F-1/A: Delixy Holdings Eyes Nasdaq Listing with $10 Million IPO

Delixy Holdings Limited, a Cayman Islands-based holding company engaged in oil trading through its Singapore subsidiary, is seeking to raise capital through an initial public offering (IPO) on the Nasdaq Capital Market.

Summary

• Delixy Holdings Limited is planning an initial public offering of its ordinary shares on the Nasdaq Capital Market.
• The company is offering 1,350,000 ordinary shares, while selling shareholders are offering 650,000 ordinary shares.
• The anticipated initial public offering price is between US$4.00 and US$5.00 per ordinary share.
• Delixy Holdings operates through its Singapore-based subsidiary, Delixy Energy Pte. Ltd., focusing on trading crude oil and oil-based products.
• The company intends to use the net proceeds from the offering to expand product offerings, strengthen market position, and for general working capital.
• Mr. Xie, Dongjian will maintain significant control after the offering, owning approximately 56.1% of the voting power.
• The company is registered as an emerging growth company and a foreign private issuer, which allows for reduced reporting requirements.

Sentiment

Score: 6

Explanation: The document presents a balanced view, outlining both the company's strengths and the risks associated with investing in its Ordinary Shares. The financial performance data is mixed, with revenue decreases in some periods but increases in others. The document also includes forward-looking statements, which are inherently uncertain.

Positives

• The company has an experienced management team with strong relationships across the value chain.
• Delixy has robust risk management and internal controls capabilities.
• The company is strategically located in Singapore, a key trading hub.
• Delixy has the financial capability to provide customers with financing alternatives and credit terms.
• The company trades in a diversified portfolio of oil products.

Negatives

• The company is dependent on suppliers for the supply of crude oil and oil-based products.
• A significant portion of revenue is attributable to the sale of crude oil.
• Delixy does not enter into long-term agreements with customers.
• The company is dependent on a small number of key customers.
• Delixy is reliant on customers and suppliers located within the Peoples Republic of China (PRC).

Risks

• The company may not maintain the listing of its Ordinary Shares on the Nasdaq Capital Market.
• An active trading market for the Ordinary Shares may not be established.
• The trading price of the Ordinary Shares may be volatile.
• The sale or availability for sale of substantial amounts of Ordinary Shares could adversely affect the market price.
• Purchasers will experience immediate and substantial dilution.
• The company may be classified as a passive foreign investment company.
• The company may rely on exemptions from certain corporate governance requirements as a controlled company.
• Mr. Xie will continue to have significant influence over the company after the offering.
• The company is permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq Capital Market corporate governance listing standards.
• Shareholders may face difficulties in protecting their interests because the company is incorporated under Cayman Islands law.
• The company is an emerging growth company and a foreign private issuer and may take advantage of certain reduced reporting requirements.
• The company will incur significantly increased costs and devote substantial management time as a result of the listing of its Ordinary Shares on the Nasdaq Capital Market.

Future Outlook

The company aims to foster growth and strengthen its market position through strategies such as expanding the trading team and diversifying into other oil-related products like LNG and LPG.

Industry Context

The document provides an overview of the crude oil and petroleum products trading market in Singapore and the APAC region, highlighting market size, drivers, trends, and competition, indicating Delixy's position within this industry landscape.

Comparison to Industry Standards

• The document mentions that Singapore has a total crude oil refining capacity of 1.5 million barrels per day (bbl/d).
• It also notes that Singapore is the market leader for high-end floating production, storage and offloading conversions and jack-up rigs, as well as the regional headquarter for most of the key players in the industry.
• The Group is the fifth largest Singapore-based crude oil and petroleum products trading company in 2023, with a revenue of USD289.4 million.

Related Party Transactions

• The amount due from shareholder, Mega Origin, is US$1,411,000 and nil as of December 31, 2022 and 2023 respectively.
• The amount due from shareholder, Mega Origin, was fully offset by interim dividend declared and paid.
• Amount due to shareholder, Mega Origin, is nil and US$99,000 as of December 31, 2023 and June 30, 2024 respectively.
• The amount represents interest payable of loan from shareholder and payments made by the shareholder on behalf of the Company during the financial years.
• The amounts are non-trade in nature, unsecured, interest-free and not repayable on demand.
• Interest expenses are charged on new loan from shareholder with simple annual interests charged at 3.5% per annum.
• On January 1, 2024, Delixy Energy entered into a loan agreement with Mega Origin.
• The loan quantum is US$5,000,000 with simple annual interests charged at 3.5% per annum.
• The loan is for a period of two years and not repayable upon demand, save upon the request by Delixy Energy, whichever earlier.
• On May 28, 2024, Delixy Energy declared a dividend of US$1.00 per share.
• The dividend amount of US$1,000,000 was recorded as distributed and payable to Mega Origin.
• To rationalize the operations of our Group in anticipation of our listing, on June 28, 2024, Delixy sold a property at 883 North Bridge Road #04-01, Southbank, Singapore 198785 (the Property) to Wisecome Oil Pte.
• Ltd. for a consideration of S$1,300,000 pursuant to a sale and purchase agreement dated June 28, 2024.
• The consideration for the disposal of the Property was based on the fair value of the Property as determined by an external, independent and qualified valuer undertaken on May 8, 2024.

Stakeholder Impact

• Shareholders will be impacted by the potential volatility of the share price and the dilution of their ownership.
• Employees may be impacted by the company's growth strategies and potential changes in operations.
• Customers and suppliers may be impacted by the company's efforts to expand its product offerings and strengthen its market position.

Next Steps

• The company intends to list its Ordinary Shares on the Nasdaq Capital Market.
• The company plans to expand its trading team by hiring market researchers and traders.
• Delixy plans to leverage its existing trading expertise and expand its product offering range beyond crude oil and oil-based products to include other oil related products, such as liquefied natural gas (LNG) and liquefied petroleum gas (LPG).
• The company also plans to explore opportunities to diversify and expand its business and operations through internal development, as well as by collaborating with suitable partners through strategic acquisitions and business cooperations, including joint ventures and/or strategic alliances.

Key Dates

Keywords

IPO, initial public offering, ordinary shares, oil trading, Delixy Holdings, Nasdaq, crude oil, oil-based products, Singapore, trading