Interpretation of New U.S. Stocks | Tongying Group (TYZ.US): A "wholesaler with increased revenue but no profit," how does it achieve its dream of listing on NASDAQ?

Even though Tongying Group (TYZ.US) had achieved a revenue scale of $644 million by 2025, its path to going public in the U.S. has not been smooth. Since it first filed with the SEC on February 21, 2025, and updated its prospectus for the third time on July 21, 2026, Tongying Group's IPO process has been technically progressing. However, the company has still not disclosed detailed information regarding the offering price and size, indicating that its IPO progress is significantly lagging behind expectations. In comparison to the typical timeline for U.S. IPOs, which generally spans 3-6 months from the initial filing to roadshows, many Chinese concept companies usually complete their overall cycles in about 12-18 months, even accounting for the CSRC's overseas listing filing process. However, it has been over 18 months since Tongying Group publicly filed in November 2024, and its filing has still not been completed; it has yet to reach the pricing stage, demonstrating a clear lag in IPO progress compared to market expectations. The slow progress is a result of multiple intertwined factors, including backlog in the filing process, new Nasdaq rules regarding commissions of $25 million, and the company's weak fundamentals. The prolonged state of uncertainty regarding Tongying Group's "non-pricing" situation is emblematic of the current challenges faced by small to medium-sized Chinese companies with weak fundamentals in the overseas listing regulatory environment. Improvement in Business Structure, Stuck in the "Increased Revenue without Increased Profit" Quagmire According to the prospectus, Tongying Group, founded in 2020, primarily engages in commodity trading and supply chain consulting. The company sources chemical products, non-ferrous metals, and agricultural commodities from upstream suppliers and sells them to downstream customers. A notable feature of its business model is its "two no's": no transportation, no warehousing. Tongying Group's products are delivered by suppliers to third-party warehouses designated by the company, where customers pick up the goods themselves. The company only completes the transaction through a method of "designated warehousing + transfer of goods rights," serving as an intermediary for "information matching + bridging funds." This extreme light-asset strategy, while reducing operational costs, also means that the company lacks an irreplaceable position in the physical supply chain, with profits entirely dependent on the price differences between upstream and downstream. In a market environment where commodity prices are highly transparent, the survival space for intermediaries continues to shrink, leading to a structurally enforced "thin profit" predicament. Tongying Group's performance in 2025, described as "business structure improvement but stagnant profits," is the best proof of this. The prospectus indicates that in 2025, due to oversupply on the supply side and weak demand on the demand side, the industry average price of PTA dropped by 13% to 15%. Seizing this opportunity, Tongying Group proactively adjusted its business structure, reducing its investment in PTA while continuously expanding its corn category and developing new products such as EVA (ethylene-vinyl acetate). As a result, corn and EVA have become the main drivers of revenue growth for the company. Specifically, corn revenue during the reporting period surged 210.4% year-on-year to $184 million, becoming the company's second growth line. Although EVA was a newly expanded product in the year, it recorded $22.07 million in revenue, effectively supporting overall revenue growth. Driven by both corn and EVA, Tongying Groups total revenue increased by 8.19% in 2025 to approximately $644 million. However, the revenue growth and improvement in business structure did not better profitability. During the reporting period, Tongying Group's net profit was merely $815,000, almost unchanged from the same period in 2024, corresponding to a slim net profit margin of only 0.13%, effectively placing it in a fragile breakeven state, underscoring the pitfalls of increased revenue without increased profit. Imbalance in Asset Structure and Revenue Scale, Trading Equity for Survival May Become Inevitable In fact, the challenges faced by Tongying Group are not limited to the single dimension of increasing revenue without increasing profit or weak profitability. The severe imbalance between asset structure and revenue scale is also a pressing challenge the company must address. According to the prospectus, as of December 31, 2025, the company's total assets were only approximately $3.83 million, yet they supported annual revenue of $644 million, clearly showcasing leveraged expansion; among them, the net value of fixed assets was around $1.92 million, with almost no substantial assets available for financing collateral, and the cash and cash equivalents on the books were merely about $178,000. For a commodity trader handling an annual transaction volume exceeding $644 million, this cash reserve is akin to "dancing on the edge of a knife"any significant price fluctuations, downstream bad debts, or disruptions in the supply chain will leave the company with insufficient buffer space and a low margin for error and risk resistance. Furthermore, small and medium-sized enterprises are facing increasingly evident "dual pressures" within the commodity cycle. On the pricing front, chemical products (PTA, EVA, ethylene glycol) are significantly influenced by political and macroeconomic cycles, capacity releases, and other factors related to GEO Group Inc., making them highly volatile, which poses distinct challenges for the company's operations. The 15.2% year-on-year drop in PTAs average price in 2025 impacted overall performance, with the company relying on corn to maintain positive revenue growth. On the competitive front, international giants (such as Glencore and Trafigura) dominate the market due to their scale advantages and integrated industrial layouts, placing small traders at a structural disadvantage in terms of resource acquisition and financing costs. How to cultivate differentiated competitive advantages for steady development in this cutthroat market has become a pressing dilemma for small and medium-sized firms. Additionally, Tongying Group's strategic transformation faces a dual gap in "capabilities and funds." To present a more imaginative growth narrative to the capital market and enhance IPO valuation attractiveness, Tongying Group has outlined three strategic transformation pillars in its prospectus. The first is a platform leap. The company plans to launch the CRMC (Chemical Raw Materials B2B Trading Platform) system by the end of 2026, achieving mature operations by 2027, upgrading traditional offline matching trades to online, centralized supply chain management services. However, the company currently has only $5,000 in intangible assets, with virtually no technological accumulation, potentially needing to build relevant teams from scratch. The second is the development of heavy-asset warehousing. Tongying Group plans to establish automated, intelligent self-owned warehouses by 2027, attempting to extend from a "pure order-passing" model to operating as physical logistics nodes to gain control over goods rights and warehouse premiums. The third is the empowerment of financial instruments. The company intends to establish a spot/futures trading team in 2026, aiming to hedge commodity price fluctuations through a combination of spot and forward contracts, breaking free from the thin profit fate of "living off the weather." However, the transformation plans are in sharp contrast to the company's weak financial status. The directions of platformization, self-owned warehousing, and spot-forward integration all require substantial financial investment, whereas the company currently faces liquidity issues and its own cash generation capabilities do not support the transformation; thus, the advancement of the strategic transformation must rely on the funds raised through this IPO. However, the new Nasdaq rule requiring a $25 million fundraising minimum for Chinese enterprises has forced Tongying Group into a dilemma: if it wants to comply with the listing standards, the company likely needs to price at a lower valuation and issue more shares, trading off equity dilution for the necessary survival funds. This essentially becomes a game of "trading equity for survival." It is thus evident that Tongying Group is "trapped in a situation of thin profits, constrained by transformation funding, and stuck on IPO pricing," becoming a typical representative of structurally problematic small and medium-sized enterprises with weak fundamentals under the new Nasdaq rules for Chinese enterprises in 2026.