F-1/A: New Century Logistics (BVI) Limited Files Amendment for IPO of 1,250,000 Ordinary Shares

New Century Logistics (BVI) Limited, a Hong Kong-based freight forwarding service provider, has filed an amendment to its registration statement for an initial public offering of 1,250,000 ordinary shares, with an expected price range of $4.00 to $5.00 per share.

Summary

• New Century Logistics (BVI) Limited, a British Virgin Islands business company with its principal place of business in Hong Kong, is planning an initial public offering (IPO).
• The company intends to offer 1,250,000 ordinary shares to the public.
• The expected offering price is between $4.00 and $5.00 per ordinary share.
• The company plans to list its ordinary shares on the Nasdaq Capital Market under the symbol NCEW.
• The offering is contingent upon final approval from Nasdaq for listing.
• The company's operations are conducted through its subsidiaries in Hong Kong, namely New Century Logistics Company Limited (NCL (HK)), GLF Cargo Services Limited (GLF), and Win-Tec Transportation Company Limited (Win-Tec).
• For the six months ended March 31, 2024, the company's total revenue was approximately U.S. $25.3 million.
• For the years ended September 30, 2023 and 2022, the company's total revenue amounted to approximately U.S.$36.1 million and U.S.$75.2 million, respectively.
• The company derives its revenue mainly from freight forwarding services.

Sentiment

Score: 5

Explanation: The document presents a mixed outlook. While the company is pursuing an IPO and has some positive aspects, there are also significant risks and challenges, including declining revenue and regulatory uncertainties. The sentiment is neutral overall.

Positives

• The company has a long-standing history in the freight forwarding industry, dating back to 2002.
• The company has a robust network with well-established agents to manage both incoming and outgoing traffic for over 140 countries.
• The company offers a range of services, including air and ocean freight forwarding, warehousing, and distribution.
• The company is managed by a group of professionals with over 20 years of combined expertise in the air and ocean freight industries in Hong Kong.

Negatives

• The company's revenue decreased significantly from 2022 to 2023.
• The company is subject to uncertainty about any future actions of the PRC government or authorities in Hong Kong.
• The company is an emerging growth company and a foreign private issuer, which means it can take advantage of certain reduced reporting requirements.
• The company's Ordinary Shares may be prohibited from trading on a national exchange or over-the-counter market under the Holding Foreign Companies Accountable Act (the HFCA Act) if the Public Company Accounting Oversight Board (United States) (the PCAOB) is unable to inspect our auditors for two consecutive years.

Risks

• The company's revenues, operating income, and cash flows are likely to fluctuate.
• The company relies on a limited number of vendors.
• The company may be subject to cyber-attacks and data breaches.
• The freight forwarding industry in which the company operates is highly fragmented.
• The company's results of operations are affected by international trading volumes and global and regional economic conditions.
• There may be disintermediation in the logistics industry in the future.
• There is no assurance that Hong Kong will continue to maintain its position as a logistics hub in Asia.
• As a holding company with no operation of its own, the company relies on dividends from its subsidiaries.
• The PRC government may intervene or influence the company's current and future operations in Hong Kong at any time.
• The enactment of the Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the Hong Kong National Security Law) could impact the company's Hong Kong holding subsidiary.
• The recent joint statement by the SEC and The Public Company Accounting Oversight Board (United States), or the PCAOB, proposed rule changes submitted by The Nasdaq Stock Market LLC (NASDAQ), and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.

Future Outlook

The revenue of air freight forwarding services in Hong Kong is estimated to increase with its gradually resumed merchandise trade, climbing from HK$68.5 billion in 2023 to HK$78.2 billion in 2027, at a CAGR of 3.4%. The revenue of ocean freight forwarding services in Hong Kong is still expected to keep its moderate growth and be higher than the pre-COVID levels in the following years. As the global merchandise trade gradually normalizes, the ocean freight forwarding service in Hong Kong is expected to grow at a CAGR of 1.2% from HK$127.4 billion in 2023 to HK$133.9 billion in 2027.

Industry Context

The freight forwarding market in Hong Kong is considered highly fragmented with many small and medium-sized players. The industry is affected by global trade volumes, economic conditions, and competition from other logistics hubs in Asia.

Comparison to Industry Standards

• The freight forwarding market in Hong Kong is considered as a highly fragmented market with a large number of small and medium-sized players.
• Tier-one freight forwarders are generally the global leading mega logistics groups with worldwide logistics network and business coverage, while tier-two freight forwarders are generally local and regional players with networks covering certain focused logistic locations and categories of goods.
• Our ability to compete with other industry players depends on a number of factors such as pricing, range of services offered and our responsiveness to market changes and demand.
• Keen competition from other freight forwarders within the market may adversely affect our customer base and market share.
• We may have to adopt a more competitive pricing strategy by lowering our profit margin in order to maintain our customer base and market share.
• There is no assurance that we can compete successfully over other industry players for customers in the future.
• If we are unable to maintain our customer base, our business, financial condition and results of operations could be adversely affected.

Legal Proceedings

• The company filed a lawsuit against a PRC customer who defaulted in its payments owing to the Company of approximately U.S. $345,680 (HK$2.7 million).
• Based on the final rulings from the relevant courts, the PRC customer was ordered, among others, to repay the outstanding trade receivables in the amount of approximately U.S. $345,680 (HK$2.7 million) owed to the Company.
• The PRC customer since then has declared bankruptcy and the Company has decided to not pursue the enforcement against the PRC customer.

Related Party Transactions

• On December 1, 2022, the Company entered into facility letter with a shareholder, Sin Yuk Hung to offer facility of up to HK$2 million ($256,410) being made available to the shareholder for overdraft.
• On December 22, 2022, the Company entered into a loan and sale and purchase agreement (the Agreement) with Ngan Ching Shun and Asia International Securities Exchange Co., Ltd (AISE), pursuant to which AISE acquired 21% shareholding in the Company from Mr. Ngan and as part of the Agreement, AISE agreed to lend the Company up to the amount of $2 million in order to finance the expenses of the offering.

Stakeholder Impact

• Shareholders will experience immediate dilution in the net tangible book value of Ordinary Shares purchased.
• The market price for the company's Class A ordinary shares may be volatile.
• The recent joint statement by the SEC, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies.
• These developments could add uncertainties to our offering, business operations, share price and reputation.

Next Steps

• Obtain final approval from Nasdaq for listing.
• Complete the IPO and begin trading on the Nasdaq Capital Market.
• Implement the use of proceeds as outlined in the prospectus.

Key Dates

Keywords

freight forwarding, logistics, IPO, Hong Kong, Nasdaq, ordinary shares, air freight, ocean freight, warehousing, distribution