Preview of new US stocks: With only $130,000 in hand, Wimay Holdings (MJID.US) urgently needs to go public to "refill" cash.

In recent years, against the backdrop of a phased adjustment in the pace of A-share IPOs, the listing standards on the main board and the ChiNext board have been raised, while the evaluation criteria for technology attributes on the Science and Technology Innovation Board (STAR Market) are also being further improved. As a result, the number of A-share listed companies has significantly decreased. Influenced by this, many companies are looking overseas for more expansive development opportunities, and capital outflow is gradually becoming a trend. In the current accelerated global economic integration process, the demand for overseas financing by companies continues to rise, and the Hong Kong and US stock markets have become the preferred markets for capital outflow. According to statistics, by 2024, a total of 68 domestic companies successfully debuted on the US stock market. Among them, 62 companies went public through Initial Public Offerings (IPOs), 5 companies used Special Purpose Acquisition Companies (SPACs), and 1 company listed through Over-The-Counter (OTC) transfer. However, not all companies have had a smooth journey. Since becoming the first company to receive a registration notice from the China Securities Regulatory Commission, the IPO journey of MJID.US has been less than smooth. Despite submitting the F-1 document in April 2023, the company has updated its prospectus multiple times but has yet to receive the ticket to Nasdaq. Looking at the company's latest prospectus, MJID.US's fundamentals are not optimistic, with consecutive years of losses and high customer concentration. In February of this year, the China Securities Regulatory Commission's official website issued supplementary material requirements for overseas issuance and listing registration, requesting additional information from 6 companies, including MJID.US. The Commission demanded an explanation of the failure to complete overseas issuance and listing within 12 months of the previous registration notice, as well as the fulfillment of the commitments made during the previous registration. Facing multiple risks, can MJID.US, which is under scrutiny, still impress Nasdaq? 95% revenue comes from a single business MJID.US provides supply chain management services to the Chinese apparel industry, offering customers a one-stop solution including yarn products, textiles, and finished garments. The company provides full services in the apparel supply chain, covering market trend analysis, product design and development, raw material procurement, etc. According to the prospectus, in the fiscal years ending on September 30, 2023, and 2024, the company's revenues were 82.5637 million yuan and 87.6224 million yuan, respectively, representing a 6.2% year-on-year increase. Specifically, the company's business is mainly divided into yarn sales and finished garment sales. Yarn sales are the company's main source of revenue, accounting for over 90% of the revenue, with yarn sales accounting for as much as 95% of the revenue in the fiscal year 2024. Benefiting from increased customer demand, yarn sales in 2024 achieved a year-on-year growth of 8.1% to 83.269 million yuan. However, the company's finished garment sales witnessed a decline during the period, falling from 55.24 million yuan in the fiscal year 2023 to 43.534 million yuan in the fiscal year 2024. While revenue growth is ongoing, the company's profitability is also improving. During the period, the company's gross profit margin was 5.1% and 6.2%, respectively. This was mainly due to the growth in the gross profit margin of yarn sales, which rose by 1.5 percentage points year-on-year to 5.6% during the period. Despite the revenue growth, the company's losses continue to expand. The net losses for the reporting period were 0.9939 million yuan and 1.2842 million yuan, totaling 2.2781 million yuan over two years. It is worth noting that the company's general and administrative expenses grew by a staggering 52.9% and amounted to 4.9925 million yuan during the period, which the company stated as the main reason for the significant increase in losses. Dependency on upstream and downstream clients remains unresolved It is also noted that MJID.US faces a high risk of concentration from major clients. According to the prospectus, the company's clients include brand manufacturers, textile producers, garment procurement agents, and online fashion retailers. During the reporting period, the revenue from the top five clients accounted for 81% and 86% of the current period's revenue. In terms of risk factors, MJID.US openly admits that they do not have long-term agreements with any of the top five clients, as these clients mainly make purchases based on orders. Therefore, these clients are not obligated to continue placing orders with the company, and the demand for the company's clothing products may fluctuate significantly due to their business strategies, operational needs, product mix, and other factors. As a result, the company cannot guarantee the maintenance of existing business relationships with major clients in the future, nor can it ensure the expansion of its client base, which may have an adverse impact on the company's performance. In addition to the dependency on major downstream clients, the company also faces high concentration risks from upstream suppliers. During the reporting period, the top five suppliers accounted for approximately 71.9% and 66.8% of the company's cost of goods sold. At the same time, the company does not have long-term agreements with suppliers. Furthermore, observing the company's financial position, tight cash flow and debt burden are also significant reasons why MJID.US is eager to seek financing through listing. As of September 30, 2024, most of the company's current assets consist of accounts receivable, with the net amount of accounts receivable reaching a staggering 40.4413 million yuan in the fiscal year 2024. In comparison to the operational funding needs, the cash level is low, with cash and bank balances decreasing sharply from 59.18 million yuan at the end of the fiscal year 2023 to 13.09 million yuan during the same period. The company stated that without additional financing, unless it can collect some accounts receivable in a timely manner, the company may not have enough working capital to fund its operations. Additionally, as the company expands its raw material inventory and strengthens its SCM services to cover a larger customer base, the company's operational and capital expenditures are expected to increase in the coming years. Therefore, if the company cannot secure sufficient funding, it may need to significantly cut back its operational plans, which could significantly impact its ongoing business capabilities. Fierce competition in the industry In terms of industry performance, Zhongjin pointed out that the textile manufacturing industry achieved rapid revenue growth in 2024 on a low base. With overseas brands resuming normal ordering rhythms, textile manufacturing companies saw a recovery and growth in orders, with double-digit growth in the entire sector's revenue from the fourth quarter of 2023 to the third quarter of 2024. At the same timeDriven by the relatively high growth in income, the capacity utilization rate of textile manufacturing enterprises is expected to recover in 2024.However, the magazine "China Textile" pointed out that in 2024, the domestic clothing market continued to grow, but due to factors such as insufficient consumer willingness and intensifying market competition, the internal consumption power of end consumers was insufficient, and the domestic sales growth rate slowed down. According to data from the National Bureau of Statistics, from January to December 2024, the total retail sales of clothing goods by designated large-scale enterprises in China reached 1.07162 trillion yuan, a year-on-year increase of 0.1%, a decrease of 15.3 percentage points from the same period in 2023; the online retail sales of clothing goods increased by 1.5% year-on-year, a decrease of 9.3 percentage points from the same period in 2023. Zhongjin predicts that the textile manufacturing industry will continue to grow steadily in 2025, with profit margins returning to normal levels against the backdrop of gradually expanding personnel and production capacity. In terms of industry competition, the clothing SCM industry in China has a large number of participants, making the industry highly fragmented and competitive. Companies compete with other clothing SCM companies based on service quality and pricing. Some competitors may have a wider range of services, greater pricing flexibility, stronger brand recognition, longer operating history, and more mature customer base. Therefore, these competitors have greater competitiveness, and in comparison, the advantages of Weimei Holdings are not obvious. Overall, under multiple risks, Weimei Holdings urgently wants to go public for "blood transfusion", but can such a fundamental outlook impress the "heart" of Nasdaq? This may not be easy.