In a significant move, Lingong Heavy Machinery Co., Ltd., commonly referred to as Lingong Heavy Machinery, has decided to resume its initial public offering (IPO) process nearly one year after halting it. The company aims to complete its preparations for an A-share listing by May 2025. This decision comes after Lingong Heavy Machinery had initially submitted its IPO application to the Shanghai Stock Exchange in March 2023, only to withdraw it later, resulting in the termination of the review process.

Founded in 2012, Lingong Heavy Machinery is recognized as one of the leading manufacturers of mining and aerial work machinery in China, based in the high-tech zone of Jinan. Its products span various sectors, including mining equipment, aerial work machinery, specialized machines, and critical components. The company has established a sales network that includes not only China, but also Southeast Asia, Central Asia, and Africa.

The current majority shareholder of Lingong Heavy Machinery is Lingong Group, which holds 60.80% of the company's shares. Lingong Group itself evolved from Shandong Linyi Engineering Machinery Co., Ltd., a noted enterprise that underwent ownership changes in 2002 when Shenzhen Nanfang Xiangjiang Group Co., Ltd. took control and restructured the company significantly.

Despite efforts to reach out for comments and clarifications regarding the previous withdrawal of its IPO and the new listing process, attempts to contact Lingong Heavy Machinery have been unsuccessful as of the time of reporting. This situation adds layers of intrigue around the company’s financial strategies and operational transparency.

The Securities Regulatory Commission's website recently reflects that Lingong Heavy Machinery has registered for advisory assistance with the Shandong Securities Regulatory Bureau, with CICC as their guiding investment bank.

This is not Lingong Heavy Machinery's first attempt at going public. Back in March 2023, the company proposed to issue between approximately 60.3 million to 96.8 million shares, hoping to raise around 1.5 billion yuan for various projects, including a digital factory for new energy mining equipment, an intelligent industrial park, and bolstering working capital. Nonetheless, following inquiries about its application, Lingong Heavy Machinery opted to withdraw its filing by the end of December 2023, leading to the suspension of review by the Shanghai exchange in January 2024.

Currently, Lingong Heavy Machinery operates with 12 wholly-owned subsidiaries and three joint ventures. In recent years, the company has begun to make its mark internationally, establishing manufacturing bases and subsidiaries in countries like Mexico, Australia, and South Korea, indicative of its ambition to capture more of the global market. However, the competition in the industry remains fierce, with strong rivals such as Xugong Group, Sany Heavy Industry, and LiuGong in the mining equipment sector, and Zhejiang Huatie Emergency Equipment Technology Co., Ltd. in aerial work machinery, all vying for dominance.

The lineage of Lingong Heavy Machinery traces back to significant developments within the Chinese machinery sector. Shandong Lingong Co., Ltd. was originally established in 1994 and went public in 1998. Historically, it was a key enterprise supported by the former Ministry of Machinery, focusing on manufacturing core equipment like loaders and excavators. A significant turning point occurred in 2003 when the then-majority holder, Shandong Engineering Machinery Group Co., Ltd., transferred a substantial portion of its shares to Xiangjiang Group, which would eventually restructure and redefine the company’s path.

Following Xiangjiang Group's acquisition, a series of asset restructures were executed, effectively separating Shandong Lingong’s core machinery business and shifting its focus towards commercial logistics and real estate. This strategic pivot has paved the way for the establishment of Lingong Group, which emerged from the original management of Shandong Lingong. In 2005, a group of 1016 employees pooled personal funds to acquire shares in Lingong Group, marking a revival of local managerial control.

The realignment of Lingong Heavy Machinery within its parent group has led to remarkable growth in recent years. In fact, Lingong Group’s revenues reached approximately $4.3 billion in 2024, positioning it as the fourth largest comprehensive manufacturer of engineering machinery in China. Beyond Lingong Heavy Machinery, the Group also controls two other enterprises focused on production: Lingong Zhi Ke and Lingong Zhong Tuo.

The company’s financial performance has been promising, with industrial output and revenue crossing the 10 billion yuan threshold by 2022. Lingong Heavy Machinery reported revenues of 3.54 billion yuan in 2019, escalating to 8.15 billion yuan in 2022, showcasing a compound annual growth rate that underscores a trajectory of stability. However, its recent listings and inquiries have drawn scrutiny concerning potential issues related to industry competition, connected transactions, and operational cash flow.

Among the most prominent areas of inquiry has been the interconnected dealings between Lingong Heavy Machinery and Shandong Lingong, which is owned 30% by Lingong Group. The overlap in customer bases and supply chains raises questions about the fairness and necessity of their transactions. Between 2019 and 2021, Lingong Heavy Machinery made significant equipment purchases from Shandong Lingong, with a sharp drop in sales recorded in the first half of 2022 when dealings ceased altogether.

As Lingong Heavy Machinery prepares for its renewed IPO endeavor, its executives are tasked with navigating these complexities while presenting a comprehensive picture to stakeholders and regulatory bodies. The upcoming period will be crucial not only for the company's financial standings but also for establishing robust governance practices that align with its growth ambitions and enhance investor confidence.