Stock Price Soars Threefold! Double Growth in Revenue and Net Income Fails to Hide Slowing Growth, Zhejiang Dongri's Bottleneck and Breakthrough

This article is sourced from Times Business Research Institute. Author: Lu Shuyi

Image source: TuChong Creative

Source | Times Business Research Institute

Author | Lu Shuyi

Editor | Han Xun

By 2025, as the market focuses on AI technology and new energy sectors, Wenzhou’s leading agricultural wholesale company Zhejiang Dongri (600113.SH) saw its stock price surge over 300% in six months. The 2025 annual report further demonstrated double growth in revenue and net profit, significantly outperforming industry peers with disclosed results.

However, behind this impressive performance, growth mainly relies on one-time project recognition. Revenue from high-margin core businesses and their proportions both declined, with gross margin dropping to a 10-year low, indicating sluggish main business growth. Meanwhile, new regional competitors entering Zhejiang Dongri’s markets caused short-term disruptions. Domestic business faces structural growth bottlenecks, and new ventures are still in the cultivation stage.

On March 17, Zhejiang Dongri’s Vice General Manager, Secretary of the Board, and CFO Xie Xiaolei discussed the company’s profitability, digital development, inventory, and industry trends with Times Business Research Institute. Xie Xiaolei stated that, according to relevant department statistics, about 70% of China’s agricultural products are sold through offline channels, and the prospects for agricultural wholesale are promising.

Stock Price and Performance Both Rise, Main Business Growth Shows Warnings

Wind data shows that on December 16, 2025, Zhejiang Dongri’s stock price peaked at 68.88 yuan per share, a rise of over 300% from June 16, 2025. As of March 23, 2026, its stock price increased by 300.27% over the past year, far exceeding the median of -6.15% in the commercial property management industry (Shenwan Level 3).

Zhejiang Dongri’s 2025 annual report indicates that during the reporting period, the company achieved operating revenue of 774 million yuan and net profit attributable to shareholders of 144 million yuan, with year-on-year growth rates of 7.06% and 6.94%, respectively. Deducting non-recurring gains and losses, net profit was 125 million yuan, up 10.30% year-over-year.

Data shows that Zhejiang Dongri was listed on the Shanghai Stock Exchange Main Board in October 1997, becoming Wenzhou’s first listed company. Its actual controller is Wenzhou State-owned Assets Supervision and Administration Commission. In 2015, through major asset restructuring, the company shifted from traditional real estate trade to focus on agricultural wholesale logistics, forming a “one core, two wings” pattern—comprising a wholesale market for agricultural and sideline products, fresh food distribution, and soybean product processing. Later, it expanded into digital industry output, AI vertical applications, and medical food sectors, creating a “1+2+N” business layout.

Despite seemingly good results, there are no signs of a substantial turning point. In 2025, revenue growth from the “one core, two wings” model was weak, mainly driven by one-time project recognition from outside regional agricultural wholesale markets. This segment earned 82 million yuan, up 4313.19% year-over-year, accounting for only 10.63% of total revenue. The revenue increase of 80 million yuan far exceeded the total revenue growth of 51 million yuan. Excluding this business, nearly 90% of the company’s revenue declined year-over-year.

This is not the first time Zhejiang Dongri has relied on asset monetization or one-time projects. In 2022, it earned 258 million yuan from sales of supporting commercial shops, nearly 30% of that year’s revenue, boosting overall revenue by 42.26%. However, in 2023, this income dropped 41.73% to 150 million yuan, and total revenue declined 3.52%, indicating weak sustainability of such one-time income.

Inventory changes also reflect the “slowing main business, pulse-like supplementary income” pattern. At the end of 2025, Zhejiang Dongri’s inventory was 390 million yuan, down 25.23% year-over-year, mainly due to reduced development products worth 161 million yuan. The company recovered funds from completed projects like Longyou Baiyi Market and Jinnan International Agricultural Products Logistics Park Phase I. However, inventory of goods surged from 2.64 million yuan to 31.49 million yuan, and prepayments skyrocketed 17,296.10% to 160 million yuan, leading to a 40.53% decline in net operating cash flow.

Xie Xiaolei told Times Business Research Institute that the increase in inventory mainly stems from new supply chain businesses launched in 2025. This segment extends the company’s core wholesale market business to the front end, aiming to organize upstream sources based on merchant needs. Since upstream suppliers are industry leaders with high payment requirements, contracts generally require prepayments and fixed supply periods, resulting in substantial prepayments. Inventory consists of goods purchased from upstream suppliers stored in designated entrusted warehouses, with downstream customers taking deliveries gradually based on operational needs.

Besides core wholesale and market development, supply chain services are one of the “N” new businesses Zhejiang Dongri is cultivating. Its goal is to consolidate merchants’ procurement needs, secure better prices through larger purchase volumes, and help solve issues related to sourcing, financing, and receivables, providing a better operating platform aligned with state-owned internal circulation trends.

Intensified Competition and Structural Adjustment, Profitability and Domestic Business Face Obstacles

While revenue and net profit grow, Zhejiang Dongri’s gross margin fell to a 10-year low of 36.90% in 2025, squeezing profit margins. Its domestic wholesale business also encounters structural growth bottlenecks.

Wind data shows that Zhejiang Dongri’s gross margin in 2025 was 36.90%, down 1.86 percentage points from the previous year, the lowest since 2016, affected by business structure adjustments and short-term competitive responses.

Looking at specific segments, wholesale markets and leasing are core high-margin businesses, with gross margins of 61.19% and 37.31% in 2025, down 2.82 and 4.88 percentage points, respectively. Their combined revenue dropped from 351 million yuan in 2024 to 307 million yuan in 2025, with their share of total revenue decreasing from 48.54% to 39.74%. Both revenue and proportion declined.

In contrast, low-margin commodity sales (such as vegetable and soybean product businesses) became the largest revenue source starting in 2024. In 2025, this segment’s revenue grew 2.51% year-over-year, accounting for 44.47% of total revenue, surpassing the combined share of the two high-margin segments. This structural shift further lowered overall gross margin.

External industry competition also pressures profitability. In April 2025, Wenzhou Oukun Agricultural Products First Wholesale Market (Oukun Market) officially opened. Covering 100,000 square meters and serving southern Zhejiang and northern Fujian, it covers seven key categories, providing comprehensive services to B-end catering and C-end consumers. It directly competes with Zhejiang Dongri’s core Louqiao wholesale market cluster, which also serves southern Zhejiang and northern Fujian, mainly wholesale vegetables and fruits to B-end wholesalers, supermarkets, and restaurants.

Xie Xiaolei told Times Business Research Institute that Oukun Market took about seven or eight years to develop. During its opening in 2025, the company provided merchants with phased discounts and support, which was a key reason for the 2 percentage point decline in gross margin that year. However, subsidy policies at the new market are unsustainable. Competition from new markets is inevitable, but the old markets’ advantageous locations, operations, and merchant loyalty remain significant. The company’s response will adjust according to market conditions, focusing on maintaining good management.

Regarding domestic business development, Zhejiang Dongri, with a regional market share of about 90%, faces structural growth bottlenecks. Xie Xiaolei believes that although the vegetable market share in the company’s wholesale sector is near “ceiling,” there is still room to grow in the fruit segment. Currently, residents’ fruit consumption share is still rising, making it a key growth area domestically. Additionally, future external expansion projects moving from cultivation to maturity will serve as important supplementary growth drivers for the wholesale business.

Industry Structural Opportunities and Multi-Dimensional Layouts for Breakthroughs

Although the agricultural wholesale industry is affected by slowing growth in overall agricultural product consumption due to population growth, it does not face an overall “ceiling.” Structural opportunities within the industry offer Zhejiang Dongri potential for breakthroughs. The company is actively optimizing domestic operations, cultivating external projects, and deploying new businesses across multiple dimensions to overcome growth bottlenecks.

From industry trends, growth logic has shifted from total volume expansion to differentiated competition. Leading companies with management, technological, and resource advantages still have growth opportunities. Specifically, there is demand for renovation and asset integration of old wholesale markets, which offers significant consolidation space; rising demand for deep processing of agricultural products boosts circulation volume and added value; and informatization and intelligent transformation of the industry are still in early stages, with considerable room for operational efficiency improvements.

In line with these opportunities, Zhejiang Dongri is targeting specific growth potentials. For domestic operations, the company will focus on expanding its fruit segment to increase market share and offset vegetable growth bottlenecks. Its soybean product business has built a new production base in 2025, tripling capacity of the old plant, and will start production in 2026 to break capacity constraints. It will also work to increase market share in surrounding counties and cities. Relying on government backing and strict food safety standards, fresh food distribution has a core competitive advantage in government and institutional procurement tenders, with gross margin expected to steadily improve as industry regulation tightens and smaller, unregulated competitors exit. There is also significant potential for market consolidation.

For external expansion, Zhejiang Dongri does not pursue short-term sales returns but emphasizes market cultivation. Xie Xiaolei said that although some shops in Linfen are easy to sell, the company believes that once matured, leasing or selling properties will generate higher long-term value, avoiding sacrificing long-term benefits for short-term gains. As external projects mature, they will become important supplementary growth drivers for the wholesale core.

Regarding new businesses, Zhejiang Dongri adopts a “racehorse mechanism” for the “N” sectors, advancing multiple projects such as digital industry output, medical foods, medical technology, and supply chain simultaneously. The company increases resource allocation to promising growth areas based on market feedback, cultivating new growth curves. Although these new businesses are not yet core growth engines, some have shown growth potential. For example, the supply chain segment, while not yet reflected in revenue, has become an important layout for integrating merchant resources and extending the main business.

For Zhejiang Dongri, the long-term performance inflection point depends on three key indicators: first, optimizing domestic business structure by increasing fruit market share to offset vegetable bottlenecks and stabilizing gross margins after phased merchant discounts; second, external projects turning profitable, with projects in Linfen and Harbin shifting from cash flow positive to net profit positive, supplementing wholesale growth; third, scaling new businesses, with soybean product capacity expansion, increasing market share and gross margin, and expanding the share of fresh food distribution, tech, and medical food sectors, creating new profit growth points.

Core Viewpoint: Focus on External Projects and New Business Implementation

As a regional leader in agricultural wholesale, Zhejiang Dongri’s 2025 stock price and performance growth do not alter its main issues: sluggish core growth and reliance on one-time income. Industry competition, domestic bottlenecks, and other challenges remain.

However, the industry’s structural opportunities and Zhejiang Dongri’s efforts in domestic optimization, external project cultivation, and new business deployment offer potential breakthroughs. In the short term, the company’s stock price may diverge from fundamentals, and investors should be cautious of valuation corrections. In the medium to long term, only by achieving three core goals—domestic business restructuring, external project profitability, and scaling new businesses—can the company reduce dependence on one-time income, establish a stable core, and drive sustained growth through a three-wheel approach of core stability, external expansion, and new business growth.

Otherwise, if external projects do not meet expectations or new business implementation is slow, Zhejiang Dongri will face continued challenges of sluggish core growth and margin pressure. The agricultural wholesale industry is at a critical stage of policy support, industry consolidation, and digital acceleration. Zhejiang Dongri’s strategic deployment and breakthroughs serve as a typical example of regional leaders seeking transformation and upgrading.

(Word count: 3518)