20-F/A: Leishen Energy Holding Co., Ltd. Files Amendment to Annual Report

Leishen Energy Holding Co., Ltd. has filed an amendment to its annual report on Form 20-F for the fiscal year ended September 30, 2025, to update specific sections related to internal controls and segment information.

Summary

• Leishen Energy Holding Co., Ltd. (the Company) has filed an amendment (Amendment No. 1) to its Annual Report on Form 20-F for the fiscal year ended September 30, 2025.
• The amendment primarily addresses Item 15 (Controls and Procedures) to include management's annual report on internal control over financial reporting and Note 20 (Segment Information) in the Notes to the Consolidated Financial Statements.
• Updated certifications from the CEO and CFO are also included as required.
• The filing does not update or modify other information from the original filing, and forward-looking statements remain as originally stated.
• The company's fiscal year ends on September 30th.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant decline in revenues, profits, and the identification of material weaknesses in internal controls, despite the company's efforts to amend and provide updated information.

Positives

• The company is proactively amending its filings to ensure compliance and transparency by providing updated information on internal controls and segment reporting.
• The amendment includes updated certifications from key executives, reinforcing accountability.
• The company has a dual-class share structure, with Class B shares having 25 votes per share, giving significant voting power to directors and officers (approximately 98.66%).

Negatives

• The company identified two material weaknesses in its internal control over financial reporting (ICFR): lack of sufficient knowledge of U.S. GAAP and pertinent SEC reporting requirements, and lack of well-established procedures for timely review and error detection in financial statements.
• These weaknesses led to management concluding that ICFR was not effective as of September 30, 2025.
• The company's revenues decreased by 30.0% to $48,335,553 in fiscal year 2025 compared to $69,073,374 in fiscal year 2024.
• Gross profit decreased by 46.8% to $8,525,671 in fiscal year 2025 from $16,034,519 in fiscal year 2024.
• Net income attributable to Leishen Energy Holding Co., Ltd. decreased by 84.5% from $8,095,871 in fiscal year 2024 to $1,254,387 in fiscal year 2025.
• Operating expenses increased by 20.1% in fiscal year 2025 compared to fiscal year 2024, primarily due to an increase in general and administrative expenses and a significant increase in the provision for expected credit losses.
• The company faces significant risks related to its reliance on a small number of customers, the cyclical nature of the oil and gas industry, and the evolving regulatory landscape in China.

Risks

• Reliance on a small number of customers, with the three largest accounting for 42.6% of total operating revenue in fiscal year 2025.
• The cyclical nature of the oil and natural gas industry, which can cause fluctuations in operating results due to volatile commodity prices.
• Potential adverse effects from ongoing military action between Russia and Ukraine on commodity prices, financial markets, and supply chains.
• Risks associated with doing business in China, including changes in economic, political, or social conditions, government policies, and the enforcement of laws and regulations.
• Uncertainties regarding PRC government approvals and filings for future offshore offerings.
• Potential delisting from U.S. exchanges due to the Holding Foreign Companies Accountable Act (HFCAA) if auditors are not subject to PCAOB inspections.
• Increases in labor costs in the PRC could adversely affect profitability.
• Failure to comply with PRC regulations regarding employee benefits plans could lead to penalties.
• Difficulties in effecting service of legal process or enforcing foreign judgments in China.
• Potential classification as a passive foreign investment company (PFIC), leading to adverse U.S. federal income tax consequences for U.S. taxpayers.
• The dual-class share structure limits shareholders' ability to influence corporate matters and could discourage change-of-control transactions.
• Substantial future sales of Class A Ordinary Shares could depress the stock price.
• The company has not historically declared or paid dividends, and future returns depend on stock price appreciation.
• Volatility in the trading price of Class A Ordinary Shares could result in substantial losses for investors.
• As an emerging growth company, the company may not be subject to all disclosure and governance requirements applicable to other public companies.
• The company incurs significant costs as a public company, which are expected to increase after ceasing to qualify as an emerging growth company.
• If the company ceases to qualify as a foreign private issuer, it would incur significant additional expenses.
• As a foreign private issuer, the company is exempt from certain U.S. securities law disclosure requirements and Nasdaq corporate governance standards, potentially affording less protection to investors.
• The company may be classified as a passive foreign investment company (PFIC), which could result in adverse U.S. federal income tax consequences for U.S. taxpayers.
• The PRC government has significant authority to influence or intervene in the company's operations, potentially leading to material adverse changes.
• Uncertainties in the enforcement of PRC laws and regulations, and changes in laws with little advance notice, could adversely affect the company.
• Failure to comply with anti-monopoly and anti-unfair competition laws could result in investigations, enforcement actions, or litigation.
• PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, and currency conversion regulations, may delay or prevent the use of offering proceeds.
• PRC regulations relating to offshore investment activities by PRC residents may limit the company's PRC subsidiaries' ability to change registered capital or distribute profits.
• The company may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws.
• Evolution of the PRC legal system could adversely affect the company.
• Fluctuations in exchange rates could materially and adversely affect the company's results of operations and the value of investments.
• The PRC Foreign Investment Law may impact the viability of the company's current corporate structure and operations.
• If the company becomes subject to scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, it may have to expend significant resources to investigate and resolve such matters.
• Increases in labor costs in the PRC may adversely affect the company's business and profitability.
• Failure to make adequate contributions to employee benefit plans as required by PRC regulations may subject the company to penalties.
• Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject plan participants or the company to fines and other legal or administrative sanctions.
• Difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against the company or its management based on foreign laws.
• Difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in Hong Kong against the company or its management based on Hong Kong laws.
• It may be difficult for overseas regulators to directly conduct investigations or collect evidence within China.
• It may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.
• Under the PRC Enterprise Income Tax Law, the company may be classified as a resident enterprise of China, which could result in unfavorable tax consequences.
• Shareholders may be subject to PRC income tax on dividends from the company or on any gain realized on the transfer of Class A Ordinary Shares.
• The company may be subject to risks associated with historical equity transfers and unpaid tax liabilities.
• In light of recent events indicating greater oversight by the Cyberspace Administration of China (CAC) over data security, the company may be subject to PRC laws and obligations regarding cybersecurity and data protection.
• Failure to comply with PRC property-related laws and regulations regarding leased properties may adversely affect the company's business, financial condition, and results of operations.
• The company may face administrative penalties if it fails to register the correct business address.
• If the chops of the company's PRC subsidiaries are not kept safely, are stolen, or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

Future Outlook

The company is actively exploring international markets to rebuild its revenue base and decrease reliance on the PRC market. It expects to increase contributions from the digitalization and integration equipment segment and aims to restore and grow revenue from oil and gas engineering technical services through new customer development and service expansion. The company plans to increase investment in technical talent and R&D to strengthen international competitiveness.

Management Comments

• The decrease in revenues was mainly due to orders from existing domestic customers decreasing as market demand decreased due to the economic downturn.
• With the decline of the domestic market demand, domestic market competition is becoming more intense, which led to a 10% to 40% lower selling price for some of the common products.
• The Company is actively exploring the international market currently for the future growth.
• We expect to rebuild our revenue base, decrease reliance on the PRC market and expand revenue by gaining access to the international market.
• Given its strong reputation and market demand, we expect this segment of revenue will make more contribution to the overall income in the future.
• We are actively working to renew the agreement and get more big clients in natural gas trading.
• The Company is trying to develop new customers and new projects, also expand new potential service type and service scope at home and abroad, and we expect these initiatives could help restore our revenue base and grow our revenue from this segment.
• With the Companys organizational restructuring and improved operational efficiency, selling expenses are expected to remain at a stable level in the future.
• At present, the Company is in the period of expansion, the number of employees is increasing, and various administrative costs are increasing. G&A expenses may continue to increase due to higher compliance and management requirements after the Companys IPO.
• In line with the Companys internationalization strategy aimed at upgrading product technology and quality to meet international standards, the Company plans to increase investment in technical talent and R&D in the coming year to strengthen the international competitiveness.
• We believe that Ms. Yu's strong professional background and rich experience in financial management and operating management will boost Leishen's sustainable development and international strategy.
• We believe that Mr. Cheng's rich experience in the oil and gas industry enables better understanding and supervision of Leishen's financial management for the benefit of our shareholders.
• We believe that Mr. Sun's wealth of experience in the oil and gas industry will provide Leishen with valuable supervision and oversight with a professional perspective.
• We believe that Mr. Dong's rich experience in international community will provide valuable oversight of management decision making for Leishen to expand the overseas market.
• We believe that Mr. Huang's decades of executive experience will provide valuable oversight of management decision making for Leishen.

Industry Context

StockSavvy.ai notes that Leishen Energy Holding Co., Ltd.'s performance in fiscal year 2025 reflects broader industry challenges, including economic downturns impacting demand for clean-energy equipment and increased market competition leading to lower selling prices. The company's strategic shift towards international markets and new energy segments aligns with global trends in energy transition and diversification.

Corporate Governance

Related Party Transactions

• The company sold its equity interest in Shuifu Yongcheng Technology Co., Ltd. to a non-related third party in August 2025.
• The company sold its equity interest in Sichuan Hongzhuo Shuya Energy Co., Ltd. to a third party in September 2025.
• The company sold its equity interest in Sichuan TIBO Fluid Technology Co., Ltd. to a third party in February 2025.
• Amounts due to related parties (Li Hongqi, Li Hongliang) were $5,755,817 as of September 30, 2025, primarily related to share capital withdrawals.
• The company made loans to various related parties, including Polar Petroleum Equipment (Shandong) Co., Ltd., Sichuan TIBO Fluid Technology Co., Ltd., and others, with accrued interest.
• The company had revenue from equipment sales to Sichuan TIBO and LNG/CNG sales to Sichuan Hongzhuo in prior periods, but these were nil in fiscal year 2025.
• The company had factory lease income from Sichuan TIBO in prior periods, but this was nil in fiscal year 2025.

Stakeholder Impact

• Shareholders may experience reduced returns due to the significant decrease in net income and the company's intention to reinvest earnings rather than pay dividends.
• Investors may be concerned about the material weaknesses in internal controls and the potential for misstatements in financial reporting.
• The dual-class share structure may limit the influence of Class A shareholders on corporate matters.
• The company's reliance on a few key customers could impact revenue stability, affecting all stakeholders.
• The company's operations in China expose it to various regulatory and economic risks that could impact its financial performance and, consequently, stakeholder value.

Next Steps

• Implement measures to address material weaknesses in ICFR, including hiring qualified accounting personnel, establishing formal internal control policies, and organizing regular training.
• Continue exploring international markets to expand revenue and reduce reliance on the PRC market.
• Seek to renew sales agreements with major clients and acquire new clients in the natural gas trading sector.
• Develop new customers and projects, and expand service types and scopes in the oil and gas engineering technical services segment.
• Increase investment in technical talent and R&D to enhance international competitiveness.

Key Dates

Recommendation

While the company has a diversified business in the energy sector and is pursuing international expansion, the significant decline in revenues and profits, coupled with material weaknesses in internal controls, warrants a cautious approach. The company's ability to execute its international strategy and remediate its control deficiencies will be critical for future performance. Therefore, a 'hold' recommendation is appropriate pending further clarity on these factors.

Keywords

Leishen Energy Holding Co., Ltd., SEC Filing, Form 20-F/A, Annual Report Amendment, Internal Control over Financial Reporting, Segment Information, Financial Statements, China Operations, Oil and Gas Equipment, Clean Energy, New Energy, Digitalization, Engineering Technical Services, Dual-Class Share Structure, Nasdaq Listing, U.S. GAAP, PCAOB, Material Weaknesses