20-F: Ping An Biomedical Reports Steep Losses, Revenue Plunge in FY25

Ping An Biomedical Co., Ltd. reported a substantial increase in net loss and a significant decrease in revenue for the fiscal year ended September 30, 2025, primarily driven by higher credit losses and reduced customer demand.

Summary

• Total revenue decreased by 61.0% to RMB 34,147,936 (US$ 4,796,732) for the fiscal year ended September 30, 2025, from RMB 87,622,395 in the prior year.
• Net loss increased by 899.0% to RMB 12,829,206 (US$ 1,802,108) for FY2025, compared to RMB 1,284,172 in FY2024.
• Gross profit declined by 82.5% to RMB 949,505 (US$ 133,376) for FY2025, with the overall gross profit margin falling to 2.8% from 6.2% in FY2024.
• Provision for credit losses surged to RMB 9,343,225 (US$ 1,312,435) in FY2025, a significant increase from RMB 119,863 in FY2024.
• The company reported net cash used in operating activities of RMB 6,427,762 (US$ 902,902) for FY2025.
• Cash and bank balances, including restricted cash, increased to RMB 36,696,290 (US$ 5,154,697) as of September 30, 2025, largely due to proceeds from its Initial Public Offering (IPO).
• The company completed its IPO on July 18, 2025, raising net proceeds of $11,108,224.38.
• The company changed its name from Majestic Ideal Holdings Ltd to Ping An Biomedical Co., Ltd. in September 2025.
• Material weaknesses in internal control over financial reporting were identified, specifically inadequate segregation of duties and a lack of independent directors and an audit committee, with remediation plans underway.
• Nasdaq notified the company on November 24, 2025, of non-compliance with the $1 minimum bid price requirement for continued listing.
• The company's top five customers accounted for 91% of total revenue in FY2025, and its five largest suppliers accounted for 70.17% of costs of goods sold, indicating high concentration risks.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a concerning report due to the substantial decline in revenue and significant increase in net loss, exacerbated by high credit loss provisions. While the IPO provided a capital injection and strategic plans are outlined, the operational performance indicates severe headwinds, and the Nasdaq delisting notice adds considerable uncertainty.

Positives

• Successfully completed its IPO on July 18, 2025, raising net proceeds of $11,108,224.38, significantly boosting cash reserves.
• Improved its liquidity position, transitioning from net current liabilities of RMB 10,266,365 in FY2024 to net current assets of RMB 40,620,625 (US$ 5,705,945) in FY2025.
• Increased gross profit margin for finished garment products to 20.6% in FY2025 from 17.9% in FY2024, reflecting a strategic focus on higher-margin offerings.
• Obtained new approval from the CSRC on March 13, 2025, for its overseas listing, ensuring regulatory compliance after the previous approval lapsed.
• Has initiated remediation plans to address identified material weaknesses in internal control over financial reporting, including hiring qualified staff and establishing an audit committee.
• Committed to integrating sustainability into its business model, exploring eco-friendly raw materials and identifying suppliers with recycled production lines.

Negatives

• Experienced a substantial 61.0% decrease in total revenue to RMB 34,147,936 (US$ 4,796,732) in FY2025, primarily due to reduced customer demand for yarn products.
• Reported a significant 899.0% increase in net loss to RMB 12,829,206 (US$ 1,802,108) for FY2025.
• Overall gross profit margin declined to 2.8% in FY2025 from 6.2% in FY2024, partly due to strategic price reductions for customer acquisition in a weakened market.
• Recorded a massive increase in provision for credit losses to RMB 9,343,225 (US$ 1,312,435) in FY2025, indicating significant challenges in collecting outstanding receivables.
• Generated negative operating cash flow of RMB 6,427,762 (US$ 902,902) for FY2025, highlighting operational inefficiencies despite the IPO proceeds.
• Received a Nasdaq notification on November 24, 2025, for non-compliance with the $1 minimum bid price requirement, posing a risk of delisting.
• Maintains high customer concentration, with the top five customers accounting for 91% of total revenue in FY2025, and high supplier concentration, with the top five suppliers accounting for 70.17% of costs of goods sold.
• Identified material weaknesses in internal control over financial reporting, including inadequate segregation of duties and a lack of independent directors and an audit committee.
• An ongoing legal proceeding to collect RMB 11,521,595.75 from a former customer, Tianjin Xinfa Knitting Products Co., Ltd., has seen its execution procedure terminated due to no available property, indicating collection difficulties.

Risks

• Uncertainties with respect to the PRC legal system, including interpretation and enforcement of laws, and sudden changes in regulations, could materially affect operations and securities value.
• The PRC government may intervene or influence operations at any time, potentially delaying development, increasing costs, or leading to business cessation.
• Actions by the PRC government to exert more oversight and control over overseas offerings and foreign investment in China-based issuers could significantly limit the ability to offer securities.
• Uncertainties regarding auditors' compliance with the HFCA Act, including potential delisting if the PCAOB is unable to inspect the auditor.
• Exposure to evolving PRC laws and regulations regarding data protection and cybersecurity, with potential penalties for non-compliance.
• Difficulties for overseas shareholders and regulators to conduct investigations or enforce foreign judgments in China.
• Dependence on the PRC subsidiary (New Brand) for earnings and distributions, with restrictions on dividend payments and currency conversion.
• Results of operations may be materially and adversely affected by a downturn in China or the global economy, including inflationary pressures.
• Difficulty in meeting cash requirements without obtaining additional capital from external sources, despite recent IPO proceeds.
• Liquidity risks due to potential future net current liabilities and total deficits, impacting ability to raise funds or pay dividends.
• Sales are subject to seasonal fluctuations, particularly for finished garment products (highest from August to December).
• Reliance on a limited number of major customers (91% of FY2025 revenue from top five) and suppliers (70.17% of FY2025 COGS from top five), increasing business vulnerability.
• Exposure to credit risks of customers, with potential for impairment or write-offs of trade receivables.
• Reliance on third parties for raw materials, manufacturing, and transport, with risks related to pricing, timing, quality, and compliance.
• Inconsistent quality control may adversely affect reputation and customer relationships.
• Profit margin may be adversely affected by increasing costs of raw materials and labor.
• Keen competition from other players in the fragmented apparel SCM market in China.
• Dependence on key executives and personnel, with potential negative impacts from loss of services.
• Inability to achieve business objectives or obtain sufficient funding on acceptable terms for future expansion.
• Inadequate insurance coverage for potential losses, including business interruption or key person life insurance.
• Unforeseeable events, such as global pandemics (COVID-19) and local energy efficiency measures, could significantly disrupt the supply chain.
• The war in Ukraine could materially and adversely affect business and results of operations due to global economic impacts.
• Lack of effective internal controls over financial reporting, identified as material weaknesses, affecting the ability to accurately report financial results or prevent fraud.
• Share price may be volatile, and investors may lose all or part of their investment, potentially leading to securities litigation.
• Risk of delisting from Nasdaq if applicable listing requirements are not met, which could reduce liquidity and market price.
• Future sales of ordinary shares by existing shareholders may adversely affect the market price.
• Controlling Shareholders (Mr. Sek Yan Ko and Ms. Yuk Yin Judy Li, holding 55.45% of shares) have significant voting power and may take actions not in the best interests of other shareholders.
• Nasdaq may apply additional and more stringent criteria for initial and continued listing due to a small public offering and large insider holdings.
• No immediate plans to pay dividends, requiring investors to rely on potential share price appreciation for gains.
• Difficulty for investors to enforce judgments against the company, its directors, and management due to Cayman Islands incorporation and non-U.S. residency of officers.
• Cayman Islands laws relating to the protection of minority shareholders' interests differ from those in the United States.
• Increased costs as a public company due to compliance with U.S. laws and Nasdaq rules.
• Status as an emerging growth company under the JOBS Act may make it more difficult to raise capital.
• Risk of being classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, leading to adverse tax consequences for U.S. Holders.

Future Outlook

The company anticipates increased operating and capital expenditures in the coming years to expand raw materials inventory and strengthen SCM services. It expects cash from the IPO and operating activities to cover estimated cash requirements for at least the next 12 months. Strategic plans include diversifying the customer base to the United States and Europe, broadening apparel product offerings, strengthening design capabilities, and developing strategic supplier relationships through framework agreements and prepayments. The company also aims to enhance product quality and production efficiency through technology investments and integrate sustainability into its business model by exploring eco-friendly materials and recycled production lines. No immediate plans to pay dividends are in place, with future earnings intended for business expansion and operational costs.

Management Comments

• We believe that our cohesive corporate culture inspires innovation, motivates quality service and encourages collaboration.
• We believe the in-depth industry experience, knowledge of SCM and established connections with customers of our management differentiate us from our competitors.
• We believe our customers value us for our integrated capabilities, dependable services, deep category expertise, market insight and ability to innovate and adapt to the fast-changing market.
• We believe that maintaining appropriate levels of inventories can help us better plan raw material procurement and deliver our products to meet customer demand in a timely manner without straining our liquidity.
• We believe our insurance coverage is adequate to insure against the risks relating to our operations, given the size and nature of our business.
• We believe the negative impact on our business by the COVID-19 pandemic has been moderate due to occasional small outbreaks, which are usually under control quickly.
• We believe that a well decorated and inspiring showroom is a great marketing tool for an apparel SCM company, for business development and brand image.

Industry Context

StockSavvy.ai notes that the apparel SCM industry in China is highly fragmented and competitive, with a large number of participants. The company's strategy to differentiate through integrated capabilities, specialization, and personalized customer experience is a common response to such market dynamics. The trend of increasing demand for rapid inventory changes and shorter fashion cycles, with some brands launching new collections monthly, highlights the critical need for efficient SCM services like those offered by Ping An Biomedical. The increasing commonality of brand owners and retailers placing orders directly with manufacturers through online platforms poses a challenge to traditional SCM providers, emphasizing the need for value-added services beyond basic logistics.

Comparison to Industry Standards

• The company competes with other apparel SCM companies on service quality and pricing, acknowledging that some competitors may offer more diverse services, greater pricing flexibility, stronger brand recognition, and longer operating histories.
• Leading players in the Chinese apparel SCM market are characterized by integrated SCM solutions and comprehensive value-added services, including raw material procurement, design, and consulting, which aligns with the company's stated capabilities.
• The company claims a 'competitively short lead time' in transforming fashion sketches into finished garments, a crucial factor in an industry driven by rapid fashion cycles.
• The company's insurance coverage is stated to be 'in line with our industry norm,' suggesting adherence to common industry practices for risk mitigation.

Management Changes

Corporate Governance

Legal Proceedings

• A civil complaint was filed on September 30, 2021, against former customer Tianjin Xinfa Knitting Products Co., Ltd., seeking RMB 11,521,595.75 for unpaid services.
• A property preservation order was obtained on November 8, 2021, and a civil mediation was issued on August 26, 2022.
• The execution procedure was terminated on February 15, 2023, due to no available property, but the debt obligation remains, and the company can apply to resume execution if property is found.

Related Party Transactions

• Other payables to Ms. Li (Controlling Shareholder) amounted to RMB 1,363,693 (US$ 191,557) as of September 30, 2025, which are unsecured, interest-free, and of a non-trade nature.
• Other payables to Meridian Industries Limited (common controlled by Mr. Ko and Ms. Li) were RMB 897,914 (US$ 126,129) as of September 30, 2025, also unsecured, interest-free, and non-trade.
• Other payables to Wisewing International Ltd (controlled by Mr. Ko) were RMB 672,476 (US$ 94,462) as of September 30, 2025, primarily representing rent payable for office premises in Hong Kong.
• Rental expense paid to Wisewing International Ltd was RMB 388,909 (US$ 54,630) for FY2025.
• Short-term bank borrowings from Bank of China are guaranteed by Suqin Li (Director and CEO) and her husband, and secured by their properties.

Stakeholder Impact

• **Shareholders**: Face significant dilution from the recent IPO, potential for further dilution from future share sales, and the risk of delisting from Nasdaq due to minimum bid price non-compliance. The concentration of voting power with controlling shareholders may limit influence for minority shareholders. No immediate dividend payments are planned.
• **Employees**: Are covered by government statutory social security plans and housing provident funds as required by PRC law. The company provides on-the-job training and financial support for external courses.
• **Customers**: May experience decreased demand for products and potential shifts to competitors or direct online ordering from manufacturers. The company faces credit risks from customers, as evidenced by increased credit loss provisions.
• **Suppliers**: Are subject to the company's reliance on third-party raw material vendors and contract manufacturers, with potential impacts from increased raw material and labor costs.
• **Creditors**: The company's improved net current asset position in FY2025 may alleviate immediate liquidity concerns, but ongoing net losses and negative operating cash flow indicate continued financial strain.

Next Steps

• Implement measures to improve internal control over financial reporting, including hiring more qualified staff, appointing independent directors, and establishing an audit committee.
• Monitor and evaluate the effectiveness of internal controls and procedures over financial reporting on an ongoing basis.
• Address the Nasdaq notification regarding non-compliance with the $1 minimum bid price requirement.
• Continue to closely monitor the COVID-19 situation and its potential impact on business objectives.
• Reinvest future earnings to expand product offerings and cover operating costs, with no immediate plans for dividend payments.
• Diversify the customer base to include markets such as the United States and Europe.
• Broaden the range of apparel products handled and strengthen design and development capabilities.
• Maintain a quality supplier base and develop strategic relationships, including entering into framework agreements and using pre-payment deposits to stabilize raw material prices.
• Enhance the quality of apparel products and the efficiency of their production, including investment in technology infrastructure.
• Integrate sustainability aspects into product sourcing and environmental marketing, exploring eco-friendly raw materials and recycled production lines.
• Apply to the court to resume execution in the Tianjin Xinfa Knitting Products Co., Ltd. case if property becomes available for collection.

Key Dates

Recommendation

The company's financial performance for FY2025 shows severe deterioration, with a 61% revenue decline and an 899% increase in net loss. The substantial rise in credit loss provisions indicates significant issues with customer collections and asset quality. While the IPO provided a capital injection, the underlying business fundamentals are weak, and the Nasdaq delisting notice adds considerable regulatory and market risk. High customer and supplier concentration further exacerbates the company's vulnerability, making it a high-risk investment with a negative outlook.

Keywords

Apparel SCM, Supply Chain Management, Knitwear, Yarn Products, Finished Garments, China Market, SEC Filing, Form 20-F, Financial Results, Net Loss, Revenue Decline, Credit Risk, Customer Concentration, Supplier Concentration, Internal Controls, Nasdaq Listing, IPO, Cayman Islands, PRC Regulations, Cybersecurity, PFIC, Corporate Governance