement a set of policies and procedures for period-end financial reporting.
• Formalize the acquisition details for Asiatic Logistics Limited following the Letter of Intent.
• Continue joint development of international air freight logistics solutions with Silk Way Airlines Limited.
• Proceed with the design and development of a vehicle-mounted drone logistics system with Soradynamics Inc.
• Monitor foreign currency exposure and consider hedging significant foreign currency exposure.
• Continue efforts to expand business and achieve the long-term objective of becoming a leading one-stop logistics service provider in Asia.

Key Dates

Recommendation

The company reported a substantial net loss of over $10 million for FY2025, coupled with a significant 15.51% decline in revenue and a drastic 96.17% drop in gross profit. This indicates a severe deterioration in financial performance. The surge in general and administrative expenses, largely due to share-based compensation, further exacerbates the losses. While the company completed an IPO and engaged in strategic partnerships, the underlying operational results are weak, and a material weakness in internal controls has been identified. These factors, combined with customer and vendor concentration risks and the company's intention not to pay dividends, suggest significant financial instability and high investment risk. A seasoned investor would likely view these results as a strong signal to exit or avoid the stock.

Keywords

Freight forwarding, Logistics, Hong Kong, SEC filing, 20-F, NCEW, Financial results, Net loss, Revenue decline, Operating expenses, Share-based compensation, IPO, Nasdaq, Reverse stock split, Minimum bid price, Internal controls, Cybersecurity, Related party transactions, Supply chain, Air freight, Ocean freight, Warehousing, Distribution, Strategic partnerships, Risk management, Corporate governance