20-F: Leishen Energy Reports FY2025 Loss Amid Revenue Decline, IPO Raises $5.4M

Leishen Energy Holding Co., Ltd. reported a significant decline in revenue and a net loss for fiscal year 2025, despite completing its initial public offering and adopting a dual-class share structure.

Summary

• Total revenues for the fiscal year ended September 30, 2025, decreased by $20,737,821, or 30.0%, to $48,335,553 from $69,073,374 in fiscal year 2024.
• The company recorded a loss from operations of $1,665,953 in fiscal year 2025, a significant decline from an income of $7,551,893 in fiscal year 2024.
• Net income attributable to Leishen Energy Holding Co., Ltd. decreased by $6,841,484, or 84.5%, to $1,254,387 in fiscal year 2025 from $8,095,871 in fiscal year 2024.
• Gross profit decreased by $7,508,848, or 46.8%, to $8,525,671 in fiscal year 2025, with gross margin declining to 17.6% from 23.2% in fiscal year 2024.
• Operating expenses increased by $1,708,998, or 20.1%, to $10,191,624 in fiscal year 2025, primarily due to higher general and administrative costs and a significant increase in the provision for expected credit losses.
• The company completed its initial public offering (IPO) on December 20, 2024, raising aggregate gross proceeds of $6.1 million and net proceeds of approximately $5.4 million.
• A dual-class share structure was adopted on November 27, 2025, granting Class B Ordinary Shares 25 votes per share, while Class A Ordinary Shares have one vote per share, resulting in directors and officers holding approximately 98.66% of the company's voting power.
• The company's business segments include clean-energy equipment, new energy production and operation, digitalization and integration equipment, and oil and gas engineering technical services.
• Cash and restricted cash increased to $10,160,587 as of September 30, 2025, from $7,301,014 in the prior year, and the current ratio improved to 254.3% from 227.5%.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with a negative sentiment due to the significant decline in revenues and net income, coupled with a shift to an operating loss in fiscal year 2025. While the IPO provided capital and strategic initiatives are underway, the current financial performance indicates substantial headwinds and operational challenges.

Positives

• The company successfully completed its initial public offering (IPO) in December 2024, raising $5.4 million in net proceeds, enhancing its capital resources.
• Cash and restricted cash balances increased to $10,160,587 as of September 30, 2025, indicating improved liquidity.
• The current ratio improved to 254.3% as of September 30, 2025, from 227.5% in the prior year, reflecting a stronger short-term financial position.
• China Oil Blue Ocean and ZJY Technologies renewed their High and New Technology Enterprise (HNTE) certifications in October and December 2025, respectively, allowing them to continue benefiting from a reduced income tax rate of 15%.
• The company is actively exploring international markets for clean-energy equipment and digitalization and integration equipment, aiming to rebuild its revenue base and reduce reliance on the PRC market.
• Gross margin for digitalization and integration equipment sales increased by 4.4% to 22.6% in fiscal year 2025, attributed to effective cost control initiatives.
• Gross margin for oil and gas engineering technical services increased by 5.9% to 76.8% in fiscal year 2025, due to efforts to reduce overall service costs.
• The company holds a substantial portfolio of intellectual property, including 105 registered patents, 8 registered software copyrights, and 6 registered trademarks as of September 30, 2025.

Negatives

• Total revenues decreased significantly by 30.0% to $48,335,553 in fiscal year 2025, primarily due to decreased orders from existing domestic customers and intense market competition leading to lower selling prices.
• The company incurred a loss from operations of $1,665,953 in fiscal year 2025, a substantial reversal from an operating income of $7,551,893 in fiscal year 2024.
• Net income attributable to Leishen Energy Holding Co., Ltd. plummeted by 84.5% to $1,254,387 in fiscal year 2025.
• Gross profit decreased by 46.8% to $8,525,671, and the overall gross margin declined to 17.6% in fiscal year 2025, mainly due to an unfavorable revenue-mix and decreased gross margin on clean-energy equipment sales.
• Provision for expected credit losses increased by 98.4% to $2,984,108 in fiscal year 2025, reflecting concerns over collectability amidst a slowdown in the PRC economy.
• General and administrative expenses increased by 14.5% to $5,124,362 in fiscal year 2025, partly due to higher consulting service fees related to the listing process and increasing employee numbers.
• Revenue from new energy sales decreased by 24.3% to $19,536,237 in fiscal year 2025, primarily due to the expiration of a sales agreement with a major client and fierce domestic market competition.
• Revenue from oil and gas engineering technical services decreased by 37.1% to $3,994,541 in fiscal year 2025, driven by lower service prices due to market competition and customers adopting low-cost operating models.
• The company identified two material weaknesses in its internal control over financial reporting (ICFR): lack of sufficient U.S. GAAP knowledge and lack of well-established procedures for timely error detection.
• A loss of $790,870 was recognized from the deregistration of Sichuan Leishen Green Energy on August 1, 2025.

Risks

• Reliance on a small number of customers who contribute a majority of revenue, with the loss of one or more potentially adversely affecting business, financial condition, and results of operations.
• The cyclical nature of the oil and natural gas industry may cause operating results to fluctuate significantly due to changes in commodity prices.
• The ongoing military action between Russia and Ukraine could adversely affect the global economy and financial markets, potentially impacting the company's business, financial condition, and results of operations.
• The need to continually research and develop new technologies and products to remain competitive, with potential limitations due to funding availability or marketplace resistance.
• Failure by third-party vendors to fulfill obligations, especially after advance payments, could negatively affect profitability due to supply chain disruptions or vendor bankruptcy.
• Challenges in protecting proprietary technology and intellectual property, including risks of unauthorized use, infringement claims, and the expiration of protection periods under Chinese law.
• Software products may contain integration challenges, design defects, or errors that could lead to delays, increased costs, and customer dissatisfaction, with no product liability insurance coverage.
• Future success depends on the ability to help customers find, develop, and acquire oil and gas reserves, and failure to do so could lead to termination of relationships.
• Financial performance is dependent on the economic conditions of the oil and gas and greater energy industries, which are subject to intense competitive pressures and price volatility.
• Changes in environmental and regulatory factors in China may impair business operations or require substantial costs and expenditures.
• Natural gas reserve degradation and depletion may reduce customer profitability, impacting demand for the company's services.
• Heavy dependence on experienced personnel, requiring active competition for their services, which could impact growth potential and profitability.
• The business is capital intensive, and growth strategy may require additional capital that may not be available on favorable terms or at all, leading to potential dilution or increased debt obligations.
• Certificates, permits, and licenses are subject to governmental regulation and renewal, and failure to obtain renewal could suspend operations and materially affect financial condition.
• If any affiliated entity becomes subject to bankruptcy or liquidation, the company may lose the ability to use and enjoy assets held by such entity.
• The COVID-19 pandemic adversely affected operations, and similar pandemics could have a material adverse effect on business, financial condition, results of operations, and cash flows.
• Changes in China's economic, political, or social conditions or government policies could have a material adverse effect on business and operations, including government intervention or influence.
• Uncertainties with respect to the enforcement of laws and changes in laws and regulations in China with little advance notice could materially and adversely affect the company.
• Failure to comply with anti-monopoly and anti-unfair competition laws and regulations may result in governmental investigations, enforcement actions, litigation, or claims.
• PRC regulations on loans to and direct investment in PRC entities by offshore holding companies and governmental regulation of currency conversion may delay or prevent the use of offering proceeds.
• PRC regulations relating to offshore investment activities by PRC residents (SAFE Circular 37) may limit PRC subsidiaries' ability to change registered capital or distribute profits.
• Fluctuations in exchange rates, particularly between Renminbi and U.S. dollar, could have a material and adverse effect on results of operations and investment value.
• The PRC Foreign Investment Law may impact the viability of the current corporate structure and operations if the industry is added to a negative list or foreign ownership is limited.
• The company may be subject to scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, requiring significant resources to investigate and resolve matters.
• Approval and filing with the CSRC or other PRC government authorities may be required for future offshore offerings, and delays or denials could significantly hinder capital raising.
• The Holding Foreign Companies Accountable Act (HFCAA) and Accelerating HFCAA (AHFCAA) could lead to delisting if the auditor is not subject to PCAOB inspections for two consecutive years.
• Increases in labor costs in the PRC may adversely affect business and profitability.
• Failure to make adequate contributions to various employee benefits plans as required by PRC regulations may subject the company to penalties.
• Failure to comply with PRC regulations regarding employee stock incentive plans may subject participants or the company to fines and sanctions.
• Difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China or Hong Kong against the company or management.
• Classification as a PRC resident enterprise for tax purposes could result in unfavorable tax consequences, including withholding tax on worldwide income and dividends/gains for non-PRC shareholders.
• Risks associated with historical equity transfers and unpaid tax liabilities, potentially leading to tax assessments, penalties, and fines.
• Subject to evolving PRC laws and obligations regarding cybersecurity and data protection, with potential for government enforcement actions, fines, or operational disruptions for non-compliance.
• Failure to comply with PRC property-related laws and regulations regarding leased properties (e.g., unregistered leases, lack of ownership certificates) may adversely affect business.
• Risk of administrative penalties for failing to register the correct business address for PRC subsidiaries.
• If company chops (seals) of PRC subsidiaries are not kept safely, stolen, or used by unauthorized persons, corporate governance could be severely compromised.
• The dual-class voting structure limits the ability of Class A Ordinary Shareholders to influence corporate matters and could discourage change of control transactions.
• Substantial future sales of Class A Ordinary Shares or the anticipation of such sales could cause the share price to decline.
• No historical declaration or payment of dividends means investment return primarily depends on share price appreciation.
• Lack of research or negative reports from securities or industry analysts could cause the share price and/or trading volume to decline.
• The trading price of Class A Ordinary Shares has been and will likely continue to be volatile, potentially resulting in substantial losses to investors.
• As an emerging growth company, the company may not be subject to certain requirements, which could affect investor confidence.
• Management has broad discretion over the use of funds raised in offerings, which may not always enhance results or share price.
• Significant costs are incurred as a public company, particularly after ceasing to qualify as an emerging growth company.
• Ceasing to qualify as a foreign private issuer would require full compliance with U.S. domestic issuer reporting requirements, incurring significant additional expenses.
• As a foreign private issuer, the company is exempt from certain U.S. securities law disclosure and Nasdaq corporate governance requirements, potentially limiting information and protection for investors.
• Classification as a passive foreign investment company (PFIC) could lead to adverse U.S. federal income tax consequences for U.S. taxpayers.
• Cayman Islands laws may not provide shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.
• Anti-takeover provisions in the amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control.
• Shareholders may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.

Future Outlook

The company plans to increase investment in technical talent and R&D to strengthen international competitiveness, aligning with its internationalization strategy to upgrade product technology and quality to meet global standards. It aims to rebuild its revenue base by decreasing reliance on the PRC market and expanding into international markets, particularly for clean-energy equipment and digitalization and integration equipment. The company also expects continued growth in its new energy sales segment due to increasing gas demand and its alignment with China's strategic energy development policies, including LNG/CNG production, network transmission, field station operations, urban pipeline network construction, and solar energy.

Management Comments

• Management believes it is necessary to enhance collection of outstanding accounts receivable and other receivables, and to be cautious on operational decisions and project selection.
• Management is confident that the company's accounts receivable and other receivables are collectable.
• Management plans to increase investment in technical talent and R&D in the coming year to strengthen international competitiveness, in line with the company's internationalization strategy.
• Management believes the increased demand for energy-related products and services is related to the strategic policies of the Chinese government, and the company's business focus aligns with these policies.

Industry Context

StockSavvy.ai notes that Leishen Energy operates within the highly cyclical oil and natural gas industry, which has experienced significant volatility influenced by global commodity prices. The company's strategic focus on clean energy and new energy production aligns with broader industry trends and the Chinese government's '14th Five-Year Plan for Modern Energy Systems,' which aims for high-quality energy development and a modern energy system by 2035, with non-fossil energy becoming the principal source. The company's expansion into international markets like Pakistan and Indonesia reflects a move to diversify beyond the competitive domestic PRC market, which has seen declining demand and lower selling prices for some products. The emphasis on digitalization and integration equipment also positions the company to capitalize on industrial interconnectivity and smart oilfield trends.

Management Changes

Corporate Governance

Legal Proceedings

• The company is currently not a party to any material legal or administrative proceedings, other than those that arise in the ordinary course of business and are not deemed material.

Related Party Transactions

• The company had non-interest bearing amounts due from Shuifu Yongcheng Technology Co., Ltd. of $31,535 as of September 30, 2024, which was collected in full by September 30, 2025.
• The company had a loan receivable from Sichuan TIBO Fluid Technology Co., Ltd. of $822,878 as of September 30, 2024, which was reclassified as a loan receivable from a third party in fiscal year 2025 due to the disposal of equity in TIBO.
• Amounts due to related parties (Li Hongqi, Li Hongliang, Sichuan TIBO, Sichuan Hongzhuo, Li Hongguang) totaled $5,755,817 as of September 30, 2025, down from $9,239,059 in fiscal year 2024. These balances primarily relate to share capital withdrawals to individual shareholders.
• The company had equipment sales to Sichuan TIBO of $1,692,268 in fiscal year 2024 and $2,222,816 in fiscal year 2023, with no sales in fiscal year 2025.
• LNG/CNG sales to Sichuan Hongzhuo Shuya Energy Co., Ltd. were $3,871,248 in fiscal year 2024 and $5,308,129 in fiscal year 2023, with no sales in fiscal year 2025.
• Factory lease payments to Sichuan TIBO were $90,483 in fiscal year 2024 and $45,787 in fiscal year 2023, with no payments in fiscal year 2025.
• Equipment purchases from Sichuan TIBO were $1,069,239 in fiscal year 2024 and $2,130,283 in fiscal year 2023, with no purchases in fiscal year 2025.
• Purchase of fixed assets from Sichuan TIBO was $9,963 in fiscal year 2023, with no purchases in fiscal years 2024 and 2025.

Stakeholder Impact

• Shareholders: The dual-class share structure significantly limits the voting power of Class A shareholders, concentrating control with directors and officers. The substantial decline in net income and operating loss may negatively impact shareholder returns and confidence. No dividends are expected in the near future, making investment return dependent on share price appreciation.
• Employees: The company is expanding its workforce, but increases in labor costs in the PRC could affect profitability. Failure to make adequate contributions to employee benefit plans could lead to penalties.
• Customers: Decreased market demand and intense competition have led to lower selling prices and reduced service prices, potentially benefiting customers in the short term but impacting the company's profitability. The company's focus on R&D and international expansion aims to provide improved products and services.
• Suppliers: The company's reliance on third-party vendors and the practice of requiring advance payments pose risks to the company if vendors fail to deliver, potentially impacting the supply chain.
• Creditors: The company's improving current ratio and increasing cash balance suggest a stronger ability to meet short-term obligations, but the shift to an operating loss and increased credit loss provisions could be a concern for long-term creditors.

Next Steps

• Increase investment in technical talent and R&D to strengthen international competitiveness and upgrade product technology and quality.
• Actively explore international markets to rebuild the revenue base and decrease reliance on the PRC market.
• Develop new customers and new projects, and expand new potential service types and scopes in oil and gas engineering technical services.
• Actively work to renew expired sales agreements with major clients in natural gas trading and secure more large clients.
• Implement measures to address identified material weaknesses in internal control over financial reporting, including hiring qualified accounting personnel, establishing an audit committee, setting up formal internal control policies, and organizing regular U.S. GAAP and SEC reporting training.

Key Dates

Recommendation

The company's significant decline in revenue and shift to an operating loss in fiscal year 2025, coupled with a substantial decrease in net income, presents a concerning financial picture. While the recent IPO provided capital and the company is pursuing strategic initiatives like international expansion and R&D investment, the immediate financial performance is weak. The dual-class share structure also concentrates voting power, which may be a concern for some investors. However, the improving liquidity and current ratio, along with the renewal of HNTE certifications, offer some stability. A 'hold' recommendation is appropriate as investors should monitor the effectiveness of the company's internationalization strategy and its ability to reverse the revenue decline and improve profitability in the coming fiscal years before considering further investment.

Keywords

Energy, Oil & Gas, Clean Energy, China, Equipment Manufacturing, Technical Services, Natural Gas, LNG, CNG, Digitalization, IPO, Nasdaq, SEC Filing, PRC, Cybersecurity, Dual-Class Shares, Financial Results, Corporate Governance