BTOC

Armlogi grew FY2025 revenue 14% to $190.4M by adding warehouses, but the growth destroyed the P&L: cost of service rose 29.9% ($44.5M) while revenue rose only $23.4M, flipping gross profit from +$18.1M (10.8% margin) to a $3.0M gross LOSS (-1.6% margin). That is the single most damning fact here — a warehousing/transportation operator whose direct costs (FedEx/UPS freight, warehouse rent, labor) exceed its billings has no operating model to leverage. Management's own MD&A concedes the new facilities, 'unlike prior expansions,' couldn't shift staff from nearby sites and required incremental labor, so the expansion added revenue at a negative contribution margin. Net income swung from +$7.4M to a -$15.3M loss and EPS to -$0.37.

The balance sheet offers little cushion. Equity fell 36% to $25.1M, liabilities/equity is 5.78x, current liabilities ($45.8M, +38.9%) now exceed current assets ($37.7M) for negative working capital, and cash is just $9.19M against a business that only generated $1.46M of operating cash flow (down 51%). Retained earnings collapsed 65% to $8.4M. Another year of gross losses at this scale would consume the cash and much of the equity.