(CapitalWatch, Nov. 3, New York) A Chinese IPO in New York is a rare sight these past few months, but there's no lack of applicants nevertheless. Chinese logistics and supply chain management company Shengfeng Development Ltd. has applied to raise up to $40 million in a New York initial public offering.
Operating since 2001, Shengfeng provides customized storage and delivery solutions to companies in China. The entity seeking a U.S. listing is offshore; Shengfeng operates through a VIE structure with headquarters in China's Fuzhou, Fujian province.
In the half year ended June, Shengfeng generated $166.5 million in revenue, up 1% year-over-year. In this period, it transported about 3,500,000 tons in volume for 2,116 clients. Net profit was approximately $2.5 million in the six months. In 2021, it booked $346.7 million in sales compared with $287.5 million in 2020, according to the prospectus. Net income last year grew 10% to $6.6 million.
The contract logistics market in China is expected to grow from 1,154.9 billion yuan in 2019 to 1,709.9 billion by 2024, according to Frost & Sullivan. Citing the same market research firm in its securities filing, Shengfeng said it was among China's top 50 B2B independent contract logistics providers. China Federation of Logistics & Purchasing has ranked Shengfeng 32nd in the country in terms of service quality.
Shengfeng's transportation network covers 341 cities in 31 provinces, and Shengfeng has provided services to over 4,000 manufacturers and trading companies in China, including big names such as CATL Battery, Bright Dairy, Schneider Electric (OTC: SBGSY), Xiaomi (OTC: XIACY; HKEX: 1810), and the logistics giant SF Express.
By segment, Shengfeng said its business is split into B2B freight transportation; cloud storage; and value-added services. It operates its fleets directly through its VIE's subsidiaries, as it does its sorting centers, cloud-based order fulfillment centers, and service outlets, the prospectus stated.
Shengfeng intends to use the proceeds from its U.S. offering to expand its sorting centers, increase the number of its OFCs and service outlets, expand its truck fleet, upgrade its existing equipment, and improve its IT infrastructure.
The company is offering 8 million ordinary shares at the expected price range of $4 to $5 apiece.
Univest Securities, LLC is serving as the underwriter on the listing, expected to occur on the Nasdaq Capital Market.
While the market sags under inflation, the war in Ukraine and other macro troubles, Chinese IPOs are rare to witness on Wall Street. Yet companies in China continue to pursue New York listings with renewed hopes after the China Securities Regulatory Commission and China's Ministry of Finance signed an agreement with the U.S. PCAOB on the inspections and investigations of PCAOB-registered public accounting firms in China and Hong Kong.