F-1/A: TMD Energy Limited Eyes NYSE American Listing with $3.50 IPO Price Target

TMD Energy Limited, a Cayman Islands-based holding company with operations in Malaysia and Singapore, is seeking to list its Ordinary Shares on the NYSE American through an initial public offering.

Summary

• TMD Energy Limited is planning an initial public offering of 3,100,000 Ordinary Shares.
• The expected offering price is between $3.25 and $3.75 per share.
• The company intends to list its Ordinary Shares on the NYSE American under the symbol TMDE.
• TMD Energy Limited operates primarily in Malaysia and Singapore through its operating subsidiaries.
• Following the offering, public shareholders will hold 13.42% of the Ordinary Shares, assuming no exercise of the over-allotment option.
• Straits Energy Resources Berhad will continue to hold a significant portion of the company's shares and voting power after the IPO.
• The company is classified as an emerging growth company and a foreign private issuer, which allows for reduced reporting requirements.
• Maxim Group LLC is the underwriter for the offering.
• The company plans to use 55% of the net proceeds for the purchase of cargo oil, 29% for defraying listing expenses, and 16% for working capital and other general corporate purposes.

Sentiment

Score: 6

Explanation: The document presents a balanced view, highlighting both the opportunities and risks associated with the company and its industry. While the company shows growth potential, it also faces significant challenges and uncertainties.

Positives

• The company has established a strong customer base.
• The company is able to provide integrated services.
• The company has strong management.

Negatives

• Investing in the company's Ordinary Shares is highly speculative and involves a high degree of risk.
• The company will be a controlled company within the meaning of NYSE American rules and may rely on exemptions from certain corporate governance requirements.
• There has been no public market for the company's Ordinary Shares prior to this offering, and you may not be able to resell our Shares at or above the price you pay for them, or at all.

Risks

• The company may not be able to obtain sufficient funds to grow or effectively manage its growth.
• Businesses the company may acquire in the future will expose it to increased operating risks.
• The company may not be able to obtain financing for its growth or to fund its future capital expenditures, which could negatively impact its results of operations and financial condition.
• Due to the lack of diversification in the company's lines of business, adverse developments in the marine fuel supply business would negatively impact its results of operations and financial conditions.
• Because of the limited supply of secondhand double hull bunkering tankers, the company may not be able to acquire secondhand double hull bunkering tankers on economically acceptable terms which could impede its growth and negatively impact its results of operations and financial condition.
• The company's purchase of secondhand vessels carries risks associated with the quality of those vessels because secondhand vessels typically are not protected by builders or sellers warranties.
• The company relies on purchases from key customers and its results of operations will decrease if some of its key customers reduce or terminate their purchases.
• The company's Group does not enter into long-term agreements with its customers and, we cannot assume that our customers will continue to use our vessel refueling services, nor can we accurately forecast future orders from our customers.
• The company depends on a limited number of suppliers, which makes it susceptible to supply shortages or price fluctuations that could diminish its operating results.
• The refined marine fuel that the company purchases from its suppliers may fail to meet the specifications that we have agreed to supply to our customers and, as a result, we could lose business from those customers and be subject to claims or other liabilities.
• Failure by the physical suppliers to provide services to us and our customers as agreed could subject us to customer claims and negatively affect our results.
• The value of our marine fuel inventory is subject to price fluctuations which may result in reduced value of our inventory and cause us to suffer financial loss.
• The company relies on the expertise of its senior management and its inability to retain key personnel could interrupt its business and limit its growth.
• As the company expands its fleet, it may not be able to recruit suitable employees and crew for its tankers which may limit its growth and cause its financial performance to suffer.
• The company's insurance may not provide adequate coverage for all potential loss and claims relating to its business operations and/or assets, and any uninsured losses incurred, may be substantial and therefore adversely affect its operations and financial results.
• Maritime claimants could arrest the company's vessels, which could disrupt its cash flow.
• Terrorist attacks, piracy and international hostilities have previously affected the shipping industry, and any future attacks could negatively impact its results of operations and financial condition.
• Security, political and economic instability in the Middle East may harm the company's business.
• Adverse conditions in the shipping industry may reduce the demand for the company's products and services and negatively affect its results of operations and financial condition.
• Material disruptions in the availability or supply of oil may reduce the supply of our products and have a material impact on our operating results, revenues and costs.
• In the highly competitive marine fuel supply industry, the company may not be able to successfully compete for customers with new entrants or established companies with greater resources.
• The company's operations are subject to extensive environmental laws and regulations, the violation of which could result in liabilities, fines or penalties and changes of which may require increased capital expenditures and other costs necessary to operate and maintain its vessels.
• The company's vessel operations have inherent risks that could negatively impact its results of operations and financial condition.
• The company's historical dividends may not be indicative of its future dividends.
• The company relies on dividends and other distributions on equity paid by its subsidiary to fund any cash and financing requirements it may have, and any limitation on the ability of its subsidiary to make payments to us could have a material adverse effect on our ability to conduct its business.
• There has been no public market for the company's Ordinary Shares prior to this offering, and you may not be able to resell its Shares at or above the price you pay for them, or at all.
• The company will incur increased costs as a result of being a public company, particularly after it ceases to qualify as an emerging growth company.
• If the company fails to meet applicable listing requirements, NYSE American may delist its Ordinary Shares from trading, in which case the liquidity and market price of its Ordinary Shares could decline.
• Volatility in the company's Ordinary Shares price may subject it to securities litigation.
• The price and the trading volume of the company's Ordinary Shares may be volatile which could result in substantial losses for investors purchasing its Shares under this offering.
• The company's pre-IPO shareholders will be able to sell their shares after completion of this offering subject to restrictions under the Rule 144.
• If you purchase the company's Ordinary Shares in this offering, you will incur immediate and substantial dilution in the book value of your shares.
• The company will be a controlled company within the meaning of NYSE American rules and it will qualify for and may rely on exemptions from certain corporate governance requirements.
• The company's management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance its results of operations or the price of its Ordinary Shares.
• The company's disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
• The company does not intend to pay dividends for the foreseeable future.
• Securities analysts may not publish favorable research or reports about the company's business or may publish no information at all, which could cause its share price or trading volume to decline.
• 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 qualifies as a foreign private issuer and, as a result, it will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that permit less detailed and less frequent reporting than that of a U.S. domestic public company.
• If the company loses its status as a foreign private issuer, it would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers.
• As a foreign private issuer, the company is permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from NYSE American corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if the company complied fully with corporate governance listing standards.
• There can be no assurance that the company will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of its Ordinary Shares.
• The company is an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

Future Outlook

The Malaysian economy is expected to improve due to resilient domestic expenditure and a recovery in external demand, with BNM forecasting a 4-5% growth in 2024.

Management Comments

• We are committed to delivering high-quality marine fuel products and reliable bunkering services to meet the specific requirements of our valued customers in the maritime industry.

Industry Context

The global bunkering industry is projected to reach USD 160 billion by 2030, with a compound annual growth rate of 3.9% from 2024 to 2028.

Comparison to Industry Standards

• TMD Energy Limited's revenue of USD 633.08 million for FY2023 represents 0.51% share of the global bunkering industry of USD 124.09 billion.
• TMD Energy Limited's revenue of USD 633.08 million for FY2023 is equivalent to 11.06% share of the OGSE industry in Malaysia of USD 5.72 billion in 2023.
• Competitors include World Fuel Services Corporation and BP Sinopec Marine Fuels Pte Ltd.

Stakeholder Impact

• Shareholders will have a stake in a publicly traded company, but face risks associated with a controlled company structure and potential dilution.
• Employees may benefit from the company's growth and expansion plans.
• Customers can expect continued service and potential diversification of fuel offerings.
• Suppliers may see increased business opportunities as the company expands its operations.
• Creditors face risks associated with the company's debt levels and ability to meet its financial obligations.

Next Steps

• The company intends to list its Ordinary Shares on the NYSE American.
• The company plans to use the net proceeds of this offering as follows: 55% for the purchase of cargo oil; 29% for defraying the listing expenses; the balance of 16% for working capital and other general corporate purposes.

Key Dates