F-1/A: Primega Group Holdings Files Amended Resale Prospectus, Reports Mixed Financials Amid Strategic Shift to Construction Works

Primega Group Holdings Limited (ZDAI) filed an amended F-1 registration statement for the resale of up to 17.84 million ordinary shares by existing shareholders, reporting a 20.8% revenue increase driven by construction works, but a 6.5% decline in net income for the fiscal year ended March 31, 2024.

Summary

• Primega Group Holdings Limited (ZDAI) filed an amended F-1 registration statement (F-1/A) for the resale of up to 17,840,000 ordinary shares by identified selling shareholders.
• The company will not receive any proceeds from the sale of these shares by the selling shareholders.
• For the fiscal year ended March 31, 2024, total revenues increased by 20.8% to US$13,464,430 from US$11,143,138 in the prior year.
• This revenue growth was primarily driven by an 806.4% increase in miscellaneous construction works revenue, reaching US$5,028,207, while soil and rock transportation services revenue decreased to US$8,436,223 and diesel oil trading ceased.
• Gross profit increased by 27.1% to US$2,768,604, with the gross profit margin improving to 20.6% from 19.5% in the previous year, attributed to the strategic shift towards higher-margin construction works.
• Net income, however, decreased by 6.5% to US$1,091,285 for the year ended March 31, 2024, compared to US$1,167,260 in the prior year, largely due to increased general and administrative expenses, including significant one-off legal and professional fees related to the company's IPO.
• Net cash provided by operating activities significantly increased by 185.0% to US$2,394,212 for the year ended March 31, 2024.
• The company completed its initial public offering (IPO) on Nasdaq on July 24, 2024, issuing 1,500,000 Ordinary Shares at US$4.00 per share, raising US$6 million in gross proceeds for the company.
• As of June 11, 2025, the closing price of the company's Ordinary Shares was $0.8410 per share.

Sentiment

Score: 5

Explanation: The document presents a mixed financial picture with revenue growth offset by a net income decline due to IPO-related expenses, alongside significant strategic shifts. While operating cash flow improved, the extensive list of geopolitical, regulatory, and industry-specific risks, coupled with the large resale offering by selling shareholders, introduces considerable uncertainty and potential downward pressure on the stock, leading to a neutral-to-slightly-negative sentiment.

Positives

• Total revenues increased by 20.8% to US$13,464,430 for the fiscal year ended March 31, 2024.
• Revenue from miscellaneous construction works grew significantly by 806.4% to US$5,028,207, indicating successful strategic expansion into higher-complexity projects.
• Gross profit increased by 27.1% to US$2,768,604, and the overall gross profit margin improved to 20.6% from 19.5%.
• Net cash provided by operating activities saw a substantial increase of 185.0% to US$2,394,212 for the fiscal year ended March 31, 2024.
• The company successfully completed its IPO on Nasdaq on July 24, 2024, raising US$6 million in gross proceeds.
• The company recovered previously provisioned credit loss, resulting in a reversal of US$22,522.
• The company highlights competitive strengths including a fleet of 42 tipper trucks, a strong network of subcontractors, stable customer relationships, and an experienced management team.
• The company's auditor, ZH CPA, LLC, is U.S.-based and subject to PCAOB inspection, mitigating some delisting risks under the HFCA Act.

Negatives

• Net income decreased by 6.5% to US$1,091,285 for the fiscal year ended March 31, 2024, despite revenue growth.
• Revenue from soil and rock transportation services decreased, and diesel oil trading ceased, indicating a shift away from previously significant revenue streams.
• General and administrative expenses increased by 12.4% to US$1,336,394, primarily due to significant one-off legal and professional fees related to the IPO and increased transportation expenses.
• Other income decreased substantially by 80.2% to US$116,397.
• The company has a concentrated customer base, with major customers accounting for approximately 88.88% and 88.26% of total revenue for the years ended March 31, 2024 and 2023, respectively.
• The company relies on non-recurring projects, with no long-term service agreements with customers.
• The high utilization rate of tipper trucks (approximately 95%, near 100% excluding downtime) necessitates renting from third parties and engaging subcontractors, which could impact costs and project fulfillment.
• The company does not intend to pay dividends for the foreseeable future, meaning investors may only see returns through share price appreciation.
• The resale offering of 17,840,000 Ordinary Shares by selling shareholders represents 67.58% of outstanding shares, which could lead to significant market volatility and downward pressure on the stock price.

Risks

• Operations in Hong Kong are subject to potential significant oversight and discretion by the PRC government, which could intervene in or influence business operations, restrict cash movement out of Hong Kong, and cause the value of securities to decline or become worthless.
• Uncertainties exist regarding the interpretation and enforcement of PRC and Hong Kong laws, rules, and regulations, which can change rapidly with little notice and be applied inconsistently.
• Potential future subjection to PRC laws and obligations regarding data security (e.g., Measures for Cybersecurity Review, Personal Information Protection Law), which could hinder operations or offerings if compliance is not met or approvals are required and denied.
• While the current auditor is PCAOB-inspected, there's no guarantee future audit reports will be from inspected auditors, and trading in shares may be prohibited if the auditor is not subject to PCAOB inspections for two consecutive years under the Accelerating Holding Foreign Companies Accountable Act (HFCA Act).
• U.S.-listed companies with substantial operations in China/Hong Kong face intense scrutiny, criticism, and negative publicity, which could harm business, reputation, and share price.
• A downturn in the Hong Kong, China, or global economy, or changes in China's economic and political policies, could materially and adversely affect the business and financial condition.
• Fluctuations in currency conversion rates between Hong Kong dollars (business currency) and U.S. dollars (share quotation currency) may affect investment value, and the Hong Kong dollar peg to the U.S. dollar could change.
• Adverse economic, social, and/or political conditions in Hong Kong, including social unrest or the impact of the Hong Kong National Security Law and Safeguarding National Security Ordinance, could affect market and business operations.
• The Hong Kong legal system embodies uncertainties that could limit legal protections, including enforceability of contractual rights and intellectual property protections.
• Changes in international trade policies, disputes, or trade wars could dampen growth in Hong Kong and negatively impact the business.
• As a holding company, ZDAI relies on dividends from its Hong Kong operating subsidiary, Primega Construction, and any limitations on these payments could adversely affect ZDAI's ability to fund operations or pay dividends.
• Internal controls over financial reporting may not be effective, and the independent registered public accounting firm may not be able to certify their effectiveness, which could have a significant adverse effect.
• Compliance with Cayman Islands economic substance requirements may affect business and operations.
• A significant portion of revenue is derived from a small number of customers, making the company vulnerable to a decrease in projects or non-payment/delayed payment from these major customers.
• Revenue relies on successful tenders for non-recurring projects, and any failure in securing new projects would adversely affect business and financial results.
• Operating results are difficult to predict due to factors like market demand, political conditions, competition, and cost management.
• Increases in biodiesel oil prices, a significant operational cost, may adversely affect financial results if costs cannot be passed on to customers.
• Capacity for soil and rock transportation is limited by the availability of 42 tipper trucks, leading to reliance on third-party rentals and subcontractors, and any failure, damage, or loss of equipment could affect operations.
• Potential liability for accidents, pollution, fire, and explosions if biodiesel oil leakage occurs during transportation, affecting reputation and business.
• Failure to meet contractual schedule requirements in construction projects could lead to liquidated damages, reduced profits, and reputational damage.
• Failure to maintain safe work sites could result in significant losses, employee injuries, investigations, litigation, and damage to reputation.
• Risk of non-payment or delayed payment from customers, and revenue fluctuations due to variation orders, affecting cash flow and financial condition.
• Dependence on third-party subcontractors for work completion and machinery supply exposes the company to risks of non-performance, delayed performance, sub-standard performance, and potential legal liabilities.
• Substantial increase in Hong Kong waste disposal charges (effective April 1, 2024) may intensify competition and divert customers to alternative solutions.
• Risk of industrial accidents leading to claims for employee compensation, personal injuries, fatal accidents, and/or property damages.
• Actual time and costs incurred in projects may deviate from estimates due to unexpected circumstances, leading to cost overruns and adversely affecting profitability.
• Cash inflows and outflows in construction projects may be irregular, potentially affecting net cash flow position and ability to take on new projects.
• Dependence on key executives, management team, and professional staff, with a risk of adverse impact if significant personnel leave.
• Inability to obtain sufficient funding on acceptable terms for business expansion.
• Insurance coverage may be inadequate to protect against all potential losses and expenses.
• Exposure to arbitration claims and lawsuits in the ordinary course of business.
• Reliance on a stable workforce; labor shortages, industrial actions, strikes, or increased labor costs could adversely affect operations.
• Inability to successfully implement future business plans and objectives due to competition, financial/operational risks, or resource limitations.
• A sustained outbreak of the COVID-19 pandemic could have a material adverse impact on business, operating results, and financial condition due to supply chain disruptions, labor shortages, and economic slowdown.
• A severe or prolonged downturn in the global economy (e.g., due to Russia-Ukraine war) could materially and adversely affect business.
• The trading price of Ordinary Shares could be subject to rapid and substantial volatility due to various factors, including regulatory developments, financial performance, and sales by pre-IPO shareholders.
• Shareholders may have more difficulty protecting their interests than in a U.S. corporation due to Cayman Islands law and foreign private issuer status.
• There is no assurance that the company will not be a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which could result in adverse tax consequences for U.S. holders.
• As a controlled company, the company may choose to exempt itself from certain Nasdaq corporate governance requirements, potentially affording less protection to public shareholders.

Future Outlook

The company intends to retain all available funds and future earnings for the operation and expansion of its business, specifically by undertaking more construction projects, strengthening its project management team, and acquiring additional machinery and equipment. In the event of insufficient liquidity, the company may consider raising additional capital through offering additional shares or tapping into appropriate capital markets. The company will continue to closely monitor the impact of the COVID-19 pandemic and global economic conditions throughout 2025 and beyond.

Management Comments

• Our management considered that this segment [miscellaneous construction works] had a better growth potential in Hong Kong and by undertaking construction works of higher complexity, we could have a chance to increase profitability.
• Our management monitors the cash position of our operating subsidiary regularly and prepares budgets on a monthly basis to ensure it has the necessary funds to fulfill its obligations for the foreseeable future and to ensure adequate liquidity.
• In the event that there is a need for cash or a potential liquidity issue, it will be reported to our chief financial officer and subject to approval by our board of directors.
• We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future.

Industry Context

The company operates primarily in the Hong Kong construction industry, focusing on transportation services for construction and demolition (C&D) materials with environmentally friendly practices aimed at reuse and waste reduction. The industry is highly competitive and influenced by government spending on construction projects, property developer investments, and general economic conditions in Hong Kong and China. The industry faces challenges from supply chain disruptions, labor shortages, and increasing waste disposal fees (effective April 1, 2024). The global economic slowdown and geopolitical events like the Russia-Ukraine war also pose risks to the industry's growth and stability.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of this prospectus, the Company, Celestial Power, and Primega Construction are not a party to, and are not aware of any threat of, any legal proceeding that, in the opinion of management, is likely to have a material adverse effect on business, financial condition, or operations.

Related Party Transactions

• Chi Yip Eng. & (Trans.) Company Limited (Chi Yip), a company owned by the parents of CEO Mr. Man Siu Ming, was a major customer in fiscal year 2023, contributing US$2,830,435 (25.40% of total revenue) from soil and rock transportation services and US$39,184 from site management services.
• Primega Construction ceased providing soil and rock transportation and site management services to Chi Yip in fiscal year 2024, resulting in no revenue from Chi Yip for that year.
• Accounts receivable due from Chi Yip decreased from US$1,903,672 as of March 31, 2023, to US$392,686 as of March 31, 2024.
• Accounts payable due to Chi Yip increased from US$236,429 as of March 31, 2023, to US$279,498 as of March 31, 2024.
• An amount of US$156,248 was due to Chi Yip as of March 31, 2024, related to initial payment of finance lease paid by Chi Yip.
• Mr. Man Siu Ming provided funds to the company, with an amount due to him of US$545,063 as of March 31, 2023, and US$196,906 as of March 31, 2024; this balance is unsecured, interest-free, and repayable on demand.
• Mr. Man Siu Ming sold an aggregate of 13,464,000 shares to the Selling Shareholders on April 7, 2025, prior to this resale offering.

Stakeholder Impact

• Shareholders face potential for significant share price volatility due to the large volume of shares offered for resale by selling shareholders (67.58% of outstanding shares).
• Shareholders are not expected to receive dividends in the foreseeable future, limiting returns to share price appreciation.
• Shareholders may experience reduced protections due to the company's foreign private issuer status and potential reliance on controlled company exemptions from Nasdaq corporate governance rules.
• Employees face risks of increased turnover if work site safety conditions are not adequately maintained.
• The company's reliance on a stable workforce means labor shortages, industrial actions, strikes, or increased labor costs could adversely affect operations and profitability.
• Customers may be impacted by potential delays in construction projects due to supply chain issues or labor shortages.
• Customers may face increased waste disposal fees in Hong Kong, potentially leading them to seek alternative solutions or negotiate lower rates, which could affect the company's customer base and margins.
• Suppliers and subcontractors are critical to the company's operations, and risks include non-performance, delayed performance, or sub-standard performance by subcontractors, as well as potential for increased subcontracting costs.
• Creditors' ability to receive timely payments from the company is dependent on prompt settlement of progress payments by the company's customers, and irregular cash flows from projects could affect this.

Next Steps

• The company plans to expand its business by undertaking more construction projects.
• The company intends to strengthen its project management team.
• The company plans to acquire additional machinery and equipment, including tipper trucks and excavation machines.
• The company will continue to closely monitor the situation regarding the COVID-19 pandemic throughout 2025 and beyond.
• The company will continue to monitor global economic conditions and their potential impact.

Key Dates

Recommendation

Keywords

Primega Group Holdings Limited, ZDAI, SEC Filing, F-1/A, Resale Prospectus, Hong Kong Construction, Soil and Rock Transportation, Construction Waste Management, Environmental Services, Heavy Machinery, Logistics, Corporate Governance, Risk Factors, Financial Performance, Nasdaq Listing, Emerging Growth Company, Foreign Private Issuer, PCAOB Inspection, China Regulations, Hong Kong Economy, Shareholder Structure, Capital Markets