Phoenix Asia Holdings Ltd

Phoenix Asia Holdings Ltd operates in the civil engineering industry in Hong Kong, primarily focused on substructure works such as site formation, ground investigation, and foundation works. The company also provides other construction services like structural steelworks and, to a lesser extent, advisory and supervision services charged on a monthly basis. According to the Census and Statistic Department, between 2014 and 2023, the construction industry in Hong Kong maintained growth with a compounded annual growth rate of 1.53% ¹. The industry is driven by sustained supply of residential units, urban renewal programs, government funding support in innovative construction methods, and continuous efforts in enhancing rail connectivity requiring extensive civil engineering works. The company operates as a subcontractor for substructure works, serving both public and private sector projects in Hong Kong.

The company's primary competitors are other construction contractors in Hong Kong, though no specific competitors are named in the filing. Competitive advantages include an established operating history of over 30 years, a proven track record of milestone projects such as the three runway system of Hong Kong International Airport (off-shore foundation works completed in early-2021) and a public project for a major trunk road involving marine grouting works expected to be completed in late-2025. The company holds key registrations: it is a Registered Specialist Contractor under the sub-registers of foundation works, site formation works, and ground investigation field works categories maintained by the Buildings Department of Hong Kong, and a Registered Subcontractor under foundation and piling and general civil works of the Registered Specialist Trade Contractors Scheme of the Construction Industry Council of Hong Kong. The company has achieved ISO9001:2015 certification for provision of design and construction works including site formation, ground investigation field works, landslip preventive, upgrading and remedial works to slope, retaining walls and foundation works. Customer concentration is high, with the five largest customers accounting for approximately 97.0% ², 93.7% ³, and 93.4% ⁴ of total revenue for the fiscal years ended March 31, 2026, 2025, and 2024, respectively.

The company generates revenue primarily through substructure projects undertaken as a subcontractor, with revenue derived from contracts awarded on a project-by-project basis through invitations for tender. Revenue is non-recurrent in nature, and customers are under no obligation to award projects to the company. To a lesser extent, the company also generates revenue from advisory services and supervision services charged on a monthly basis, with the monthly charge typically determined with reference to a mark-up over estimated costs. The company's customer base includes project owners, consultants, main contractors, or subcontractors of relevant projects. The number of customers with revenue contribution was 12 for the fiscal year ended March 31, 2026 ⁵, 15 for the fiscal year ended March 31, 2025 ⁶, and 11 for the fiscal year ended March 31, 2024 ⁷.

The company's primary service line is substructure works, which includes site formation works (clearance of construction site, demolition of existing structures, reduction and stabilization of existing slopes), ground investigation works (assessing ground condition by drilling and conducting tests), and foundation works (excavation and lateral support works, pile caps construction, earth works, structural steelworks, underground drainage works, and demolition works). For the fiscal years ended March 31, 2026, 2025, and 2024, total revenue derived from substructure and other construction services was approximately USD7.2 million ⁸, USD7.4 million ⁹, and USD5.8 million ¹⁰, respectively. The company also provides other construction services such as structural steelworks, and advisory and supervision services to customers in substructure projects charged on a monthly basis. Revenue is split between public sector projects (USD2,269,996 ¹¹ or 31.5% ¹² of total revenue for fiscal 2026, USD6,114,652 ¹³ or 83.0% ¹⁴ for fiscal 2025, and USD4,625,386 ¹⁵ or 80.4% ¹⁶ for fiscal 2024) and private sector projects (USD4,935,753 ¹⁷ or 68.5% ¹⁸ for fiscal 2026, USD1,255,893 ¹⁹ or 17.0% ²⁰ for fiscal 2025, and USD1,130,255 ²¹ or 19.6% ²² for fiscal 2024).

The company's top five customers for the fiscal year ended March 31, 2026, all being construction contractors in Hong Kong, accounted for 57.7% ²³, 15.4% ²⁴, 9.5% ²⁵, 8.7% ²⁶, and 5.7% ²⁷ of total revenue, respectively. For the fiscal year ended March 31, 2025, the top five customers accounted for 50.4% ²⁸, 25.5% ²⁹, 9.9% ³⁰, 5.5% ³¹, and 2.4% ³² of total revenue, respectively. For the fiscal year ended March 31, 2024, the top five customers accounted for 40.9% ³³, 21.4% ³⁴, 17.1% ³⁵, 11.1% ³⁶, and 2.9% ³⁷ of total revenue, respectively.

On April 24, 2025, the company entered into an underwriting agreement for its initial public offering of an aggregate of 1,600,000 ³⁸ Ordinary Shares at a public offering price of $4.00 ³⁹ per Ordinary Share. The net proceeds to the company from the initial public offering, after deducting underwriting discount, underwriters' fees and expenses, and the company's estimated offering expenses, were approximately $5.76 million ⁴⁰. The Ordinary Shares commenced trading on The Nasdaq Capital Market under the ticker symbol 'PHOE' on April 25, 2025. On June 10, 2025, the Audit Committee accepted the resignation of ARK Pro CPA & Co as its independent registered public accounting firm and approved the appointment of J&S Associate PLT as the new independent registered public accounting firm. On September 2, 2025, the Board approved the appointment of Ms. Yu Gao as a director. On October 31, 2025, the Board approved the appointment of Ms. Yafei Xie as a non-independent director and Ms. Yaqiao Xie as an independent director. On May 4, 2026, the company entered into a stock acquisition agreement with ACEA Pharma, Inc. and ACEA Therapeutics, Inc. to acquire all issued and outstanding equity interests of ACEA Pharma, Inc. in exchange for 100,000,000 ⁴¹ newly-issued ordinary shares of the company, valued at $1,000,000,000.00 ⁴². On May 4, 2026, the company issued a convertible promissory note in favor of Phoenix Prosperity Investment Limited with a principal sum of $20,000,000.00 ⁴³, maturing on the third anniversary of issuance, not accruing interest, and convertible into ordinary shares at a conversion price of $10.00 ⁴⁴ per share.

For the fiscal year ended March 31, 2026, total revenue was USD7,205,749 ⁴⁵, compared to USD7,370,545 ⁴⁶ for fiscal 2025 and USD5,755,641 ⁴⁷ for fiscal 2024. Net income for fiscal 2026 was USD1,112,636 ⁴⁸, compared to USD1,161,178 ⁴⁹ for fiscal 2025 and USD1,034,088 ⁵⁰ for fiscal 2024. Diluted earnings per share for fiscal 2026 was USD0.05 ⁵¹, compared to USD0.06 ⁵² for fiscal 2025 and USD0.06 ⁵³ for fiscal 2024. The company's revenue declined slightly year-over-year, while net income also decreased modestly. The company's cost of revenue has historically fluctuated, and gross profit margin may be affected by changes in cost estimates.

The company plans to enhance competitiveness and expand market share by deploying additional resources towards competing for additional and more sizeable substructure projects in Hong Kong. The company intends to expand the scale of its works by recruiting additional professional staff and strengthening working capital to capture potential opportunities in the growing substructure market, which is expected to continue growing driven by sustained supply of residential units, urban renewal programs, government funding support, and enhanced rail connectivity. The company also plans to acquire innovative machinery to enhance productivity and service capacity, noting that as of March 31, 2026, it possessed drilling rigs and water pumps, and believes a larger fleet will enable more efficient resource deployment, enhanced capability in undertaking large-scale projects, lower machinery rental expenses, and improved capability in addressing technical difficulties.

The company plans to improve its technical capability through technology investment, including future investment in new hardware and technical software such as advanced Building Information Modeling (BIM) systems and Smart Site Safety Systems (4S system). The filing notes that these technologies represent a new direction for operations as the company has not yet invested in BIM or 4S Systems and has not historically incorporated AI into its service offerings. The BIM systems are capable of generating digital models to lower risks of errors and provide clear design plans, while the 4S system provides a centralized management platform for digitized tracking, digitalized permits for high-risk activities, and utilizes artificial intelligence in safety monitoring and virtual reality technology in safety training.

The filing does not contain specific margin or cost outlook targets, but notes that cost of revenue has historically fluctuated and that if actual costs are higher than originally budgeted, it may reduce profit margin. The company reviews cost budgets from time to time.

The company's operational outlook includes plans to enhance brand recognition of its 'Winfield' brand through increased marketing efforts, including enhancing web pages, placing advertisements in newspaper and industry publications, sponsoring industry events, updating promotional materials, and proactively approaching potential customers to secure new tendering opportunities. The company intends to position itself as a contractor capable of offering comprehensive, one-stop solutions for construction projects.

The company's capital allocation plans include deploying additional resources for competing for larger substructure projects, recruiting additional professional staff, and strengthening working capital. The company also plans to invest in innovative machinery and technology investments such as BIM and 4S systems. The filing does not provide specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy figures.

The company faces structural headwinds including its reliance on market conditions and trends in the civil engineering industry in Hong Kong, with the availability of substructure projects largely dependent on continued infrastructure development by the Government of Hong Kong. The company's revenue is mainly derived from non-recurrent projects, and there is no guarantee that customers will provide new business. The company also faces risks related to labor shortage and ageing workforce in the Hong Kong civil engineering industry, with the statutory minimum wage currently set at HKD43.1 per hour (approximately USD5.5) effective from May 1, 2026 ⁵⁴, and there is no assurance that the minimum wage will not increase in the future.

The company faces execution risks including the highly competitive nature of the industry, with competitors potentially having advantages such as long operating history, better financing capabilities, and well-developed technical expertise. The company also faces risks related to customer concentration, with the five largest customers accounting for approximately 97.0% ⁵⁵ of revenue in fiscal 2026. Additionally, the company's expansion plans may be affected by factors beyond its control, including changes in economic conditions in Hong Kong, changes in supply and demand for substructure services, and government regulations.

The company's revenue is highly concentrated, with the five largest customers accounting for approximately 97.0% ⁵⁶ of total revenue for fiscal 2026, and there is no assurance that these customers will continue to award projects to the company. The company's business depends on market conditions and trends in the Hong Kong civil engineering industry, and any slowdown in infrastructure development by the Government of Hong Kong could significantly decrease the availability of substructure projects. The company faces labor shortage risks, with the statutory minimum wage set at HKD43.1 per hour (approximately USD5.5) effective from May 1, 2026 ⁵⁷, and any significant increase in labor costs could reduce profit margins. The company has identified material weaknesses in its internal control over financial reporting, including limited controls over information processing, inadequate segregation of duties, insufficient formal written policies and procedures for accounting and financial reporting, and limited precision in management's review of the CECL allowance calculation. The company's backlog is subject to cancellation and unexpected adjustments, and reductions in backlog due to customer cancellation could significantly reduce actual revenue.

Management's message emphasizes the company's over 30 years of operating history in substructure works, its proven track record with milestone projects such as the three runway system of Hong Kong International Airport and a major trunk road project involving marine grouting works, and its registrations with the Buildings Department and Construction Industry Council of Hong Kong. The strategic priorities emphasized for the period ahead include enhancing competitiveness and expanding market share by deploying additional resources towards competing for additional and more sizeable substructure projects, acquiring innovative machinery to enhance productivity and service capacity, improving technical capability through technology investment in BIM and 4S systems, and enhancing brand recognition of the 'Winfield' brand through increased marketing efforts. Management also highlights the company's intention to actively seek new opportunities from existing customer bases as well as new potential customers.