F-1/A: Leishen Energy Holding Co. Ltd. Files for IPO, Aiming to List on Nasdaq Capital Market

Leishen Energy Holding Co., Ltd., a Cayman Islands-based holding company with operations in China, has filed an amendment to its F-1 registration statement for an initial public offering of 1,375,000 ordinary shares, with an expected price range of $4.00 to $5.00 per share, seeking to list on the Nasdaq Capital Market under the symbol LSE.

Summary

• Leishen Energy Holding Co., Ltd., a Cayman Islands holding company, is planning an IPO to list its ordinary shares on the Nasdaq Capital Market.
• The company is offering 1,375,000 ordinary shares with an anticipated IPO price between $4.00 and $5.00 per share.
• The underwriters have a 45-day option to purchase up to an additional 15% of the shares offered.
• Leishen Energy conducts its operations primarily through its subsidiaries in China and is subject to legal and operational risks associated with being based in China.
• The company submitted initial documents to the CSRC on August 28, 2023, and received approval on January 2, 2024.
• The company intends 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.
• The company is an emerging growth company and a foreign private issuer, which allows it to take advantage of reduced reporting requirements.
• Hongliang Li, the CEO, controls a majority of the voting power, making the company a controlled company under Nasdaq listing rules.

Sentiment

Score: 6

Explanation: The document presents a balanced view, highlighting both the opportunities and risks associated with the company and its operating environment. The company's growth plans and technological advancements are positive, but the regulatory and competitive landscape in China, along with the company's reliance on a few key customers, present challenges.

Positives

• The company has received CSRC approval for the offering and listing.
• 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 focusing on high-margin market segments.
• The company is committed to providing high customer satisfaction through its products and services.

Negatives

• 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.
• The company is subject to regulatory approvals on offerings conducted overseas by and foreign investment in China-based issuers, anti-monopoly regulatory actions, oversight on cybersecurity, data privacy and personal information.
• The company may be prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act (HFCAA) if the PCAOB is unable to inspect or fully investigate its auditor.
• The company is reliant on a small number of customers who contribute a majority of its revenue and the loss of one or more of these customers could adversely affect its business, financial condition, and results of operations.

Risks

• The company's reliance on a small number of customers poses a risk to its revenue and financial stability.
• The cyclical nature of the oil and natural gas industry could cause fluctuations in operating results.
• The ongoing military action between Russia and Ukraine could adversely affect the company's business, financial condition and results of operations.
• The company's ability to operate profitably is directly related to its ability to develop and protect its proprietary technology.
• The company may be accused of infringing the intellectual property rights of others.
• 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 its auditor.
• 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.
• The approval, filing, or other procedures of the CSRC or other PRC regulatory authorities may be required in connection with this offering under PRC laws, regulations, and rules.
• The newly enacted HFCAA and AHFCAA both call for additional and more stringent criteria to be applied to restrictive market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to the company's offering and if its auditors fail to permit the PCAOB to inspect the auditing firm, its Ordinary Shares may be subject to delisting.
• Hongliang Li, the company's chief executive officer and director, through his holding company Polar Energy Company Limited controls a majority of the voting power of its outstanding Ordinary Shares and will be able to influence its management and affairs and all matters requiring shareholder approval.
• There has been no public market for the company's Ordinary Shares prior to this offering, and you may not be able to resell its Ordinary Shares at or above the price you have paid, or at all.

Future Outlook

The company expects to continue 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 oil and gas industry, which is cyclical and subject to fluctuations in commodity prices. The company also faces competition from other providers of clean-energy equipment and integrated solutions. The company's success depends on its ability to help its customers find, develop, and acquire oil and gas reserves.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the document does mention that the company is the only manufacturer of ultra-high pressure reciprocating compressors in China with pressure discharge of up to 52MPa and a daily processing capacity of more than 250,000 cubic meters.
• The document also mentions that there are two other renowned companies in the United States that are capable of producing 52MPa compressor units, but such companies are currently unable to provide integrated skid solutions.
• The document also mentions that the company is the largest natural gas compressor rental service provider in Southwestern China, and that it is a first-class supplier for Customer Group A and an A-level credit rating supplier for Customer Group B.

Related Party Transactions

• The company has engaged in transactions with related parties, including equipment sales, LNG/CNG sales, and lease agreements.
• The company has outstanding balances due to and from related parties.

Stakeholder Impact

• The company's performance and growth plans could benefit shareholders.
• The company's ability to attract and retain skilled workers may impact growth potential and profitability.
• The company's operations could be affected by changes in environmental and regulatory factors.

Next Steps

• The company intends to apply to list its Ordinary Shares on the Nasdaq Capital Market.
• The company is required to report the offering and listing status to the CSRC after completion of the offering.
• The company intends to use the proceeds from this offering for the construction of a high-tech manufacturing industrial park, for the establishment of its smart manufacturing and new energy R&D center, for 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.

Key Dates

Keywords

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