F-1/A: Tong Ying Group Files F-1/A for Nasdaq IPO

Tong Ying Group, a Cayman Islands holding company operating in China's commodities trading and supply chain consulting, filed an amended prospectus for its initial public offering on Nasdaq.

Summary

• Tong Ying Group is a Cayman Islands holding company primarily conducting operations in Mainland China through its subsidiaries, Shanghai Zhangyang Supply Chain Management Co., Ltd (SH Zhang Yang) and Zhejiang Xinyu Trading Co., Ltd (Zhejiang Xinyu).
• The company is engaged in commodities trading (chemical products, non-ferrous metals, agricultural products) and supply chain consulting services.
• Total revenue decreased by 24.2% from $784.8 million in 2023 to $594.8 million in 2024, primarily due to lower market demand for ethylene glycol and rebar, despite growth in PTA and corn sales.
• For the six months ended June 30, 2025, total revenue increased by 3.6% to $315.2 million from $304.3 million in the same period of 2024, driven by higher trading volumes of PTA and corn.
• Net income increased by 14.6% from $0.71 million in 2023 to $0.81 million in 2024.
• Net income for the six months ended June 30, 2025, was $0.487 million, up from $0.414 million in the same period of 2024.
• The company plans to establish an Online Integrated Transaction Settlement Management Platform (CRMC Platform) by the end of 2025, aiming for 50% customer acceptance by the end of 2026.
• Future strategies include building self-operated automated intelligent warehouses by 2027 and expanding into chemical futures trading with a dedicated team.
• The company aims to achieve over 10% market share through mergers and acquisitions by the end of 2027.
• Working capital was negative $1,368,000 as of December 31, 2024, improving to negative $1,036,000 as of June 30, 2025 (excluding deferred offering costs).

Sentiment

Score: 7

Explanation: The company shows strong strategic initiatives and recent positive financial trends in net income and H1 2025 revenue growth, alongside a clear plan for future expansion and market share capture. However, significant risks related to PRC regulatory oversight, HFCAA compliance, and negative working capital temper the overall sentiment. The shift in product focus is a positive adaptation to market conditions.

Positives

• Net income increased by 14.6% from $0.71 million in 2023 to $0.81 million in 2024, and further to $0.487 million for H1 2025 from $0.414 million for H1 2024.
• Revenue for the six months ended June 30, 2025, increased by 3.6% to $315.2 million, compared to $304.3 million for the same period in 2024, indicating recent growth momentum.
• Strategic shift towards PTA, corn, and EVA has shown positive results, with PTA revenue increasing by 11.7% in 2024 and corn revenue increasing by 973.2% in 2024.
• The company has established a stable and mature risk control system accepted by upstream and downstream enterprises since 2021.
• Possesses strong relationships across the supply chain, enabling efficient procurement and distribution, and cost savings from economies of scale.
• Led by an experienced and highly educated management team with over a decade of industry experience.
• Believes it has good industry credit with no legal or industry business disputes.
• Plans to develop an Online Integrated Transaction Settlement Management Platform (CRMC Platform) to improve transaction efficiency and security in the chemical raw materials industry.
• Intends to build self-operated automated intelligent warehouses to enhance warehousing services and integrate with the CRMC Platform.
• Plans to establish a spot/futures chemical trading team to better protect against price risk and potentially gain pricing power in specific products.
• Received a government economic incentive award of $133,000 in June 2025, tied to revenue scale.

Negatives

• Total revenue decreased by 24.2% from $784.8 million in 2023 to $594.8 million in 2024, primarily due to reduced market demand for ethylene glycol and rebar.
• Revenue from ethylene glycol sales decreased by 90.9% in 2024 and 54.8% in H1 2025 due to lower market demand and strategic shifts.
• Revenue from rebar sales decreased by 54.1% in 2024 and was nil in H1 2025 due to lower market demand and strategic shifts.
• Working capital was negative $1,368,000 as of December 31, 2024, and negative $1,036,000 as of June 30, 2025, indicating potential short-term liquidity challenges.
• The company relies on a limited number of suppliers and warehouse partners, exposing it to supply chain risks if these relationships are disrupted.
• The company does not have long-term contracts with its suppliers, exposing it to price volatility and supply interruptions.
• The business is geographically concentrated in Mainland China, making it vulnerable to changes in local or regional economic, political, and regulatory conditions.
• The company has a limited operating history, which makes it difficult to evaluate its current business and prospects and increases investment risk.
• The chemical raw material supply chain industry in Mainland China is characterized by a low level of informatization and inefficient collaboration.
• The company does not maintain product liability insurance coverage for its domestic market, exposing it to significant costs and reputational damage from potential product liability claims or recalls.

Risks

• The Chinese government may exercise significant oversight and discretion over the business of subsidiaries in Mainland China, potentially intervening or influencing operations at any time, which could materially adversely affect business, financial condition, and the value of securities.
• Uncertainties exist regarding the interpretation and enforcement of PRC laws, rules, and regulations, which may evolve quickly with little advance notice, potentially resulting in material adverse changes to operations or the value of Ordinary Shares.
• The approval, filing, or other requirements of the China Securities Regulatory Commission (CSRC) or other PRC government authorities may be required for this offering, and any failure to comply could completely hinder the ability to offer Ordinary Shares.
• The Holding Foreign Companies Accountable Act (HFCAA) could prohibit Ordinary Shares from trading in the United States if the PCAOB is unable to inspect the auditor for two consecutive years, potentially causing the value of shares to significantly decline or become worthless.
• Recent greater oversight by the Cyberspace Administration of China (CAC) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact business and the offering.
• PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject the company to liability or penalties, limit capital injection into PRC subsidiaries, or restrict profit distribution.
• Restrictions on the remittance of Renminbi into and out of China and governmental control of currency conversion may limit the ability to pay dividends and other obligations, affecting investment value.
• The company is a holding company incorporated in the Cayman Islands with no material operations of its own, and investors are purchasing equity interests in the holding company, not the Chinese operating subsidiaries, which involves unique risks.
• The Chinese regulatory authorities could disallow the operating structure, which would likely result in a material change in operations and/or the value of Ordinary Shares, potentially rendering them worthless.
• The company is an emerging growth company and a foreign private issuer, eligible for reduced reporting requirements, which may make Ordinary Shares less attractive to some investors.
• The company is a controlled company, with Mr. Yin Zhang indirectly holding more than 50% of voting power, allowing reliance on exemptions from certain Nasdaq corporate governance requirements, which may afford less protection to shareholders.
• The company has a limited operating history, making it difficult to evaluate current business and prospects and increasing investment risk.
• Dependence on the procurement of finished products means various factors may result in inadequate supply or increased costs.
• Operations are dependent on the availability and price of materials (chemical products, non-ferrous metals, agricultural products), exposing the company to fluctuations and regulations.
• Reliance on a limited number of suppliers and warehouse partners means a loss of any of these could negatively affect the business.
• Intense competition in the chemical industry in China may reduce demand, operating margins, and market share.
• Quality issues with commodity products from suppliers or negative publicity could materially and adversely affect business and results of operations.
• Improper handling or storage of commodity products, spoilage, or contamination could lead to regulatory/legal action and damage reputation.
• Funding requirements and proposed deployment of IPO proceeds are based on management estimates and may change, potentially affecting business prospects if additional capital is needed.
• Inability to introduce new products and respond to changing consumer preferences in a timely manner could decline demand.
• Failure to obtain or renew certain filings, approvals, licenses, permits, and certificates required for business operations may materially and adversely affect the business.
• Suppliers and customers may fail to obtain, maintain, or renew required statutory and regulatory licenses, permits, and approvals, adversely affecting the business.
• Exposure to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws.
• Enforcement of the PRC Labor Contract Law and other labor-related regulations may adversely affect business and results of operations.
• Lack of insurance coverage could expose the company to significant costs and business disruption.
• Certain data and information in the prospectus are derived from a third-party report and publicly available sources and may not be reliable.
• The interests of Mr. Yin Zhang, the controlling shareholder, may conflict with those of other shareholders.
• The market price of Ordinary Shares may be volatile or decline regardless of operating performance, and investors may not be able to resell shares at or above the IPO price.
• Immediate and substantial dilution will be experienced by new investors.
• Liability risks stemming from foreign status (Cayman Islands incorporation) could make it more difficult for investors to sue or enforce judgments against the company.
• The board of directors may decline to register transfers of Ordinary Shares in certain circumstances.
• Shareholders may experience difficulties in presenting proposals before general meetings not called by shareholders.
• Inflation in the PRC could negatively affect profitability and growth.
• Current tension in international trade, particularly with regard to U.S. and China trade policies, may adversely impact business.

Future Outlook

The company plans to collect industrial resources through digital management, operations, and intelligent warehousing layout to enhance corporate value and create an integrated trading ecosystem. Key initiatives include establishing an Online Integrated Transaction Settlement Management Platform (CRMC Platform) by the end of 2025, aiming for over 50% customer acceptance by the end of 2026, and achieving full online trading and preliminary financing functions for SMEs on the platform in the same year. It also intends to build company-owned automated intelligent warehouses by 2027 to interconnect the chemical supply chain with IoT and expand into chemical futures trading with a dedicated team. The company aims to achieve a target of over 10% market share through mergers and acquisitions by the end of 2027. Management believes the PTA market will show a stable upward trend in production capacity, volume, and value, with global market size expected to grow to approximately $85.1 billion by 2028. Demand for ethylene glycol and rebar is also projected to increase in China by 2028, and corn sales are expected to grow steadily.

Management Comments

• Management believes that the company's sound risk management practices have contributed to positive performance through volatile market environments.
• Management is focused on expanding the company's existing business and customer base, including efforts to generate and increase revenue from operations.
• Management is looking to financing itself from related parties if needed, and the Chairman of the Board of Directors has agreed to provide continuing financial support for at least 12 months from October 24, 2025.
• Management believes that current liquidity resources, future operating cash inflows, and subsequent committed financing will be adequate to meet obligations for at least one year from October 24, 2025.
• Management is continuing to focus on improving operating efficiency and cost reduction, including standardizing finance and operation policies, enhancing internal controls, and creating synergy of resources.
• Management believes the system will be able to further decrease general and administrative expenses in the future and substantially enhance the company's ability to generate cash.
• Management believes that the price and gross profit margin of PTA are showing a broad stable upward trend despite periodic fluctuations through an in-depth understanding of market dynamics and market analysis.
• Management believes that the corn business, initiated in late 2023, has entered a phase of operational stability and its characteristics as a staple commodity contribute to steady development and ongoing viability.
• Management believes the company is well-positioned to expand into the EVA market by leveraging existing supply chain relationships and procurement infrastructure.

Industry Context

The company operates within Mainland China's chemical raw material supply chain industry, a fundamental and pillar sector of the national economy with a large market space. While the overall industry volume maintains stable growth, it is characterized by a low level of informatization and collaboration, leading to information gaps. There's a growing consensus on green development, with stricter environmental protection regulations. The market is not yet mature, with technical defects in high-value-added materials and disorderly competition. The PTA market is expected to see steady growth in production capacity and demand, particularly in Asia. The ethylene glycol market faces overcapacity risks but demand is projected to increase with economic growth. The rebar market has experienced a prolonged downturn due to the real estate sector's weakness, leading the company to scale down operations in this area. The corn market is stable with increasing sales volume, supported by national policies and feed consumption. The industry is highly competitive, with larger, diversified players, but the company believes its focus on familiar products mitigates risks.

Comparison to Industry Standards

• The company's strategy of focusing only on products with which it is familiar (e.g., PTA, corn, EVA) is presented as a way to effectively mitigate risks of industry fluctuations, contrasting with competitors who may have hundreds of product categories and face more pressure on operating and risk control costs.
• The company notes that a Nasdaq-listed competitor had to shift its primary focus to the agricultural product field to search for new growth points, implying the company's current strategic shifts are in line with industry adaptation.
• The company acknowledges competition from larger chemical enterprises that are both producers and suppliers/customers, which are in leading positions across product range, market size, business service scope, and electronic/information operations. This suggests the company operates in a fragmented market with dominant players.
• The company's plan to establish an online integrated transaction settlement management platform (CRMC Platform) aims to address a recognized industry demand for a credible platform that includes funds transactions, bulk commodity matching, and logistics services, which is currently lacking in the industry.
• The plan to build self-built automated intelligent warehouses addresses an urgent industry demand for modern warehousing solutions, as existing state-owned warehouses are slow to upgrade and have outdated transaction mechanisms.

Management Changes

Corporate Governance

Legal Proceedings

• As of June 30, 2025, and through the date of this prospectus, neither the company nor any of its subsidiaries is a party to any pending legal proceedings, nor are they aware of any such proceedings threatened against them.

Related Party Transactions

• Amounts due to Mr. Yin Zhang (Chairman and shareholder) were $4,701,000 as of December 31, 2023, and were fully settled by December 31, 2024. These amounts were primarily for working capital and consideration from a share transfer agreement.
• Amounts due to Mr. Chenyu Wang (CEO and director) were $145,000 as of December 31, 2023, and were fully settled by December 31, 2024. These amounts were primarily for consideration from a share transfer agreement.
• The consideration of $2,847,578 from the share transfer agreement during the Reorganization process (March 2024) was settled in cash on May 7, 2024, to Shanghai Zhangyang's former shareholders, including related parties.

Stakeholder Impact

• **Shareholders:** Potential for dilution from the IPO, but also opportunity for capital appreciation if growth strategies are successful. Subject to significant risks related to PRC regulatory intervention and HFCAA delisting. Controlled company status means less protection compared to companies with fully independent boards.
• **Employees:** Expansion plans (CRMC Platform, intelligent warehouses, trading team) will require recruiting more managers, analysts, and engineers, potentially creating new job opportunities. Increased labor costs and the ability to retain suitable employees are noted risks.
• **Customers:** Development of the CRMC Platform and self-operated intelligent warehouses aims to improve transaction efficiency, security, and provide safer, more scientific warehousing services. Diversified product offerings and strong supply chain relationships are intended to meet customer demand.
• **Suppliers:** The company's strong network and bulk purchasing provide preferential prices to suppliers. The CRMC Platform aims to improve transaction efficiency and security for industry participants, including suppliers. However, reliance on a limited number of suppliers poses risks if relationships are disrupted.
• **Creditors:** Negative working capital indicates potential short-term liquidity challenges, though management expects current cash, operating cash flows, and committed financing from the Chairman to be adequate for the next 12 months. Future debt financing could impose restrictive covenants.

Next Steps

• Complete the initial public offering and listing on the Nasdaq Capital Market under the symbol TYZ.
• Initiate the establishment of the CRMC Platform by the end of 2025.
• Achieve mature operation of the CRMC Platform with customer acceptance/usage rates exceeding 50% by the end of 2026.
• Achieve full online trading functions and preliminary financing functions for small and medium-sized enterprises on the CRMC Platform by the end of 2026.
• Establish a futures trading team with experienced members by the end of 2026.
• Build company-owned automated intelligent warehouses by 2027 to achieve chemical supply chain and IoT interconnection.
• Expand matching trading categories horizontally to the entire chemical industry in China by 2027.
• Achieve a target of over 10% market share through mergers and acquisitions by the end of 2027.
• Continue to monitor and comply with evolving PRC regulatory requirements, especially regarding overseas listings, data security, and foreign investment.
• Implement and maintain effective internal control over financial reporting to address identified material weaknesses.

Key Dates

Recommendation

The company presents a mixed financial picture with a revenue decline in 2024 but a rebound in H1 2025, coupled with consistent net income growth. Its strategic initiatives, such as the CRMC Platform and intelligent warehouses, are ambitious and address industry needs, indicating future growth potential. However, the significant and pervasive risks associated with operating in Mainland China, including potential government intervention, regulatory uncertainties (CSRC, CAC), and the threat of delisting under the HFCAA, create substantial uncertainty. The negative working capital also highlights liquidity concerns. While the recent financial performance is encouraging and the growth strategies are sound, the high geopolitical and regulatory risks, along with the controlled company structure, warrant a 'hold' recommendation. Investors should monitor the execution of growth strategies and the evolving regulatory landscape in China closely before considering further investment.

Keywords

Commodities Trading, Supply Chain Management, Chemical Raw Materials, PTA, Ethylene Glycol, Rebar, Corn, EVA, China, IPO, Nasdaq, SEC Filing, F-1/A, Risk Factors, Corporate Governance, Cross-border Data Transfer, Cybersecurity, Foreign Investment, PRC Regulations, Holding Foreign Companies Accountable Act, CRMC Platform, Intelligent Warehouse, Futures Trading