F-1: Leishen Energy Holding Co. Ltd. Files for $7.9 Million Nasdaq IPO

Leishen Energy Holding Co., Ltd., a Cayman Islands-based company with primary operations in China, is seeking to raise capital through an initial public offering on the Nasdaq Capital Market.

Summary

• Leishen Energy Holding Co., Ltd., a Cayman Islands holding company, has filed a registration statement for an initial public offering (IPO) on the Nasdaq Capital Market.
• The company conducts substantially all of its operations in China through its operating subsidiaries.
• Leishen Energy is offering 1,375,000 ordinary shares with an expected IPO price range of $4.00 to $5.00 per share, aiming to raise approximately $5.5 million at the low end of the range.
• The underwriters have a 45-day option to purchase up to an additional 15% of the ordinary shares offered.
• The company has reserved the ticker symbol 'LSE' for its Nasdaq listing.
• Leishen Energy is classified as an emerging growth company, a foreign private issuer, and a controlled company under Nasdaq listing rules, which allows for reduced reporting requirements.
• The company submitted initial documents in connection with this offering and its listing on the Nasdaq Capital Market to the CSRC on August 28, 2023, and the CSRC published the notification of its approval of the completion of the required filing procedures of this offering on January 2, 2024.
• The company plans to use the IPO proceeds for the construction of a high-tech manufacturing industrial park, the establishment of a smart manufacturing and new energy R&D center, the purchase of business equipment and other patented technologies, to strengthen and expand its presence in the PRC Southwest oil and gas market, and for working capital.

Sentiment

Score: 6

Explanation: The document presents a balanced view of the company, highlighting both its strengths and risks. The company is pursuing an IPO, which is generally a positive sign, but there are also several risks associated with the company's operations and the industry in which it operates.

Positives

• The company has received CSRC approval for the offering.
• The company has a diversified business model with four segments: clean-energy equipment, oil and gas engineering technical services, new energy production and operation, and digitalization and integration equipment.
• The company is expanding its business operations to Central Asia and Southeast Asia.
• The company holds more than 75 patents and software copyrights.
• The company is strategically aligned with China's energy policies.

Negatives

• The company is reliant on a small number of customers who contribute a majority of its revenue.
• The company is subject to various legal and operational risks and uncertainties associated with being based in or having the majority of its operations in China and the complex and evolving PRC laws and regulations.
• The company may be affected by the currency conversion system.
• The company may be classified as a resident enterprise of China, which could result in unfavorable tax consequences to the company and its non-PRC shareholders.
• The company is a controlled company, which could have an adverse effect on its public shareholders.

Risks

• The cyclical nature of the oil and natural gas industry may cause the company's operating results to fluctuate.
• The ongoing military action between Russia and Ukraine could adversely affect the company's business, financial condition and results of operations.
• The company must continually research and develop new technologies and products to remain competitive.
• A failure by the company's third-party vendors to fulfill their obligations would negatively affect its ability to operate profitably.
• The company may not be able to prevent others from unauthorized use of its intellectual property, which could harm its business and competitive position.
• The company's Ordinary Shares may be prohibited from trading on a national exchange or over-the-counter markets under the Holding Foreign Companies Accountable Act (the HFCAA) if the Public Company Accounting Oversight Board (PCAOB) determines it is unable to inspect or fully investigate the company's auditor and as a result the exchange where the company's securities are traded may delist the company's securities.
• The Chinese government has significant authority to exert influence on the conduct of the company's business and may intervene or influence its operations at any time, which result in a material change in its operations, and significantly limit or completely hinder its ability to offer or continue to offer securities to investors and cause the value of its securities to significantly decline or be worthless.

Future Outlook

The company expects to increase its market share in China, develop its own branded products and services, focus on high-margin market segments, provide services for foreign oil fields outside PRC contracted by Chinese consultants, seek opportunities for cooperation with foreign companies in China, and provide high customer satisfaction through its products and service.

Industry Context

The company operates in the clean-energy equipment and integrated solutions for the oil and gas industry, which is influenced by factors such as oil and natural gas prices, government regulations, and technological advancements. The company is also involved in the new energy sector, which is growing due to increasing demand for clean energy and government support for renewable energy sources.

Comparison to Industry Standards

• The document mentions that the company is the only manufacturer of ultra-high pressure reciprocating compressors in China with certain specifications, suggesting a leading position in that specific niche.
• The document also states that the company is the largest natural gas compressor rental service provider in Southwestern China, indicating a strong regional presence.
• The document does not provide enough information to compare the company's financial performance to specific industry standards or competitors.
• The document does not provide enough information to compare the company's technology to specific industry standards or competitors.

Related Party Transactions

• The company has engaged in related party transactions with Sichuan TIBO Fluid Technology Co., Ltd., Sichuan Hongzhuo Shuya Energy Co., Ltd., Li Hongqi, and Li Hongliang.
• These transactions include equipment sales, LNG/CNG sales, lease agreements, and share capital withdrawals.

Stakeholder Impact

• Shareholders will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares purchased.
• The market price of the company's Ordinary Shares may be volatile or may decline regardless of the company's operating performance, and investors may not be able to resell their shares at or above the initial public offering price.
• The company's management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance the company's results of operations or the price of its Ordinary Shares.
• The company will incur increased costs as a result of being a public company, particularly after it ceases to qualify as an emerging growth company.
• As a foreign private issuer, the company is not subject to certain U.S. securities law disclosure requirements that apply to a domestic U.S. issuer, and is exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, which may limit the information publicly available to investors and afford them less protection than if the company were an U.S issuer.
• As a controlled company under the rules of the Nasdaq Stock Market, the company may choose to exempt its company from certain corporate governance requirements that could have an adverse effect on its public shareholders.

Next Steps

• The company intends to apply to have its Ordinary Shares listed on the Nasdaq Capital Market.
• The underwriters expect to deliver the Ordinary Shares in this offering to purchasers in this offering on or about , 2024.
• The company is required to report the offering and listing status to the CSRC after its completion of this offering.
• If the company fails to complete this offering within 12 months from the issuance date of the notification, and the offering is still under progress, it is required to update the filing materials and documents with the CSRC.

Key Dates

Keywords

IPO, initial public offering, Leishen Energy, energy, China, Nasdaq, ordinary shares, clean energy, oil and gas, CSRC, filing, PCAOB, HFCAA