F-1/A: OMS Energy Technologies Inc. Files Amendment for IPO, Aiming for Nasdaq Listing

OMS Energy Technologies Inc. is moving forward with its IPO plans, filing an amendment to its registration statement as it seeks a Nasdaq Capital Market listing.

Summary

• OMS Energy Technologies Inc., a Cayman Islands-based holding company, has filed Amendment No. 6 to its Form F-1 registration statement with the SEC.
• The company is planning an initial public offering of 5,555,556 Ordinary Shares, with an anticipated price between US$8.00 and US$10.00 per share.
• The offering is contingent upon listing approval from the Nasdaq Capital Market under the symbol OMSE.
• OMS Energy Technologies Inc. conducts its operations through indirect subsidiaries in Singapore, Malaysia, Brunei, Saudi Arabia, Thailand, and Indonesia.
• Upon completion of the offering, the company's issued and outstanding shares will consist of 44,300,556 Ordinary Shares, with Mr. How Meng Hock owning approximately 59.20% of the total voting power.
• The underwriters have an option to purchase up to an additional 833,333 Ordinary Shares to cover any over-allotments.
• The company is an Emerging Growth Company and a Foreign Private Issuer, which allows for reduced public company reporting requirements.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While revenue and gross margin have increased, net profit has decreased. The company is also heavily reliant on a single customer, Saudi ARAMCO, which presents a customer concentration risk.

Positives

• The company's revenue increased from $58.4 million for the combined six months ended September 30, 2023 to $129.2 million for the six months ended September 30, 2024, representing an increase of $70.8 million or approximately 121.2%.
• The company's gross margin increased from $11.6 million for the combined six months ended September 30, 2023, to $43.4 million for the six months ended September 30, 2024, representing an increase of $31.8 million or an approximate increase of 273.8%.
• The company's revenue increased from $97.5 million for the year ended March 31, 2023, to $181.4 million for the combined year ended March 31, 2024, representing an increase of $83.9 million or approximately 86.2%.
• The company's gross margin increased from $28.0 million for the year ended March 31, 2023, to $49.7 million for the combined year ended March 31, 2024, representing an increase of $21.7 million for an approximate increase of 77.2%.
• The company's net profit for the year increased from $12.4 million for the year ended March 31, 2023, to $81.1 million for the combined year ended March 31, 2024, representing an increase of $68.7 million or approximately 552.7%.

Negatives

• The company's net profit for the period decreased from $54.7 million for the combined six months ended September 30, 2023, to $31.0 million for the six months ended September 30, 2024, representing a decrease of $23.7 million or approximately 43.3%.
• For the six months ended September 30, 2024, Saudi ARAMCO accounted for 71% of the company's total revenue.

Risks

• The company serves customers who are involved in drilling for and production of oil and natural gas, and adverse developments affecting this industry could have a material adverse effect on the company's business, financial condition and results of operations.
• The company's business involves many hazards and operational risks.
• Compliance with and changes in laws could be costly and could affect operating results, and government disruptions could negatively impact the company's ability to conduct its business.
• International governments and agencies continue to evaluate and promulgate legislation and regulations that are focused on reducing GHG emissions, and compliance with GHG emission regulations applicable to the company's or its customers' operations may have significant implications that could adversely affect the company's business and operating results in the fossil-fuel sectors.
• Voluntary initiatives to reduce GHG emissions and an increased climate change awareness may result in increased costs for the oil and gas industry to curb greenhouse gas emissions and could have an adverse impact on demand for oil and natural gas.
• The company's backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of the company's future revenues and earnings.
• The company may lose money on fixed-price contracts.
• The company's customers industries are undergoing continuing consolidation that may impact the company's results of operations.
• Impairment in the carrying value of long-lived assets, inventory and intangible assets could negatively affect the company's operating results.
• The company depends on its customers willingness to undertake drilling and completion spending.
• Conservation measures and technological advances could reduce demand for oil and natural gas.
• The company has operated at a loss in the past, and there is no assurance of the company's profitability in the future.
• The company's business may be adversely affected by a deterioration in general economic conditions or a weakening of the broader energy industry.
• The company may need to obtain additional capital or financing to fund expansion of its asset base, which could increase the company's financial leverage, or the company may not be able to finance its capital needs.
• The company is dependent on a small number of key customers for continued sale of its products and services.
• Shortages or increases in the costs of the equipment the company uses in its operations could adversely affect the company's operations in the future.
• The company is dependent on a small number of suppliers for key goods and services that the company uses in its operations.
• The company's inability to develop, obtain or implement new technology may cause the company to become less competitive.
• The company and its customers are subject to local laws and regulations regarding issues of health, safety, climate change and the protection of the environment, under which the company or its customers may become liable for penalties, damages or costs of remediation or other corrective measures, and changes in such laws or regulations could increase the company's or its customers' costs of doing business and adversely impact the company's business, financial condition and results of operations.
• Delays by the company or its customers in obtaining permits or the inability by the company or its customers to obtain or renew permits could impair the company's business.
• Increased labor costs or the unavailability of skilled workers could hurt the company's business, financial condition and results of operations.
• The company may be unable to retain personnel who are key to the company's operations.
• The company may be unable to implement price increases or maintain existing prices on the company's services.
• The company operates in highly competitive markets and the company's failure to compete effectively may negatively impact the company's business, financial condition and results of operations.
• If the company loses significant customers, significant customers materially reduce their purchase orders or significant programs on which the company relies are delayed, scaled back or eliminated, the company's business, financial condition and results of operations may be adversely affected.
• The company may be unable to effectively and efficiently manage the company's equipment fleet as the company expands its business, which could have an adverse effect on the company's business, financial condition and results of operations.
• Increased leverage could adversely impact the company's business, financial condition and results of operations.
• The company's success may be affected by the company's ability to enter into or renew existing license agreements.
• The company's operations rely on an extensive network of information technology resources and a failure to maintain, upgrade and protect such systems could adversely impact the company's business, financial condition and results of operations, and the company's operations are subject to cyber security risks that could have a material adverse effect on the company's business, financial condition and results of operations.
• The company has been expanding its available products and services, and the company's business may continue to grow at a rapid pace, and the company's inability to properly manage or support this growth may have a material adverse effect on the company's business, financial condition and results of operations.
• The company's assets require capital for maintenance, upgrades and refurbishment, and the company may require capital expenditures for new equipment.
• Competition among oilfield service and equipment providers is affected by each provider's reputation for safety and quality.
• Seasonal and adverse weather conditions adversely affect demand for services and operations.
• The company may be subject to claims for personal injury and property damage or other litigation, which could materially adversely affect the company's business, financial condition and results of operations.
• The company may be affected if the company is found to be in breach of any lease agreements entered into by the company.
• The company is exposed to the credit risks of the company's customers.
• The company's business model has a long cashflow conversion cycle.
• The company's business and operations may be materially and adversely affected in the event of a re-occurrence or a prolonged global pandemic outbreak of COVID-19.
• The company may be affected by an outbreak of other infectious diseases.
• The company is exposed to risks arising from fluctuations of foreign currency exchange rates.
• The company's business is subject to supply chain interruptions.
• The unaudited pro forma condensed combined financial information included in this document may not be indicative of the company's actual financial position or results of operations.
• The company's Indonesian operations are subject to pending regulatory approvals and licenses.
• An active trading market for the company's Ordinary Shares may not be established or, if established, may not continue and the trading price for the company's Ordinary Shares may fluctuate significantly.
• The company may not maintain the listing of the company's Ordinary Shares on the Nasdaq Capital Market which could limit investors ability to make transactions in the company's Ordinary Shares and subject the company to additional trading restrictions.
• The trading price of the company's Ordinary Shares may be volatile, which could result in substantial losses to investors.
• Certain recent initial public offerings of companies with public floats comparable to the anticipated public float of the company's Company have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company, and the company may experience similar volatility, and such volatility, including any stock-run up, may be unrelated to the company's actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of the company's Ordinary Shares.
• If securities or industry analysts do not publish research or reports about the company's business, or if they adversely change their recommendations regarding the company's Ordinary Shares, the market price for the company's Ordinary Shares and trading volume could decline.
• Because the company does not expect to pay dividends in the foreseeable future, you must rely on price appreciation of the company's Ordinary Shares for a return on your investment.
• Short selling may drive down the market price of the company's Ordinary Shares.
• Because the company's initial public offering price per share is substantially higher than the company's net tangible book value per share, you will experience immediate and substantial dilution.
• A significant portion of the company's total outstanding shares are restricted from immediate resale but may be sold into the market in the near future, and this could cause the market price of the company's Ordinary Shares to drop significantly, even if the company's business is doing well.
• You must rely on the judgment of the company's management as to the uses of the net proceeds from this offering, and such uses may not produce income or increase the company's share price.
• If the company is classified as a passive foreign investment company, United States taxpayers who own the company's securities may have adverse United States federal income tax consequences.
• The company's controlling shareholder has substantial influence over the Company, and its interests may not be aligned with the interests of the company's other shareholders, and it could prevent or cause a change of control or other transactions.
• As a controlled company under the rules of the Nasdaq Capital Market Rules, the company may choose to exempt the company from certain corporate governance requirements that could have an adverse effect on the company's public shareholders.
• As a company incorporated in the Cayman Islands, the company is permitted to follow certain home country practices in relation to corporate governance matters in lieu of certain requirements under the Nasdaq corporate governance listing rules, and these practices may afford less protection to shareholders than they would enjoy if the company complied fully with the Nasdaq corporate governance listing standards.
• You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because the company is incorporated under Cayman Islands law.
• Certain judgments obtained against the company by the company's shareholders may not be enforceable.
• The company is an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
• The company is a foreign private issuer within the meaning of the Exchange Act, and as such the company is exempt from certain provisions applicable to United States domestic public companies.
• The company may lose the company's foreign private issuer status in the future, which could result in significant additional costs and expenses to the company.
• The company will incur significantly increased costs and devote substantial management time as a result of the listing of the company's Ordinary Shares on the Nasdaq Capital Market.
• If the company fails to implement and maintain an effective system of internal controls, the company may be unable to accurately report the company's results of operations, meet the company's reporting obligations or prevent fraud, and investor confidence and the market price of the company's shares may be materially and adversely affected.
• There may be potentially adverse impacts on the company's corporate governance because of the indemnification provisions in the company's articles of association pertaining to the company's directors and officers liability.

Future Outlook

The company intends to use the net proceeds from this offering for (i) product research and development, (ii) marketing and sales, (iii) compliance and governance, and (iv) working capital.

Management Comments

• The management team is also comprised of individuals who have over 15 years experience in the upstream oil and gas sector.
• We expect our production facilities will require minimal maintenance capital expenditures on an annual basis, which will enable us to generate strong free cash flow and returns.

Industry Context

The oilfield service and manufacturing industry is tied to fluctuating oil prices, reflecting global supply and demand, impacting profitability and expenditure.

Comparison to Industry Standards

• The company's products have been designed, manufactured and certified with the American Petroleum Standards (API) and International Organization of Standardization (ISO).
• The company primarily competes with Schlumberger, Technip FMC, BakerHughes, OilState Industries, National Oilwell Varco and Dril-Quip for the same pool of potential customers.

Stakeholder Impact

• Investing in our Ordinary Shares is speculative and involves a high degree of risk, including the risk of losing your entire investment.
• As a controlled company under the rules of the Nasdaq Stock Market Rules, we may choose to exempt our Company from certain corporate governance requirements that could have an adverse effect on our public shareholders.

Next Steps

• The company anticipates that the initial public offering price of the Ordinary Shares will be between US$8.00 and US$10.00 per Ordinary Share.
• The company has applied to list its Ordinary Shares on the Nasdaq Capital Market under the symbol OMSE.
• The underwriters expect to deliver the Ordinary Shares to the purchasers against payment on or about [], 2025 through the book-entry facilities of The Depository Trust Company.

Key Dates