CDT Environmental Technology Investment Holdings filed its intention to IPO on March 1, 2022. The company will release 3,070,000 ordinary shares at $4 per share in the submission. The company plans to list the NASDAQ stock exchange under the symbol CDTG in a $12.2m IPO.
WestPark Capital, Inc. is the lead managing underwriter and sole book-runner on the offering. WestPark Capital, Inc. previously acted as the underwriter for Troika Media Group Inc (NASDAQ: TRKA) in its April IPO.
After the CDTG IPO, the underwriter will receive warrants worth 10% of the aggregate number of ordinary shares sold in the offering.
What is CDT Environmental Technology?
CDT Environmental Technology is a waste treatment company that generates revenue through the design, development, manufacture, sales, installation, operation and maintenance of sewage treatment systems and by providing sewage treatment services.
The company operates in sewage treatment systems and sewage treatment services, sometimes referred to as septic tank treatment. CDT serves urban and rural areas, and its overarching goal is to become one of China's premier sewage treatment solution companies.
The company was founded on November 28, 2016, and is headquartered in Shenzhen, China.
When will CDTG stock go public?
There is not yet an IPO date for CDTG stock, and it has to receive approval to be listed on the NASDAQ Capital Market before the offering date is confirmed.
How does CDTG make money?
CDT Environmental Technology makes money from selling and installing sewage treatment systems. It also sells maintenance and servicing contracts.
Financials:
The company's business is capital intensive. CDTG's working capital was approximately $9.3m at the end of 2020, compared to roughly $12m at the end of 2019.
As of December 31, 2020, the cash-on-hand balance was approximately $0.3m.
Revenue:
For the year ended | For the year ended | |
December 31, 2020 | December 31, 2019 | |
Sewage treatment systems | $5,838,482 | $15,194,751 |
Sewage treatment services and others | 3,072,626 | 3,537,515 |
Total revenues | $8,911,108 | $18,732,266 |
Source: FactSet financial data and analytics.
For the Six Months Ended June 30, | ||
2021 | 2020 | |
$ | ||
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss: | ||
Total revenues | 3,522,751 | 3,151,444 |
Cost of revenues | 2,040,762 | 2,043,508 |
Gross profit | 1,481,989 | 1,107,936 |
Operating expenses | 1,639,375 | 1,494,233 |
Loss from operations | (157,386) | (386,297) |
Other income, net | 129,222 | 4,107 |
Income taxes expense | 67,768 | 59,255 |
Net loss | (95,962) | (441,445) |
Net (loss) income attributable to CDT Environmental Technology Investment Holdings Limited | $169,321 | $(211,979) |
(Loss) earnings per share, basic and diluted | $0.02 | $(0.02) |
Weighted average number of ordinary shares outstanding, basic and diluted | 9,200,000 | 9,099,086 |
Source: FactSet financial data and analytics.
Why is CDTG going public?
CDT Environmental Technology is going public to raise cash. It intends to use approximately 45% of the net proceeds for working capital purposes. This will primarily be used for rural sewage treatment, including building its sewage treatment equipment.
Then it plans approximately 35% of the sum raised for implementing new systems and services and potential mergers and acquisitions of subsidiaries. However, no definitive merger or acquisition targets have been identified.
It will use approximately 15% of the money raised for research and development. Meanwhile, the remainder will go towards sales and marketing, additional working capital and general corporate purposes.
CDTG IPO Lock-up period
Directors, officers and principal shareholders (defined as owners of 5% or more the CDTG ordinary shares) have agreed to a 12-month lockup period during which they will not sell, transfer or dispose of their shares. Other early shareholders will be subject to a 6-month lockup period.
Growth Potential
The company has growth potential through acquisitions, developing new products and technological innovations. The future growth of CDT depends partly on maintaining its current products in new and existing markets and proving its ability to create new products and technologies to serve such markets.
Risks to Investing in CDTG:
There are many risks to investing in CDTG stock. It is highly speculative, and investors should consider the following factors.
The Chinese government has been controlling individual businesses, particularly foreign listings. It has also indicated intent to increase its oversight and control over such companies. Future action by the Chinese government could hinder its progress.
The company has a limited operating history. There is no assurance that its future operations will result in profitable revenues.
COVID-19 continues to pose a risk to profitability. CDTG's revenues were impacted by COVID-19 and were significantly lower in 2020 compared to the same period of 2019.
Should you invest in CDT Environmental Technology?
The CDTG IPO will help the company raise funds to pay off debt, make additional acquisitions and continue to grow in China.
Sewage treatment is a dull but necessary business, and therefore the opportunity is apparent in a growing industry. However, competitors are large companies with clout.
