Yueshi Digital’s name belies its agribusiness focus

The company started out as a digital solutions provider for China’s agricultural supply chain but has morphed into a produce trader in its own right

Key Takeaways:

• The IPO hopeful gets 99% of its revenue from the sale of agricultural products, which is a low-margin business
• Backed by big state-owned food and agricultural conglomerates, the company is firmly anchored in China’s cold-chain logistics network

By Lee Shih Ta

What’s in a name? In the case of Shenzhen Yueshi Digital Intelligence Co. Ltd., the answer could be a set of contradictions.

In its recent pitch for a Hong Kong IPO, the company described itself as a seller of perishable products in China’s refrigerated supply chain, driven by digital intelligence. But in fact, digital solutions make up just a tiny fraction of its income.

The business of getting temperature-controlled foodstuffs from the farm or factory to consumers is highly fragmented and labor-intensive in China, operating on thin margins and resistant to efforts to achieve meaningful scale.

Although cold-chain infrastructure has expanded rapidly, circulating the agricultural products efficiently through the system has been hampered by opaque information, crude forecasting and inventory mismatches.

Digitization has offered a way to streamline the process, as highlighted in Yueshi Digital’s application to list shares on the Hong Kong Stock Exchange.

The company was founded in 2019 as a provider of digital tools for the agricultural supply chain. Using a self-developed cloud platform deployed across storage facilities, wholesale markets and food processing plants, it set out to standardize warehouse management, logistics and transaction records. The platform now covers around 30 provinces, autonomous regions and municipalities across China, serving more than 750 cold-chain operators.

As coverage expanded, Yueshi Digital gained insights into procurement patterns, product preferences and pricing dynamics for small and medium-sized wholesalers. From 2023 the company expanded its business by getting directly involved in the sale of cold-chain products and feeding the data back into the trading process. From there, sales of agricultural products quickly became the primary growth engine, complementing its digital tools business.

The path was taken with the support of key shareholders, including institutions with deep roots in China’s food chain, such as state-owned COFCO Group, China Co-op Group and Guangdong Agribusiness Group. These partners provide critical resources for the company’s cold-chain trading, offering stable supply, cross-border sourcing, import coordination and credit guarantees that are crucial for small and medium-sized wholesalers.

The growing supply-chain capabilities have turbo-charged Yueshi Digital’s earnings. The company posted revenue of 1.25 billion yuan ($180 million) in 2023 and more than doubled that figure to 2.98 billion yuan a year later. In the first nine months of 2025, revenue had already exceeded the previous year’s total, reaching 3.99 billion yuan.

Gaping gap in margins

A revenue breakdown shows that nearly all the recent growth has come from sales of cold-chain agricultural products. In the first nine months of 2025, these products accounted for around 99% of revenue, at nearly 3.97 billion yuan. Digital intelligence solutions contributed less than 0.7% of the total, at 27.68 million yuan.

The two businesses also contrast sharply in their gross margins. The margin on agricultural products is a meager 2.4%, while digital intelligence solutions carry a whopping 93.2% margin. The small scale of the digital business means that the overall gross margin stands at just 3%.

Revenue from the digital side of the business amounted to around 30.65 million yuan in 2024. Based on an average of 750 customers, this translates into roughly 41,000 yuan annually per customer, or about 3,500 yuan per month. This suggests that the platform acts more as a basic industry tool or support system. Raising fees for using the system or increasing the share of software revenue are not cited as part of the company’s core development strategy in the listing documents.

Why has the company not focused more aggressively on expanding its higher-margin business, rather than doubling down on low-margin sales? The move may have been driven more by necessity than business preference.

Within the cold-chain industry, digitization demand from small- and medium-sized operators of cold-storage facilities and wholesale markets is highly utilitarian. In many cases the goal is to secure a working solution rather than the best option. For these customers, digital systems serve mainly as tools to cut day-to-day management costs, rather than as revenue-generating assets, which naturally limits their willingness to pay.

While gross margins for sales of cold-chain products are only around 2%, the scale of the market is huge, measured in trillions of yuan. Even paper-thin deal margins can add up to meaningful revenue as turnover becomes more efficient and decision errors are reduced. After accumulating a store of data as a digital service provider, it made complete sense for Yueshi Digital to step directly into trading.

That move pushed the company into the black on an adjusted basis. After an adjusted net loss of around 6 million yuan in 2023, the company swung to an adjusted net profit of 29.7 million yuan in 2024. The figure increased to 50.9 million yuan in the first nine months of last year.

By the end of September, the company had net current liabilities of 2.35 billion yuan and net liabilities of around 2.24 billion yuan, while cash flow from operating activities remained negative. This indicates that the company is still in expansionary mode, with a relatively high reliance on capital markets.

While nominally a digital intelligence enterprise, the firm is essentially an agricultural products trader. As such, it may struggle to command the valuation level typically applied to platform businesses or software service providers.

A recent reference point is Hongxing Coldchain (1641.HK), which listed two weeks ago and has since seen its share price fall around 9%. Investors do not appear to assign a premium to cold-chain companies, instead focusing on fundamentals such as trading scale and operating efficiency. As a result, Yueshi Digital may need to adopt a conservative pricing strategy to enhance its investment appeal.

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