The table below sets forth the breakdown of cost of revenue by service type for the six months ended June 30, 2023 and 2024.
For the Six Months
Ended June 30,
2023 2024
US$ US$
Freight forwarding services
- Air freight 58,762,055 37,486,005
- Ocean freight 706,676 626,154
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Subtotal 59,468,731 38,112,159
Ancillary logistic services 4,063 27,904
---------- ----------
Total 59,472,794 38,140,063
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Our cost of revenue amounted to US$59.5 million and US$38.1 million for the six months ended June 30, 2023 and 2024, respectively. The trend of cost of revenue of each of the service types was in line with the trend of the revenue of respective service types during the period.
The table below sets forth the breakdown of cost of revenue by nature for the six months ended June 30, 2023 and 2024.
For the Six Months
Ended June 30,
----------------------
2023 2024
---------- ----------
US$ US$
Air freight charges 47,081,030 29,845,670
Ocean freight charges 653,549 612,256
Logistics and warehousing fees 11,699,414 7,676,528
Depreciation of property, plant and equipment 38,801 5,609
Total 59,472,794 38,140,063
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Our cost of revenue mainly comprised of air and ocean freight charges, and warehouse and transportation cost. Air and ocean freight charges represented costs of cargo space charged by airlines, shipping liners or other freight forwarders. Air freight charges were the major component of our cost of revenue, which accounted for 79.2% and 78.2%, respectively, for the six months ended June 30, 2023 and 2024.
Logistics and warehousing fees primarily represent costs and service fees incurred in relation to warehousing services such as x-ray screening, storage, palletizing and consolidation performed in our warehouse and costs of local trucking and transportation services. Logistics and warehousing fees represented a significant portion of our cost of revenue, which accounted for 19.7% and 20.2%, respectively, for the six months ended June 30, 2023 and 2024. The increase in the relative proportions is primarily attributed to increased costs in transportation and pre-loading preparation for the aircraft.
Depreciation of property, plant and equipment represents the depreciation of property, plant and equipment related to our warehouse such as x-ray screening equipment and forklifts.
Gross profit
The table below set forth the breakdown of gross profit by service type for the six months ended June 30, 2023 and 2024.
For the Six Months
Ended June 30,
------------------------
2023 2024
---------- ------------
US$ US$
Freight forwarding services
Air freight 7,507,243 1,258,324
Ocean freight 93,401 (4,479)
--------- ---------
Subtotal 7,600,644 1,253,845
Ancillary logistic services (3,986) (27,699)
--------- ---------
Total 7,596,658 1,226,146
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Our total gross profit amounted to US$7.6 million and US$1.2 million for the six months ended June 30, 2023 and 2024, respectively. We recorded overall gross profit margin of 11.3% and 3.0% for the same period. Our gross profit and gross profit margin are mainly affected by the spread we earn between the freight charge per kilogram payable by our customers and the freight charges payable to suppliers we are able to secure.
General and administrative expenses
Our general and administrative expenses decreased from US$2.2 million for the six months ended June 30, 2023 to US$1.8 million for the six months ended June 30, 2024, primarily driven by (i) the decrease in staff costs and benefits in the first six months of 2024 and (ii) increased professional service fees relating the proposed listing of our company in the United States.
Interest expenses
Our interest expenses decreased from US$1,291 for the six months ended June 30, 2023 to Nil for the six months ended June 30, 2024, which was primarily attributable to decrease in short-term bank loans.
Other income
Our other income decreased from US$0.12 million for the six months ended June 30, 2023 to US$0.08 million for the six months ended June 30, 2024.
Exchange (loss) gain
Our exchange loss of US$271,736 for the six months ended June 30, 2023 changed to exchange gain of US$335 for the six months ended June 30, 2024, which was primarily driven by fluctuation of RMB and US$ against HKD.
Income tax
Our income tax expense decreased from US$0.8 million for the six months ended June 30, 2023 to Nil for the six months ended June 30, 2024, which was in line with the decrease in our net income for the period.
Net income
As a result of the above factors, our net income decreased by US$4.8 million from US$4.4 million for the six months ended June 30, 2023 to net loss of US$0.4 million for the six months ended June 30, 2024, our net income margin decreased from 6.6% for the six months ended June 30, 2023 to -1% for the six months ended June 30, 2024.
Cash flows
The table below sets forth a summary of our cash flows for the six months ended June 30, 2023 and 2024:
For the Six Months
Ended June 30,
2023 2024
US$ US$
Net cash provided by (used in) operating
activities 6,090,423 (2,237,934)
Net cash provided by an investing activity 2,251,466 9,095
Net cash (used in) provided by financing
activities (130,927) 26,667
Net increase (decrease) in cash and cash
equivalents and restricted cash 8,210,962 (2,202,172)
Cash provided by operating activities
Our operating cash inflow is primarily from our operating activities principally from the receipt of payments for our provision of freight forwarding services, whereas our outflow from operating activities is principally for freight charges, ancillary service fees payable to suppliers, payment of salaries and employee benefits and general and administrative expenses.
For the six months ended June 30, 2023, our net cash provided by operating activities was US$6.1 million, mainly attributable to (i) our net income of US$4.4 million which was primarily adjusted for depreciation of right-of-use assets of US$59,769, allowance for expected credit loss of US$9,253 and depreciation of property, plant and equipment of US$90,492; (ii) increase in accounts payables to third party of US$7.3 million; (ii) decrease in amounts due to related companies of US$0.2 million; and (iii) decrease in contract liabilities of US$4,430; which was partially offset by (iv) increase in accounts receivables of US$5.0 million.
For the six months ended June 30, 2024, our net cash used in operating activities was US$2.2 million, mainly attributable to (i) our net loss of US$0.4 million which was primarily adjusted for depreciation of right-of-use assets of US$47,659, and depreciation of property, plant and equipment of US$31,716; (ii) decrease in accounts payables to third parties of US$6.9 million; (ii) decrease in amounts due to related companies of US$0.2 million; and (iii) decrease in contract liabilities of US$3,661; which was partially offset by (iv) decrease in accounts receivables of US$6.5 million.
Cash provided by an investing activity
Our cash provided by an investing activity is primarily attributable to proceeds on disposal of equity securities and repayment from related parties. Our cash used in investing activities is primarily for purchase of property, plant and equipment, purchase of equity securities and advance to related parties.
For the six months ended June 30, 2024, our net cash flow provided by an investing activity was US$9,095, as a result of decrease in restricted cash with maturity of more than three months when acquired.
Cash (used in) provided by financing activities
For the six months ended June 30, 2024, our net cash provided by financing activities was US$26,667, due to expiry of unpresented check for dividend paid to a shareholder in prior years.
Recent Development
We have consummated the business combination with AIB Acquisition Corporation, special purpose acquisition company ("SPAC") on July 18, 2024, pursuant to the Business Combination Agreement entered into on December 27, 2023. The ordinary shares of the Company commenced trading on Nasdaq Stock Market on July 19, 2024. The successful completion of the merger and the listing represents a key moment in the Company's journey towards growth and expansion.
About PS International Group Ltd.
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