F-1/A: Julong Holding Limited Files for IPO on Nasdaq Capital Market

Julong Holding Limited, a Cayman Islands holding company operating primarily in mainland China, is seeking to raise capital through an initial public offering of Class A ordinary shares on the Nasdaq Capital Market.

Summary

• Julong Holding Limited, a Cayman Islands holding company with operations mainly in mainland China, has filed for an IPO to list its Class A ordinary shares on the Nasdaq Capital Market under the ticker symbol JLHL.
• The company plans to offer 1,250,000 Class A ordinary shares with an anticipated IPO price between US$4 and US$6 per share.
• The offering is contingent upon Nasdaq's approval of the listing application.
• Upon completion of the offering, Julong Holding's share capital will consist of 11,261,132 Class A ordinary shares and 10,000,000 Class B ordinary shares, assuming the underwriters do not exercise their option to purchase additional Class A ordinary shares.
• Class B ordinary shares have twenty votes per share, while Class A ordinary shares have one vote per share.
• Mr. Jiaqi Hu, the founder, chairman, and CEO, will control approximately 99.0% of the aggregate voting power after the offering, making Julong Holding a controlled company.
• The company intends to use the net proceeds from the offering for strategic acquisitions, expansion into new markets, research and development, and general corporate purposes.
• Julong Holding's revenue for the fiscal year ended September 30, 2024, was RMB173,651 thousand (US$24,745 thousand), with a net income of RMB17,076 thousand (US$2,433 thousand).
• As of September 30, 2024, the company's backlog included RMB40,821 thousand (US$5,817 thousand) in engineering solutions and RMB15,778 thousand (US$2,248 thousand) in operation and maintenance projects.
• The company faces risks associated with operating in China, including regulatory oversight, currency conversion restrictions, and the potential impact of the Holding Foreign Companies Accountable Act (HFCA Act).

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook for Julong Holding, highlighting its growth, profitability, and strategic plans. However, it also acknowledges significant risks associated with operating in China and the potential for volatility in the company's stock price.

Positives

• The company has a proven track record and a long-standing reputation for professionalism and operational excellence.
• Julong Holding offers a one-stop-shop integrated suite of solutions.
• The company has demonstrated rapid growth and sustained profitability.
• The company has a highly experienced management team and an entrepreneurial corporate culture.
• The company has a stringent internal approval process for cash transfers.
• The company has completed the filing with the CSRC in connection with this offering and our listing on the Nasdaq Stock Market in accordance with the Trial Measures, and the CSRC published the notification on our completion of the required filing procedures on the CSRC website on February 20, 2025.

Negatives

• The company is a holding company that relies on dividends from its PRC subsidiaries, which are subject to currency conversion restrictions.
• The company is subject to significant regulatory oversight by the PRC government.
• The company is a controlled company, which may reduce corporate governance protections for shareholders.
• The company is an emerging growth company and a foreign private issuer, which allows it to take advantage of certain reduced reporting requirements.
• The company has a dual-class voting structure, which may limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares may view as beneficial.

Risks

• The company faces risks associated with operating in China, including regulatory oversight, currency conversion restrictions, and the potential impact of the HFCA Act.
• The company's reliance on certain major customers for a large portion of its revenues may materially affect its business, financial performance, financial position and prospects.
• The company may not be able to sustain the growth of its business or manage the expansion of its operations.
• The company operates in a highly competitive industry and may not be able to compete effectively.
• The company may not be able to satisfy the listing requirements of the Nasdaq Stock Market or obtain or maintain a listing of its Class A ordinary shares on the Nasdaq Stock Market.
• The trading price of the company's Class A ordinary shares could be subject to rapid and substantial volatility, which could result in substantial losses to investors.
• The company may not be able to prevent others from unauthorized use of its intellectual property, which could harm its business and competitive position.

Future Outlook

The company intends to use the net proceeds from this offering for (i) pursuing strategic acquisitions and investment opportunities to strengthen our market position and further enhance our competitiveness in the intelligent integrated solutions industry, (ii) expanding into a wider customer base and more geographical markets in mainland China and internationally, (iii) investment in research and development to expand the capabilities of our technology in both hardware and software domains, and (iv) general corporate purposes.

Management Comments

• We aspire to be a pioneer and a leader in Chinas intelligent integrated solutions industry that exceed customers expectations, embrace innovation, invest in technologies and effect improvements in the industry.

Industry Context

The intelligent integrated solutions market in China is experiencing rapid growth, driven by national strategic direction, development demand of various industries and the innovation of emerging technologies. The market size is expected to reach RMB3,763.6 billion in 2028, representing a CAGR of 15.6% from 2023 to 2028.

Comparison to Industry Standards

• The intelligent integrated solutions market in China is highly fragmented.
• As of December 31, 2023, there were more than 10,000 providers in China who have obtained various qualifications required to provide intelligent integrated solutions in different industry verticals.
• As an intelligent integrated product and solution provider with industry or business attributes, Julong Online is able to provide customers with comprehensive one-stop services including consulting, design, procurement of materials, equipment and software, installation, integration, testing, maintenance and other aftermarket services.
• Based on its extensive industry know-how and strong technical capabilities, Julong Online is well-recognized by a range of well-known companies in China, such as well-known international airports in Chinas first-tier cities and renowned public universities.
• In addition, Julong Online has a wide range of high-quality qualifications in a number of critical industry sectors, which enables it to undertake a wide range of different projects to keep the business expanding.

Related Party Transactions

• For the fiscal years ended September 30, 2022, 2023 and 2024, Beijing Jianlei International Decoration Engineering Co., Ltd, a company controlled by Mr. Jiaqi Hu, our founder, chairman and chief executive officer, outsourced contracts to provide engineering solutions of intelligent projects for some customers to us for an aggregate amount of RMB14,205 thousand, RMB64,897 thousand, and RMB71,613 thousand (US$10,205 thousand), respectively.
• For the fiscal year ended September 30, 2023 and 2024, we purchased services from Beijing Yihai Construction Engineering Co., Ltd., a company controlled by Mr. Jiaqi Hu, our founder, chairman and chief executive officer, for amount of RMB87 thousand, and RMB116 thousand (US$17 thousand), respectively.
• Beijing Huiju Tianxia Investment Co., Ltd. made a payment of RMB350 thousand (US$50 thousand) for legal fees incurred in connection with this offering to Beijing Dacheng Law Firm on behalf of Julong Online.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of new shares.
• Shareholders may benefit from the company's growth and strategic initiatives.
• Employees may benefit from the company's expansion and investment in research and development.
• Customers may benefit from the company's enhanced services and solutions.

Next Steps

• Obtain Nasdaq approval for listing.
• Complete the IPO and allocate net proceeds according to the stated plan.
• Report the offering and listing status to the CSRC within 15 business days following completion of the offering.

Key Dates

Keywords

IPO, Julong Holding, Class A ordinary shares, Nasdaq, China, intelligent integrated solutions, financials, risk factors, CSRC, HFCA Act