Executive Summary / Key Takeaways

• Nisun International (NASDAQ:NISN) is strategically transforming China's SME financing and supply chain landscape through its technology-driven platforms, positioning itself for significant growth despite recent economic headwinds.
• The company's core investment thesis hinges on its integrated fintech and AI-driven supply chain solutions, which offer a competitive edge by enhancing operational efficiency and access to capital for small and medium-sized enterprises.
• While 2024 saw a 12% revenue decline to $340.2 million due to China's economic slowdown, the first half of 2024 demonstrated a robust 52% revenue increase to $192.5 million, primarily fueled by a 114% surge in its gold trading business.
• Strategic initiatives, including expansion into KFC franchise operations and the edible oil trading sector (targeting $415 million in 2025 revenue), alongside a $15 million share buyback program, underscore management's confidence in future growth and shareholder value.
• Key risks include China's economic volatility, regulatory uncertainties, and the need to continuously enhance transparency and corporate governance to address investor concerns regarding Chinese-listed companies.

Forging a Digital Path in China's SME Economy

Nisun International Enterprise Development Group Co., Ltd. (NASDAQ:NISN), founded in 2005 and rebranded in September 2020, stands as a technology-driven provider of integrated financial and supply chain solutions, primarily serving small and medium-sized enterprises (SMEs) across China. The company's overarching strategy is to empower businesses by leveraging its expertise in cutting-edge technologies, industry integration, and financial services to drive growth and efficiency within a critical segment of the Chinese economy. This foundational approach, initiated with its entry into financial services in 2019 and the launch of its digital supply chain financing platform in January 2020, has shaped its current market position.

The broader economic landscape in China, characterized by a deceleration in growth during the second and third quarters of 2024, has presented a challenging environment marked by cautious investor sentiment and supply chain commodity market volatility. Despite these pressures, Nisun International's strategic focus on technology-driven solutions has enabled it to adapt and identify new growth avenues. The company's integrated platforms, underpinned by big data, artificial intelligence (AI), the Internet of Things (IoT), and blockchain technologies, are central to its competitive differentiation. These technologies streamline complex supply chain processes, enhance operational efficiency, and improve trading terms by intelligently matching upstream suppliers with downstream customers. This technological backbone is not merely an operational tool but a strategic asset, contributing to a competitive moat by fostering superior customer loyalty through tailored financing and faster access to capital, particularly for SMEs.

Technological Edge and Strategic Innovation

Nisun International's core technology stack, encompassing big data analytics, AI, IoT, and blockchain, forms the bedrock of its integrated platforms. These advanced technologies are deployed across its fintech online platform, which offers specialized asset allocation and financial planning services, and its AI-driven supply chain platforms. While specific quantitative performance metrics for the technology itself are not publicly detailed, the stated benefits are clear: enhanced operational efficiency, streamlined transactions, and improved trading terms for participants across China's diverse industrial sectors, including agriculture, medical, and commodities.

The company's commitment to technological innovation is further evidenced by its research and development (R&D) initiatives. R&D expenses increased by 27% in the first half of 2024, primarily due to the amortization of platform technology service fees associated with an agriculture-focused platform acquired in June 2023. Management views investment in R&D as a "continual process" vital for long-term growth and maintaining a competitive advantage. The stated goal is to further enhance AI-driven supply chain solutions and develop new technologies that will streamline operations and provide greater value to clients. For investors, this continuous investment in technology is crucial; it underpins the company's ability to scale its business model, reduce operational costs, and sustain its competitive edge in a rapidly evolving digital economy.

Segment Performance and Strategic Diversification

Nisun International operates primarily through three core segments: SME Financing Services, Supply Chain Financing Solutions, and the Supply Chain Trading Business, with a notable new venture into KFC franchise operations.

The SME Financing Services segment, which provides technology-driven capital access to SMEs, experienced a 16% revenue decrease to $48.5 million in the first half of 2024, down from $58 million in the same period last year. This decline was primarily attributed to challenging financing market conditions stemming from China's economic slowdown. Despite this, management remains optimistic, anticipating a rebound as economic conditions improve, partly driven by recent government stimulus measures.

Similarly, Supply Chain Financing Solutions saw a 30% drop in revenue to $1.9 million in the first half of 2024. However, this high-margin segment is gaining traction, with its expansion into the gold industry driving increased demand and signaling a market recovery. Management highlights the valuable synergies this segment creates with the lower-margin supply chain trading business.

The Supply Chain Trading Business emerged as a significant growth driver, with revenue surging by 114% to $142.1 million in the first half of 2024, up from $66.2 million in the prior year. This impressive growth was largely propelled by the company's expanding market share in the gold trading sector. While this segment operates with lower gross margins, contributing to an overall gross margin narrowing to 9% in H1 2024 from 15.6% in H1 2023, it is strategically important. Nisun International is actively seeking to improve profitability by identifying higher-margin products, expanding into new and lucrative markets (such as Chinese herbs and potentially other metals), and leveraging technology to streamline operations and reduce costs.

A pivotal strategic move for Nisun International is its KFC franchise operations expansion in China. While no specific financial data is yet available for this new segment, it represents a deliberate effort to diversify revenue streams and capitalize on the company's operational efficiency and customer engagement expertise in high-growth sectors. Further bolstering its supply chain trading capabilities, Nisun International acquired Zhetai (Tianjin) Trading Co., Ltd. in June 2025, a move targeting RMB 3 billion (approximately USD 415 million) in 2025 revenue from the edible oil trading sector. Additionally, a $50 million corn supply agreement signed in May 2025 with Sichuan Yingdafeng Agricultural Technology Co., Ltd. strengthens its position in China's agricultural supply chain.

Financial Resilience Amidst Transformation

The full year 2024 presented a mixed financial picture for Nisun International. Total revenue decreased by 12% to $340.2 million from $386.7 million in 2023, primarily due to reduced activities in SME financing and supply chain trading amidst the broader economic slowdown. Despite this, the company achieved a net income attributable to shareholders of $5.8 million, or $1.3 per share, demonstrating the resilience of its business model. Cost of revenue for 2024 decreased by 11% to $309.3 million, aligning with reduced trading volumes, while gross profit fell 20% to $30.9 million. Income from operations was $3.6 million, significantly impacted by the revenue decline and ongoing investments.

However, the first half of 2024 signaled a strong rebound, with total revenue rising by 52% to $192.5 million compared to the same period in 2023. Net income for this period totaled $10.3 million, down from $11.4 million a year earlier, primarily due to lower gross profit margins in the rapidly expanding supply chain trading business. Operating expenses saw a notable 31% decline to $5.7 million, driven by a 69% reduction in selling expenses and a 14% decrease in general and administrative expenses, reflecting successful cost control measures.

Nisun International maintains a solid liquidity position. As of December 31, 2024, cash and cash equivalents stood at $45 million, equivalent to approximately $11.11 per share. By June 30, 2024, this figure was $47.8 million. While net cash used in operating activities was $75.7 million in 2024, this was largely driven by strategic advance deposits to key suppliers and working capital investments. Management views these as "critical to positioning us for future growth and higher margin opportunities as market conditions improve," rather than a sign of weakness. To further enhance shareholder value, the company executed a share repurchase program in October 2024 and has approved a new $15 million share buyback program, reflecting management's conviction that the stock is significantly undervalued.

Competitive Dynamics and Strategic Positioning

Nisun International operates in a competitive landscape, positioning itself as an agile, technology-driven player focused on niche markets within SME fintech and supply chain solutions. Its proprietary fintech ecosystem and strategic partnerships, particularly in agriculture, are key competitive advantages. This ecosystem fosters strong customer loyalty through tailored financing solutions, potentially leading to robust growth and capital efficiency. Compared to larger, more established players like Alibaba Group (BABA), Nisun's offerings may provide more specialized and accessible solutions for smaller businesses, offering lower entry barriers.

However, Nisun faces formidable competition. Alibaba Group, with its vast digital ecosystem spanning e-commerce, logistics, and fintech, directly competes in supply chain management and financial solutions for SMEs. While Nisun may lead in niche adaptability, it lags in overall market share capture due to Alibaba's superior scale and extensive reach. In the broader infrastructure and energy sectors, companies like MYR Group Inc. (MYRG), Duke Energy (DUK), and NextEra Energy (NEE), while not direct fintech competitors, represent significant players in technology infrastructure and energy-related supply chains. Nisun's digital platforms offer faster deployment for SMEs compared to the large-scale physical projects of MYR Group Inc. or the established energy distribution networks of Duke Energy. Yet, Nisun's vulnerabilities include potential supply chain dependencies and a more limited global scale, which could impact operational costs and market share when contending with the efficient networks of a giant like Alibaba Group or the financial resilience of large utilities.

The company's strategic response involves focusing on its core strengths: continuous technological enhancement, diversification into high-growth sectors like edible oil trading and KFC franchises, and deepening relationships with key supply chain partners. These efforts aim to mitigate scale limitations and leverage its agility to capture market share where larger competitors may be less focused.

Outlook and Investment Considerations

Nisun International's management expresses strong optimism for 2025, anticipating it to be a "pivotal year" for sustainable growth. This outlook is underpinned by a robust pipeline of demand, ongoing investments in digital transformation, and the scalability of its integrated supply chain solutions. The company forecasts "Strong Growth in 2025 Driven by Supply Chain and KFC Franchise Expansion," with the newly acquired edible oil trading sector alone targeting RMB 3 billion (USD 415 million) in revenue for the year. This guidance is based on assumptions of recovering market demand in China, enhanced technology platforms, and the ability to deliver high-margin services to a growing customer base.

Despite this positive outlook, investors must consider several pertinent risks. The challenging economic environment in China, marked by cautious investor sentiment and market volatility, remains a significant factor. Concerns regarding transparency, corporate governance, and internal controls, historically associated with some Chinese-listed companies, also present a risk. Nisun International acknowledges these concerns and is actively working to enhance transparency through increased investor outreach and to improve governance standards to comply with U.S. regulations. Regulatory and geopolitical risks inherent in operating in China also warrant careful monitoring. Furthermore, while strategic investments in advances to suppliers are intended to fuel future growth, they also represent a significant use of cash, which could impact short-term liquidity if market conditions deteriorate unexpectedly.

Conclusion

Nisun International is at an inflection point, strategically leveraging its technology-driven platforms to redefine financial and supply chain solutions for China's vast SME market. The company's narrative is one of resilience and ambitious expansion, demonstrating profitability in a challenging 2024 and achieving significant revenue growth in the first half of 2024, largely propelled by its supply chain trading business. Its core investment thesis is firmly rooted in its technological differentiation, which provides a competitive edge in operational efficiency and capital access, and its strategic diversification into high-growth sectors like edible oil trading and KFC franchises.

While the company faces inherent risks associated with China's economic volatility and broader investor sentiment towards Chinese equities, management's proactive measures in cost control, shareholder value initiatives, and a clear commitment to transparency aim to mitigate these challenges. Nisun International's ability to execute on its ambitious growth targets for 2025, particularly in its new ventures and through continued technological leadership, will be paramount in realizing its stated goal of unlocking significant shareholder value. For discerning investors, Nisun International presents a compelling opportunity to participate in the digital transformation of China's SME economy, provided they are comfortable with the associated market and operational risks.