F-1/A: Zi Yun Dong Fang Files IPO for Hong Kong Consulting Business

Zi Yun Dong Fang Limited, a Cayman Islands holding company, is launching an initial public offering of 3,000,000 Ordinary Shares to fund its Hong Kong-based Southeast Asia investment consulting operations.

Summary

• Zi Yun Dong Fang Limited, a Cayman Islands holding company incorporated on April 23, 2024, is offering 3,000,000 Ordinary Shares in an initial public offering.
• The anticipated initial public offering price is between US$4.00 and US$6.00 per Ordinary Share, with an assumed midpoint of US$5.00.
• The company expects to receive net proceeds of approximately US$5.4 million from the offering, assuming no exercise of the over-allotment option.
• Proceeds will be allocated to enhancing analysis and reporting tools (20%), building a high-quality team and training (15%), growth initiatives (30%), and brand building (35%).
• Operations are conducted through its wholly-owned Hong Kong subsidiary, Ziyun Oriental Consulting Management Limited, which focuses on assessing and researching investment feasibility in Southeast Asia, particularly Vietnam and Thailand.
• Ziyun Oriental provides business feasibility reports, site visiting services, and corporate support services.
• Total revenues increased by 22.6% from US$2.23 million in 2024 to US$2.73 million in 2025.
• Gross profit increased by 18.4% from US$1.69 million in 2024 to US$2.00 million in 2025.
• Net income decreased by 25.7% from US$1.06 million in 2024 to US$789,020 in 2025, primarily due to a significant increase in general and administrative expenses.
• The company has high customer concentration, with its top five customers accounting for 82.4% of total revenue in 2025 and 90.0% in 2024.
• The offering is contingent upon listing Ordinary Shares on the Nasdaq Capital Market or the New York Stock Exchange American under the symbol YLY.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this filing as neutral to slightly negative. While the company is pursuing an IPO and shows revenue growth, the significant decline in net income due to increased expenses and the inherent risks of a new company with high customer concentration in a politically sensitive region balance out the growth prospects.

Positives

• Total revenues increased by US$504,175 or 22.6%, from US$2,228,823 for the year ended May 31, 2024, to US$2,732,998 for the year ended May 31, 2025.
• Gross profit increased by US$310,449 or 18.4%, from US$1,689,062 for the year ended May 31, 2024, to US$1,999,511 for the year ended May 31, 2025.
• Revenue from site visiting services saw significant growth, increasing by US$462,003 or 159.1% from US$290,330 in 2024 to US$752,333 in 2025, driven by customer base expansion and project satisfaction.
• The company plans to invest 20% of net IPO proceeds in technical infrastructure like AI predictive analysis to enhance analysis and reporting tools.
• A significant portion (35%) of net IPO proceeds is dedicated to brand building, including improving website and social media presence, participating in exhibitions, and organizing seminars.
• The company aims to broaden its geographic scope by expanding into other Southeast Asian markets like Indonesia, Singapore, and Cambodia within the next three years.
• The company has established close cooperative relationships with government departments, industry associations, and law firms in multiple Southeast Asian countries, providing access to real-time information.

Negatives

• Net income decreased by US$273,250 or 25.7%, from US$1,062,270 for the year ended May 31, 2024, to US$789,020 for the year ended May 31, 2025.
• General and administrative expenses increased significantly by US$645,478 or 149.4%, from US$431,910 in 2024 to US$1,077,388 in 2025, primarily due to incremental audit fees for the IPO process.
• The company has a short operating history, being incorporated on April 23, 2024, and has not generated revenue as a holding company, making future prospects difficult to evaluate.
• High customer concentration persists, with the top five customers accounting for 82.4% of total revenue in 2025 and 90.0% in 2024, posing a risk if these relationships are lost.
• The company is dependent on third-party service providers for operations, exposing it to risks of supply chain interruptions, delays, and performance problems outside its control.
• Management lacks experience in managing a U.S. public company and complying with associated laws and regulations, which could divert attention from day-to-day business.
• The CEO, Zixiao Hui, is not required to commit his full time to the company's affairs, potentially leading to conflicts of interest.
• The company does not maintain director and officer (D&O) liability insurance for its key executive, increasing personal risk for management.
• The overall gross margin decreased by 2.6% from 75.8% in 2024 to 73.2% in 2025, mainly due to an increase in lower-margin site visiting services.

Risks

• No operating history as a newly formed company, with potential for operating losses and reliance on additional capital.
• Dependence on a small group of customers for most of its revenue, posing a challenge to business growth if the customer base is not expanded.
• Reliance on professional services from unrelated third parties, with failure to perform potentially damaging reputation and business operations.
• Inability to compete successfully against larger, more resourced companies in the advisory and consulting services market.
• Failure to develop and market services effectively could limit potential revenues and decrease share value.
• Political events, social unrest, regime changes, and policy changes in China and globally may significantly affect business operations and asset value.
• Negative impacts from global economy and financial markets on business and clients, including reduced spending behavior and currency fluctuations.
• Acts of God, acts of war, epidemics (like COVID-19), and other disasters could materially and adversely affect business operations and financial conditions.
• Loss of key executive or failure to attract and retain competent personnel could negatively impact service development and growth.
• CEO's allocation of time to other businesses may cause conflicts of interest.
• Internal controls over financial reporting may not be effective, potentially leading to misstated financial results or regulatory sanctions.
• Lack of an independent audit committee and audit committee financial expert may hinder board effectiveness and prevent national securities exchange listing.
• Board of Directors acting as compensation committee presents risk of non-commensurate executive compensation.
• Limitations on director and officer liability and indemnification may discourage shareholder lawsuits.
• Difficulties in establishing adequate management, legal, and financial controls in the PRC.
• Lack of comprehensive insurance coverage for all business risks.
• Risks associated with having substantially all business operations in Hong Kong, including potential intervention or influence by the PRC government.
• Uncertainties with respect to the PRC legal system, including enforcement of laws and sudden changes in regulations, which could extend to Hong Kong operations.
• Potential for the PRC government to expand oversight and control over overseas offerings and foreign investments in Hong Kong-based issuers, limiting ability to offer securities.
• Difficulties for investors in protecting their interests and limited ability to enforce rights through U.S. courts due to incorporation in the Cayman Islands.
• Reliance on dividends from the Hong Kong subsidiary, with potential for PRC government restrictions on cash transfers out of Hong Kong.
• Controlling shareholder (Zixiao Hui) owning over 68% of voting power, enabling control over corporate matters and potential conflicts of interest.
• Uncertainties regarding PCAOB inspection of auditors, potentially leading to delisting under the Holding Foreign Companies Accountable Act (HFCAA).
• No prior public market for Ordinary Shares, with no assurance of a liquid public market developing or shares trading at or above the IPO price.
• Volatility in the trading price of Ordinary Shares due to various factors, including market conditions, industry performance, and negative publicity.
• Thinly traded Ordinary Shares, making it difficult to sell at desired prices or at all.
• Potential for adverse effects on market price and trading volume if securities or industry analysts publish inaccurate or unfavorable research.
• Reliance on price appreciation for investment return, as dividend distribution is at the board's discretion and subject to Cayman Islands law.
• Exemption from certain provisions applicable to U.S. domestic public companies as a foreign private issuer, potentially affording less protection to shareholders.
• Risk of being classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, leading to significant adverse tax consequences for U.S. investors.
• Increased costs as a public company, particularly after ceasing to qualify as an emerging growth company.
• Reduced disclosure requirements as an emerging growth company may make Ordinary Shares less attractive to investors.
• Potential for litigation in the ordinary course of business, diverting resources and affecting financial results.
• Labor disputes could adversely affect operations, increase costs, and lead to customer loss.
• Technology failures or security breaches could disrupt operations, compromise confidential information, and result in reputational damage.
• Failure to comply with cybersecurity, data privacy, and data protection laws and regulations.
• Impact of the currency peg system in Hong Kong on expenditures if HKD devalues against USD.

Future Outlook

The company plans to enhance its analysis and reporting tools by investing in AI predictive analysis, build a high-quality team with necessary training, and pursue growth initiatives including market research, service optimization, and user/operational efficiency. It also intends to dedicate resources to brand building through website/social media presence, exhibitions, and seminars. Geographically, the company aims to expand into other Southeast Asian markets such as Indonesia, Singapore, and Cambodia within the next three years, while strengthening compliance services and continuously innovating its product and service offerings.

Management Comments

• Management understands that as of the date of this prospectus, the Company and its operating subsidiary have no operations in China and are not required to complete filing procedures with the CSRC.
• Management believes that using an incremental borrowing rate of the Hong Kong Prime Rate 6.125% plus Margin 1% p.a. was the most indicative rate of the Company's borrowing cost for the calculation of the present value of lease payments.
• The Company's general policy has been to keep funds within the entities where they are raised or generated to support local entity's operations, with the exception of required funding for capital investments.
• Management believes that its current insurance policies are sufficient for its operations.

Industry Context

StockSavvy.ai notes that Zi Yun Dong Fang operates within the business management consulting services market, which is experiencing significant digital transformation initiatives. While North America dominates this global market, Zi Yun Dong Fang's focus on Southeast Asia (Vietnam and Thailand) positions it in a growing regional segment. The company's strategy to leverage big data and potentially AI for market analysis aligns with broader industry trends emphasizing strategic guidance and efficiency. Its emphasis on customized, one-stop cross-border solutions caters to the increasing demand for specialized consulting in complex international business environments.

Management Changes

Corporate Governance

Legal Proceedings

• Neither the company nor any of its subsidiaries has been involved in any litigation, claim, administrative action, or arbitration that had a material adverse effect on operations or financial condition for the years ended May 31, 2025 and 2024, or as of the date of the prospectus.

Related Party Transactions

• Mr. Zixiao Hui (CEO, director, and shareholder) had an amount due from him of US$237,720 as of May 31, 2024, which was reduced to US$0 as of May 31, 2025. He also had amounts due to him of US$213,368 as of May 31, 2025.
• Jiangsu Yalu Cloud Enterprise Management Consulting Co., Ltd. (wholly owned by Mr. Zixiao Hui) had amounts due to it of US$183,724 as of May 31, 2025 (US$212,071 as of May 31, 2024).
• Staff costs paid to Jiangsu Yalu Cloud Enterprise Management Consulting Co., Ltd. were US$7,233 (Cost of revenues) and US$32,246 (General and administrative expenses) for the year ended May 31, 2025 (US$418,764 and US$81,369 respectively for 2024).
• Ms. Na Li (shareholder after October 1, 2024) had an amount due to her of US$72,863 as of May 31, 2025. Consulting service fees paid to Ms. Na Li were US$341,485 for the year ended May 31, 2025.
• Salaries paid to Mr. Zixiao Hui were US$23,118 for the year ended May 31, 2025 (US$23,015 for 2024).
• Mr. Bing Yuan (former shareholder and director) had an amount due to him of US$29,628 as of May 31, 2024, which was reduced to US$0 as of May 31, 2025.
• All amounts due from/to related parties were unsecured, interest-free, and had no specific repayment terms.

Stakeholder Impact

• Shareholders: New investors will experience immediate dilution of US$4.22 per share. Existing shareholders will see an increase in net tangible book value of US$0.73 per share. The value of shares is subject to significant risks, including political, regulatory, and operational factors, potentially leading to substantial losses.
• Employees: The company plans to use 15% of IPO proceeds to build a high-quality team and provide necessary training, indicating potential growth and development opportunities for staff.
• Customers: The company aims to enhance services through digitization (AI predictive analysis), expand geographic reach, and optimize client relationships, potentially leading to improved service offerings and satisfaction.
• Suppliers: The company remains dependent on third-party service providers and suppliers, indicating continued business for these partners, but also risks if these relationships are disrupted.
• Creditors: The IPO is expected to provide significant capital, improving the company's liquidity and ability to meet financial obligations, although the company may seek additional financing in the future.

Next Steps

• Listing Ordinary Shares on the Nasdaq Capital Market or the New York Stock Exchange American under the symbol YLY.
• Utilizing IPO net proceeds for business expansion, brand promotion, and general corporate purposes, including investment in AI predictive analysis and team building.
• Expanding service network to other major economies in Southeast Asia (e.g., Indonesia, Singapore, Cambodia) within the next three years.
• Strengthening research and monitoring of regulations in target markets to ensure compliance.
• Continuing to promote service innovation and optimize existing services.

Key Dates

Recommendation

The company presents a mixed financial picture with strong revenue and gross profit growth, but a notable decline in net income due to increased administrative expenses, particularly IPO-related costs. While the IPO provides capital for strategic expansion and technology investment, the company is newly formed, operates in a politically sensitive region (Hong Kong with PRC oversight risks), and has high customer concentration. These significant risks, coupled with management's lack of U.S. public company experience, warrant a cautious 'hold' recommendation. Investors should monitor the company's ability to execute its growth strategies, diversify its customer base, and navigate regulatory complexities while improving profitability.

Keywords

Investment Consulting, Southeast Asia, Hong Kong, IPO, Nasdaq, NYSE, Advisory Services, Cross-border Enterprise Services, Feasibility Reports, Site Visiting Services, Corporate Support Services, Cayman Islands, Emerging Growth Company, Foreign Private Issuer, PRC Regulatory Risk, PCAOB Inspection, Ziyun Oriental