Jerash Holdings (JRSH): Riding Trade Diversion Waves Amid Geopolitical Crosscurrents

Global supply chains are in flux as companies scramble to diversify manufacturing away from China and Southeast Asia to mitigate geopolitical and tariff risks. Among the beneficiaries of this trend is Jerash Holdings (JRSH), a U.S.-listed textile manufacturer with a strategic foothold in Jordan. Despite facing near-term logistical hurdles, JRSH's recent financial performance and partnerships suggest it is well-positioned to capitalize on long-term shifts in global trade patterns. For investors seeking exposure to this trend, JRSH's stock appears undervalued relative to its growth trajectory—provided they are prepared to navigate the company's operational and geopolitical risks.

A Surge in Revenue, With Margins to Match

Jerash's fiscal 2025 results, reported on June 23, underscore its growing relevance in the reshoring/re-shoring boom. Revenue for the fourth quarter jumped 35.6% year-over-year to $29.3 million, while full-year revenue hit a record $145.8 million, up 24.4% from 2024. The real breakthrough, however, was margin expansion: gross profit surged 250% in Q4 to $5.2 million, pushing gross margins to 17.9%, up from just 7.0% a year earlier. This improvement reflects economies of scale from higher production volumes and cost discipline, as the company ramps up capacity in Jordan.

The Hansho Collaboration: A Catalyst for Scale

Central to JRSH's growth is its partnership with Hansoll Textile (referred to as Hansho in some reports), a South Korean apparel giant. This collaboration has enabled JRSH to secure a major order from a large U.S. retailer, tapping into demand for manufacturing alternatives to China. As trade tensions between the U.S. and China persist, and as Southeast Asia's labor costs rise, companies are increasingly seeking stable, lower-cost production hubs. Jordan's strategic location—near Europe and the Middle East, with preferential trade agreements—positions JRSH to serve both U.S. and European clients.

Navigating Logistical Crosscurrents

Despite this progress, JRSH is not immune to geopolitical volatility. A prime example is the disruption caused by congestion at Israel's Haifa port, a key transit point for its exports. Delays forced the company to reroute shipments through Jordan's Aqaba port, which is $2,000 cheaper per truckload but adds transit time. While this deferred $3–4 million in revenue to early 2026, CFO Gilbert Lee emphasized that Aqaba's cost efficiency makes it a viable long-term alternative.

Moreover, JRSH is diversifying its supply chain further, with plans to source materials from Turkey and Egypt and expand production capacity by 15% at its Amman facility by mid-2026. These moves aim to reduce reliance on any single port or region.

Valuation: A Discounted Play on Trade Diversification

JRSH's stock price of $3.39 (as of June 24) reflects a market cap of $41.68 million, just 28.6% of its trailing revenue ($145.8 million). This P/S ratio of 0.29 is exceptionally low for a company growing at 24% annually and improving margins. By comparison, peer group averages in the textiles sector typically trade at 0.5–1.0x P/S during growth phases.

Even more compelling is the path to profitability. While JRSH posted a $840,000 net loss for fiscal 2025, its operating income turned positive for the first time in years ($1.4 million annually). With margins set to stabilize near 15–16% (per Q1 2026 guidance) and a $15.1 million cash buffer, the company is on track to erase losses by late 2026.

Risks to Consider

• Geopolitical Uncertainty: Conflicts in the region, such as the Israel-Hamas war, could disrupt Jordan's ports or labor markets.
• Supply Chain Delays: Rerouting via Aqaba may strain lead times, risking customer patience.
• Profitability Lag: While margins are improving, the company remains unprofitable on a net basis.

The Investment Thesis

For investors with a 3–5 year horizon, JRSH offers a compelling risk-reward profile. Its valuation leaves ample room for upside if it achieves its $38–$40 million Q1 2026 revenue target and expands margins further. The partnership with Hansho and its cost-effective logistics strategy suggest it can sustain high growth even amid volatility.

Historical performance, however, underscores the need for patience. A simple strategy of buying JRSH on positive quarterly earnings announcements and holding for 90 days from 2020 to 2025 would have delivered an overall return of -5.94%, with a maximum drawdown of 50.83%, highlighting the stock's volatility in the short term.

Final Take

JRSH is a speculative bet on two trends: global trade diversification and Jordan's rise as a manufacturing hub. While risks are elevated, the company's execution so far—balancing partnerships, cost controls, and geopolitical agility—justifies a position in portfolios seeking exposure to reshored manufacturing. At current prices, the stock appears to offer a discounted entry point into a sector with secular tailwinds. Investors should monitor Q1 2026 results closely, as they will test whether JRSH can convert its growth and margin gains into sustained profitability.

Consider this a long-term play for those willing to endure near-term turbulence for potential rewards in the reshaped global supply chain.