F-1/A: Antharas Inc Eyes U.S. Market with Development Agreement and IPO Filing

Antharas Inc, a Malaysian property developer, files an F-1/A form detailing a development agreement and plans for an initial public offering in the U.S. market.

Summary

• Antharas Inc, a Cayman Islands-based holding company with operations in Malaysia, is preparing for an initial public offering (IPO) in the United States.
• The company conducts its business through Antharas Hills Sdn Bhd, focusing on property development, PropTech, and hospitality.
• A development agreement between Antharas Hills and Pesat Bumi Sdn Bhd outlines the terms for developing land in Bentong, Negeri Pahang, Malaysia, into apartment buildings and commercial units.
• The IPO aims to offer 1,250,000 ordinary shares, with an estimated price range of $4.00 to $5.00 per share, seeking to list on the Nasdaq Capital Market under the symbol AAS.
• The company plans to use the IPO proceeds for land acquisition, technology investments, hospitality acquisitions, and general working capital.
• The document highlights potential risks associated with doing business in China, including regulatory uncertainties and cybersecurity concerns.
• The company believes it is not required to submit an application to the CSRC for the approval of the offering and trading of its Shares.
• The document also mentions the Holding Foreign Companies Accountable Act (HFCA Act) and its potential impact on the company's listing status.
• The company's auditor, UHY Malaysia PLT, is registered with the PCAOB and subject to inspection.
• The document includes financial information, such as revenue, cost of revenue, gross profit, and net income for the years ended December 31, 2022 and 2023, as well as interim data for the six months ended June 30, 2023 and 2024.

Sentiment

Score: 6

Explanation: The document presents a mix of positive and negative information. While there's revenue growth and expansion plans, there are also significant risks and potential challenges, including regulatory hurdles and financial obligations. The sentiment is neutral, reflecting a balanced view of the company's prospects.

Positives

• The company is expanding into PropTech and hospitality, diversifying its revenue streams.
• The company has a franchise agreement with Wyndham Hotels, providing a strong brand partnership.
• The company's management team has experience in real estate development and technology.
• The company's research and development team has experience in product development and team management.
• The company's financial performance shows revenue growth and profitability in recent years.

Negatives

• The company faces potential risks related to doing business in China, including regulatory changes and cybersecurity reviews.
• The company's auditor, UHY Malaysia PLT, is subject to PCAOB inspection, but potential delisting risks exist under the HFCA Act.
• The company is obligated to pay a balance of RM33.5 million (approximately USD7.79 million) for the land underlying Geo Antharas.
• The company may be unable to complete its property development projects on time, or at all.
• The company may be unable to sell its apartment units, which could adversely affect its financial condition, results of operations and cash flow.
• The discrepancy between the contractual 8% interest rate and the actual 6% interest payments to investors of Geo Antharas poses potential financial and legal risks for the Company.

Risks

• The company does not have a long operating history as an integrated group.
• The company participates in a highly competitive market.
• The company may not be successful in expanding into new markets.
• The company may not be able to manage its expected growth.
• The company relies on key relationships with service providers across the real estate development industry.
• The company's ability to complete the Grand Antharas project depends on obtaining additional financing.
• The company may be unable to complete its property development projects on time, or at all.
• The company may be unable to sell its apartment units.
• The company is obligated to pay a balance of RM33.5 million (approximately USD7.79 million) for the land underlying Geo Antharas.
• The company may experience a decline in the fair value of its assets.
• Early termination of the Wyndham Agreement or any change in its terms could harm the company's business.
• Developments in the social, political, regulatory and economic environment in Malaysia may have a material adverse impact on the company.
• The company is subject to foreign exchange control policies in Malaysia.
• The company may be exposed to liabilities under applicable anti-corruption laws.
• Uncertainties with respect to the PRC legal system could result in a material change in the company's operations.
• The PRC government may intervene or influence the company's operations at any time.
• Any actions by the PRC government to exert more oversight and control over offerings that are conducted overseas could significantly limit the company's ability to offer securities.
• Recent joint statements by the SEC and PCAOB call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors.
• The PRC government may intervene or impose restrictions to prevent the cash maintained in PRC from being transferred out.
• The company's results of operations may be materially and adversely affected by a downturn in China or the global economy.
• It may be difficult for overseas shareholders and/or regulators to conduct an investigation in China.
• Changes in international trade policies may dampen growth in China.
• Changes in PRC political, economic and governmental policies may have an adverse impact on the company's business.
• PRC regulation of loans to and direct investment in PRC entities may delay the company from remitting the proceeds of this Offering into PRC.
• The company faces uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
• An active trading market for the company's Ordinary Shares may not develop.
• The initial public offering price for the company's Ordinary Shares may not reflect their actual value.
• Investors in the company's Ordinary Shares will face immediate and substantial dilution in the net tangible book value per share.
• The company may have conflicts of interest with its Major Shareholders.
• The company's Ordinary Shares may trade under $4.00 per share and thus would be known as penny stock.
• If the company fails to meet applicable listing requirements, Nasdaq may delist its Ordinary Shares.
• Investors may have difficulty enforcing judgments against the company, its directors and management.
• The laws of the Cayman Islands relating to the protection of the interest of minority shareholders are different from those in the United States.
• The company is an emerging growth company and may take advantage of certain reduced reporting requirements.
• The company qualifies as a foreign private issuer and will not be subject to U.S. proxy rules.
• There can be no assurance that the company will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes.
• The company has broad discretion in the use of the net proceeds from this Offering and may not use them effectively.

Future Outlook

The company plans to diversify its property portfolio, expand into PropTech and hospitality services in 2025, and pursue disciplined acquisitions and joint ventures to enhance its market presence.

Industry Context

The Malaysian real estate market is expected to grow to USD 47.53 billion by 2028, with a CAGR of 6.64%. The PropTech market in Southeast Asia remains relatively untapped and shows significant potential for growth. The hospitality industry in Malaysia was estimated at USD 4 billion in 2022, with an expected CAGR of over 6.5% from 2023 to 2028.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or comparable companies.
• The document does not provide specific comparisons to global benchmarks.
• The document does not provide specific comparisons to comparable projects.

Related Party Transactions

• The company has secured the total funding sum of RM6.12 million (approximately USD1.3million) from three investors for its development and construction of tower C, one of the three towers of Geo Antharas.
• In November 2018, the company entered into a development agreement with the owner of the piece of land where Geo Antharas is located, pursuant to which the company was granted the right to develop the land.
• The transactions under such development agreement is considered related party transaction.
• The general contractor for the company's Geo Antharas Project was a related party at the time of award.
• PDI Design & Associates (which for the purpose of clarity is a different entity than our subsidiary PDI Design) is majority owned by Dato Dr. Su Cheng Tan, the company's Chief Executive Officer, Chairman of the Board and Director, and one of the company's Major Shareholders.
• The company intends to use part of the proceeds from this Offering to purchase Antharas Villa, the company's potential resort home project in Janda Baik, Malaysia, and Antharas Ipoh, the company's potential hotel project in Ipoh, Malaysia, the acquisition costs of which are estimated to be approximately RM16 million and RM8 million respectively, from one or more companies of which Dato Dr. Su Cheng Tan, the company's Major Shareholder who is also the company's Chief Executive Officer, Chairman of the Board and Director, is a Major Shareholder.

Stakeholder Impact

• Shareholders will be impacted by the potential dilution from the IPO and the company's future performance.
• Employees may be affected by the company's expansion plans and potential changes in operations.
• Customers will benefit from the company's focus on innovative living and technology-driven property management.
• Suppliers and creditors may be impacted by the company's financial performance and ability to meet its obligations.

Next Steps

• The company intends to list the Shares on the Nasdaq Capital Market under the symbol AAS.
• The company plans to roll out PropTech and hospitality services in 2025.
• The company plans to acquire additional properties for its hospitality business.
• The company will seek to create alliances with companies within and outside Malaysia.

Key Dates