As filed with the Securities and Exchange Commission on December 10, 2024.

Registration Statement No. 333-                   

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

TMD Energy Limited

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

B-10-06, Block B, Plaza Mont Kiara

No. 2, Jalan Kiara, Mont Kiara

50480 Kuala Lumpur

Wilayah Persekutuan, West Malaysia

+603 – 6419 1266
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

Tel: (212) 947-7200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act: Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Ordinary Shares

TMD Energy Limited

We are offering 3,100,000 ordinary shares, par value $0.0001 per share (“Ordinary Shares”). This is the initial public offering of Ordinary Shares of TMD Energy Limited (our “Company”). The offering price of our Ordinary Shares in this offering is expected to be between $3.25 and $3.75 per share. Prior to this offering, there has been no public market for our Ordinary Shares.

We intend to apply to list our Ordinary Shares on the NYSE American under the symbol “TMDE”. There is no assurance that such application will be approved, and if our application is not approved; however, we will not complete this offering unless we are so listed.

Our Company is a holding company incorporated in the Cayman Islands. As a holding company with no material operations of our own, we conduct our operations mainly in Malaysia and Singapore, through our operating subsidiaries, including Straits Marine Fuels & Energy Sdn. Bhd., Straits Marine Services Pte. Ltd., Straits Maritime Services Pte. Ltd., Tumpuan Megah Development Sdn. Bhd., TMD Marine Fuels Sdn. Bhd., Cavalla Asia Ltd., Dolphin Asia Ltd., Escolar Asia Ltd., Oscar Asia Ltd., Phoenix Asia Ltd., S3 Asia Ltd., TMD Straits Ltd., TMD Sturgeon Ltd., SMF Begonia Ltd., SMF Ixora Ltd., SMF Omura Ltd., SMF Eden Maritime Ltd., SMF Beluga Ltd., Sierra Pioneer Marine Ltd. and Katsu Pioneer Marine Ltd. (the “Operating Subsidiaries”).

This is an offering of the Ordinary Shares of our Company, the holding company in the Cayman Islands, instead of shares of our Operating Subsidiaries. You may never directly hold any equity interest in our Operating Subsidiaries. We are offering 3,100,000 Ordinary Shares, representing 13.42% of the Ordinary Shares following completion of the offering of our Company. Following the offering, 3,100,000 Ordinary Shares, representing 13.42% of the Ordinary Shares will be held by public shareholders, assuming the underwriters do not exercise their over-allotment option.

Following the completion of this offering, we will be a “controlled company” within the meaning of the NYSE American Company Guide and may rely on exemptions from certain corporate governance requirements. As at the date of this prospectus, 76.68% of the issued share capital of the Company is owned by Straits Energy Resources Berhad. Straits Energy Resources Berhad therefore beneficially owns 76.68% of our total voting power as at the date of this prospectus. Following completion of this offering, 66.39% of the issued share capital of the Company will be owned by Straits Energy Resources Berhad, which will beneficially own 66.39% of our total voting power. Dato’ Sri Kam Choy Ho, the Chairman of the board of directors and the Chief Executive Officer of our Company, is also the Group Managing Director of Straits Energy Resources Berhad (“Straits”), and that three other director nominees of our Company, namely Dato’ Leong Yan Yoong (An Executive Director in Straits), Datin Fong Shiang Ng (An Independent Non-Executive Director of Straits) and Mr. Kok Chaw Leong (An Independent Non-Executive Director of Straits), are also directors of Straits, and Mr. Chee Mun Hoh, the Chief Financial Officer of our Company, is also the Group Chief Financial Officer cum General Manager of Straits. See “Management — Controlled Company Exception”.

Investing in our Ordinary Shares is highly speculative and involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our Ordinary Shares in “Risk Factors” beginning on page 11 of this prospectus.

We are an “emerging growth company” as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company and a Foreign Private Issuer” for additional information.

Neither the U.S. Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

(1) For a description of the compensation to be received by the underwriters, see “Underwriting” beginning on page 142.

We expect our total cash expenses for this offering (including cash expenses payable to our underwriters for their out-of-pocket expenses) to be approximately $        , exclusive of the above discounts. In addition, we will pay additional items of value in connection with this offering that are viewed by the Financial Industry Regulatory Authority, or FINRA, as underwriting compensation. These payments will further reduce proceeds available to us before expenses. See “Underwriting”.

This offering is being conducted on a firm commitment basis. The underwriters are obligated to take and pay for all of the shares if any such shares are not taken. We have granted the underwriters an option for a period of forty-five (45) days after the closing of this offering to purchase up to 15% of the total number of our Ordinary Shares to be offered by us pursuant to this offering (excluding shares subject to this option), solely for the purpose of covering over-allotments, at the initial public offering price less the underwriting discounts. If the underwriters exercise the option in full, the total underwriting discounts payable will be $        based on an assumed initial public offering price of $3.50 per ordinary share (the midpoint of the price range set forth on the cover page of this prospectus), and the total gross proceeds to us, before underwriting discounts and expenses, will be $        .. If we complete this offering, net proceeds will be delivered to us on the closing date.

The underwriters expect to deliver the Ordinary Shares against payment as set forth under “Underwriting”, on or about         , 2024.

Maxim Group LLC

The date of this prospectus is         , 2024.

TABLE OF CONTENTS

We are responsible for the information contained in this prospectus and any free writing prospectus we prepare or authorize. We have not, and the underwriters have not, authorized anyone to provide you with different information, and we and the underwriters take no responsibility for any other information others may give you. We are not, and the underwriters are not, making an offer to sell our Ordinary Shares in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or the sale of any Ordinary Shares.

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Ordinary Shares and the distribution of this prospectus outside the United States.

Our Company is incorporated under the laws of the Cayman Islands and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission, or the SEC, we currently qualify for treatment as a “foreign private issuer”. As a foreign private issuer, we will not be required to file periodic reports and financial statements with the Securities and Exchange Commission, or the SEC, as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Until and including         , 2024 (twenty-five (25) days after the date of this prospectus), all dealers that buy, sell or trade our Ordinary Shares, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

CONVENTIONS THAT APPLY TO THIS PROSPECTUS

Unless otherwise indicated or the context otherwise requires, all references in this prospectus to:

We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their over-allotment option.

The functional currency of our entities located in Malaysia (save for Labuan) is RM, the functional currency of our entities located in Labuan is USD and the functional currency of our entities located in Singapore is SGD. Our consolidated financial statements are presented in USD. We use USD as reporting currency in our consolidated financial statements and in this prospectus. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the period. Gains or losses resulting from foreign currency transactions are included in the accompanying consolidated statement of income and other comprehensive income.

Translations of balances in the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows from RM and SGD into USD as of and for FY2022, FY2023, 6M2023 and 6M2024 are solely for the convenience of the reader. The translations of balances in the consolidated balance sheets from RM and SGD into USD as of December 31, 2022 were calculated at the rate of RM 1.00 to USD 0.2262 and SGD 1.00 to USD 0.7443 respectively, while that of December 31, 2023 were calculated at the rate of RM 1.00 to USD 0.2172 and SGD 1.00 to USD 0.7577 respectively. The translations of balances in the consolidated balance sheets from RM and SGD into USD as of June 30, 2023 were calculated at the rate of RM 1.00 to USD 0.2142 and SGD 1.00 to USD 0.7374 respectively, while that of June 30, 2024 were calculated at the rate of RM 1.00 to USD 0.2121 and SGD 1.00 to USD 0.7382 respectively.

The translations of balances in the consolidated statements of income and consolidated statements of cash flow from RM and SGD into USD for FY2022 were calculated at the rate of RM 1.00 to USD 0.2274 and SGD 1.00 to USD 0.7253 respectively, while that for FY2023 were calculated at the rate of RM 1.00 to USD 0.2194 and SGD 1.00 to USD 0.7447 respectively. The translations of balances in the consolidated statements of income and consolidated statements of cash flow from RM and SGD into USD for 6M2023 were calculated at the rate of RM 1.00 to USD 0.2245 and SGD 1.00 to USD 0.7486 respectively, while that for 6M2024 were calculated at the rate of RM 1.00 to USD 0.2118 and SGD 1.00 to USD 0.7486 respectively.

No representation is made that the RM and SGD amounts represent or could have been, or could be, converted, realized or settled into USD at that rate, or at any other rate.

PROSPECTUS SUMMARY

The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our Ordinary Shares. You should read the entire prospectus carefully, including “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and our consolidated financial statements and the related notes thereto, in each case included in this prospectus. You should carefully consider, among other things, the matters discussed in the section of this prospectus titled “Business” before making an investment decision.

Overview

We are principally involved in marine fuel bunkering services specializing in the supply and marketing of marine gas oil and marine fuel oil which include high sulfur fuel oil, low sulfur fuel oil and very low sulfur fuel oil, to ships and vessels at sea. We are also involved in the provision of ship management services for in-house and external vessels, as well as vessel chartering.

For our bunkering services, we provide offshore bunkering services which involve STS transfer of marine fuels. We operate in 19 ports across Malaysia, and we operate under a fleet of 15 bunkering vessels to provide STS transfer of marine fuels. The marine fuel we provide to our customers is procured from our suppliers including energy companies, national oil companies, oil traders and oil refineries.

We are currently operating with 15 well-maintained bunkering vessels ranging from 540 dwt to 7,820 dwt, of which nine (9) are double bottom and double hull vessels with an average cargo-carrying capacity of approximately 4,200 dwt each. Our comprehensive range of bunkering services caters to various types of seafaring vessels, including container vessels, oil tankers, cruise ships, and accommodation work barges such as floating production storage and offloading units and floating storage and offloading units, supply and support vessels such as platform supply vessels and research vessels. Additionally, we provide fueling services to offshore structures such as semi-submersible rigs, jack-up rigs and drillships.

Our customer base is diverse and includes oil and gas companies, shipping companies, maritime transport and logistics companies, charterers, fishing vessels, naval and military vessels, as well as passenger transport vehicles such as cruise ships. 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.

Our supporting services include ship management services for in-house and external vessels whereby we will undertake operational management, technical management, and crewing for the vessel. Additionally, we also carry out vessel chartering services in-house and provide the services to external parties. We will also charter our vessels to our subsidiaries based on its requirements.

To ensure reliable and timely fuel delivery, we utilize our fleet of bunkering vessels exclusively for our own physical delivery operations. We do not typically charter them out to external parties. This level of control allows us to maintain a high degree of oversight and optimize our operations to meet the specific demands of our customers. The management of our technical ship operations is conducted in-house, which enables us to uphold our standards of customer service. By managing these operations internally, we can ensure that our vessels are well-maintained and operated to the highest standards.

Our Competitive Strengths

We believe the following competitive strengths differentiate us from our competitors:

Our Strategies

We intend to pursue the following strategies to further expand our business:

Our Corporate History

The history of our Group’s involvement in the OGSE industry can be traced back to 2016, when its ultimate holding company, Straits Energy Resources Berhad (previously known as Raya International Berhad (“RIB”)) ventured into the provision of oil bunkering services. Since then, RIB had on June 20, 2017 changed its name to Straits Inter Logistics Berhad and subsequently to its current name, Straits Energy Resources Berhad, on August 19, 2021.

Currently, our Group is operating with a fleet of 15 well-maintained bunkering vessels and is currently providing bunkering services. We operate in 19 ports in Malaysia, including Lumut Port, Penang Port, Port Klang, Malacca Port, Linggi Port, Johor Port, Port of Tanjung Pelepas, Tok Bali Port, Kuala Terengganu Port, Dungun Port, Kemaman Port, Kuantan Port, Pulau Tioman Port, Desaru Port, Bintulu Port, Miri Port, Labuan Port, Kota Kinabalu Port and Sapangar Bay Oil Terminal.

The subsidiaries of our Group are the subsidiaries of Straits under the latter’s bunkering and shipping related services segment. Straits is a Malaysia company whose shares are listed on the ACE Market of Bursa Malaysia (stock code: 0080) and is subject to the ACE Market Listing Requirements issued by Bursa Malaysia which includes but not limited to requirements governing corporate governance and transfer of shares by Straits and its subsidiaries. Certain of these requirements may extend to the subsidiaries of Straits, including our Group. In contemplation of Straits’ intention to reorganize its oil bunkering and shipping related services segment for listing on NYSE American via common control transactions, Straits had on November 21, 2023 acquired our Company to initiate its restructuring exercise which involve the acquisition of oil bunkering, vessels chartering and vessels management subsidiaries from the Straits Group.

Our Corporate Structure

The following diagram illustrates our corporate structure upon completion of the restructuring exercise and prior to the consummation of this offering.

Transfers of Cash to and From Our Subsidiary

Our Company is permitted under the laws of the Cayman Islands to provide funding to our subsidiaries through loans or capital contributions without restrictions on the amount of the funds.

Malaysian subsidiaries are permitted to obtain funding through an increase of share capital pursuant to a capital contribution subject to and in accordance with their respective constitution and the Malaysia Companies Act. Our Company is also permitted under the laws of Malaysia to borrow from or lend to our Malaysian resident subsidiaries in RM in any amount to finance the following activities in Malaysia:

Our Company is also allowed to borrow in currency other than RM from our Malaysian resident subsidiaries up to RM50 million equivalent per calendar year using funds sourced from the aggregate of conversion of RM into other currency. There is no restriction on our Company under Malaysian laws to borrow from or lend to our Labuan incorporated subsidiaries or for our Malaysian resident subsidiaries to borrow from our Company in currency other than RM.

The Singapore subsidiaries can obtain funding through an increase in share capital pursuant to a capital contribution or loans from shareholders or other companies within the Group subject to and in accordance with their respective constitution and the Singapore Companies Act. The Singapore subsidiaries can also provide funding in the same manner to other Group Companies. In addition, funds within the Group may also flow through the Singapore subsidiaries in the form of service fees and recharges, subject always to the authority granted to the Singapore subsidiary to enter into such transactions under its constitution.

We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our Board after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors our Board deems relevant, and subject to the restrictions contained in any future financing instruments.

Subject to the Cayman Islands laws and our articles of association as may be amended from time to time, our Company may only pay dividends out of profits or share premium and, our Board may authorize and declare a dividend to shareholders at such time and of such an amount as they think fit if they are satisfied, on reasonable grounds, that immediately following payment of the dividend we will be able to pay our debts as they become due in the ordinary course of business. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our Board. There is no further Cayman Islands statutory restriction on the amount of funds which may be distributed by us by dividend.

For FY2022, FY2023, 6M2023, 6M2024 and up to the date of this prospectus, we did not declare or pay any dividends. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our subsidiary by way of dividend payments.

See “Dividend Policy”, “Risk Factors — We rely on dividends and other distributions on equity paid by our subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business.”. Please refer to Summary Consolidated Financial Data and Consolidated Statements of Change in Shareholders’ Equity in the Report of Independent Registered Public Accounting Firm for more information.

Risks Related to Our Business and Industry (beginning on page 11 of this prospectus)

Risks Related to Our Corporate Structure (beginning on page 18 of this prospectus)

Risks Related to our Ordinary Shares (beginning on page 18 of this prospectus)

Implications of Being an Emerging Growth Company and a Foreign Private Issuer

As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012, and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first sale of our Ordinary Shares pursuant to this offering. However, if certain events occur before the end of such five-year period, including if we become a “large accelerated filer”, our annual gross revenues exceed $1.235 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company before the end of such five-year period.

In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards and acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act.

We are a “foreign private issuer”, as defined by the SEC. As a result, in accordance with the rules and regulations of the NYSE American, we may comply with home country governance requirements and certain exemptions thereunder rather than complying with NYSE American corporate governance standards. We may choose to take advantage of the following exemptions afforded to foreign private issuers:

If we rely on our home country corporate governance practices in lieu of certain of the rules of the NYSE American, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE American. If we choose to do so, we may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.

Although we are permitted to follow certain corporate governance rules that conform to the Cayman Islands requirements in lieu of many of the NYSE American corporate governance rules, we intend to comply with the NYSE American corporate governance rules applicable to foreign private issuers.

Implication of Being a Controlled Company

We are and will continue, following this offering, to be a “controlled company” within the meaning of the NYSE American Company Manual and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

We are, and will remain, a “controlled company” as defined under the NYSE American Company Guide. As at the date of this prospectus, 76.68% of the issued share capital of the Company is owned by Straits. Straits therefore beneficially owns 76.68% of our total voting power as at the date of this prospectus. Following completion of this offering, 66.39% of the issued share capital of the Company will be owned by Straits, which will beneficially own 66.39% of our total voting power. Dato’ Sri Kam Choy Ho, the Chairman of our Board and the Chief Executive Officer of our Company, is also the Group Managing Director of Straits, and that three other Director nominees, namely Dato’ Leong Yan Yoong (An Executive Director of Straits) , Datin Fong Shiang Ng (An Independent Non-Executive Director of Straits) and Mr. Kok Chaw Leong (An Independent Non-Executive Director of Straits), are also directors of Straits, and Mr. Chee Mun Hoh, the Chief Financial Officer of our Company, is also the Group Chief Financial Officer cum General Manager of Straits.

For so long as we are a controlled company, we are permitted to elect not to comply with certain stock exchange rules regarding corporate governance, including the following requirements:

As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

Although we do not intend to rely on the “controlled company” exemption under the NYSE American listing rules, we could elect to rely on this exemption after we complete this offering. If we elected to rely on the “controlled company” exemption, a majority of the members of our Board might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors after we complete this offering. (See “Risk Factors — Risks Related to Our Ordinary Shares — We will be a “controlled company” within the meaning of the NYSE American Company Guide and we will qualify for and may rely on exemptions from certain corporate governance requirements.”)

Corporate Information

Our principal executive office is located B-10-06, Block B, Plaza Mont Kiara, No 2, Jalan Kiara, Mont Kiara, 50480 Kuala Lumpur, Wilayah Persekutuan, West Malaysia. Our telephone number is (+603) 6419 1266. Our registered office in the Cayman Islands is located at the office of Ogier Global (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9009, Cayman Island.

Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY10168. Our website is located at www.tmdel.com. Information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus.

The Offering⁽¹⁾

Unless otherwise indicated, all information contained in this prospectus assumes no exercise of the underwriters’ over-allotment option and is based on 20,000,000 Ordinary Shares outstanding as of the date of this prospectus.

RISK FACTORS

An investment in our Ordinary Shares involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this prospectus, before deciding to invest in our Ordinary Shares. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our Ordinary Shares could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

We may not be able to obtain sufficient funds to grow or effectively manage our growth.

A principal focus of our strategy is to grow by expanding our business. Our future growth will depend on a number of factors which include our ability to:

A deficiency in any of these factors may negatively impact our ability to generate cash flow, raise money or effectively manage our growth. In addition, competition from other companies could reduce our expansion or acquisition opportunities, cause us to lose business opportunities, competitive advantages or customers or cause us to pay higher or charge lower prices than we might otherwise pay or charge. Furthermore, competitive conditions in the markets that we may consider for future expansion may be more adverse to us than those markets that we currently have presence and any new markets that we open may be less profitable than our existing markets.

Businesses we may acquire in the future will expose us to increased operating risks.

As part of our growth strategy, we intend to explore acquisition opportunities of marine fuel supply and complementary businesses. This expansion could expose us to additional business and operating risks and uncertainties, including:

Although our management will endeavor to evaluate the risks inherent in any particular transaction, we cannot assure you that we will properly ascertain all such risks. In addition, future acquisitions could result in the incurrence of substantial additional indebtedness and other expenses. Future acquisitions may also result in potentially dilutive issuances of equity securities and may affect the market price of our common shares. Difficulties encountered with acquisitions may have a material adverse effect on our business, financial condition and results of operations.

As at the date of this prospectus, no such acquisitions have been planned.

We may not be able to obtain financing for our growth or to fund our future capital expenditures, which could negatively impact our results of operations and financial condition.

In order to fund future vessel acquisitions for market expansion, products expansion, increased working capital levels or capital expenditures, we will be required to use cash from operations, incur borrowings or raise capital through the sale of debt or additional equity securities. Use of cash from operations will reduce cash available for dividend distributions to you. Our ability to obtain additional bank financing or to access the capital markets for any future offerings may be limited by our financial condition at the time of any such financing or offering, as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for future vessel acquisitions, market and products expansion or capital expenditures could impact our results of operations and financial condition. The issuance of additional equity securities would dilute your interest in our Company and reduce dividends payable to you. Even if we are successful in obtaining additional bank financing, paying debt service would limit cash available for working capital and increasing our indebtedness could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Due to the lack of diversification in our lines of business, adverse developments in the marine fuel supply business would negatively impact our results of operations and financial condition.

We rely primarily on the revenues generated from our business of physical supply and marketing of refined marine fuel to end customers. Due to the lack of diversification in our lines of business, an adverse development in our marine fuel supply business would have a significant impact on our business, financial condition and results of operations.

Because of the limited supply of secondhand double hull double bottom bunkering tankers, we may not be able to acquire secondhand double hull double bottom bunkering tankers on economically acceptable terms which could impede our growth and negatively impact our results of operations and financial condition.

Our ability to grow is in part dependent on our ability to expand our fleet through acquisitions of suitable double hull double bottom secondhand bunkering tankers. We believe that the availability of secondhand double hull double bottom bunkering tankers in the open market is limited. We may not be able to obtain suitable secondhand tankers or negotiate acceptable purchase contracts with their owners or obtain financing for such acquisitions on economically acceptable terms. Our failure to obtain and acquire suitable secondhand double hull double bottom bunkering tankers could limit the future growth of our business and have a material impact on our results of operations and financial condition.

As at the date of this prospectus, we do not have any plan to acquire additional double hull double bottom secondhand bunkering tankers.

Our 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.

Our fleet renewal and expansion strategy includes the acquisition of secondhand vessels. As at the date of this prospectus, we are operating with 15 well-maintained secondhand bunkering vessels which typically do not carry warranties with respect to their condition. Our inspections of secondhand vessels would normally not provide us with as much knowledge of its condition as we would possess if the vessel had been built for us and operated by us throughout its life. Repairs and maintenance costs for secondhand vessels are difficult to predict and may be more substantial than for vessels we have operated since they were built. These costs could decrease our profits and reduce our liquidity.

As at the date of this prospectus, we do not have any plan to acquire additional secondhand vessels.

We rely on purchases from key customers and our results of operations may decrease if some of our key customers reduce or terminate their purchases.

Generally, we have not derived a significant amount of revenue from written volume commitments from our key customers or any other understandings with our key customers that relate to future purchases. Purchases by our key customers could be reduced or terminated at any time. A substantial reduction or a termination of purchases by our key customer could significantly decrease our results of operation.

Our Group does not enter into long-term agreements with our 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.

Our Group does not enter into long-term agreements with our customers. Our customers are not obliged to continue to use our vessel refueling services at a level similar to that in the past or at all. The volume of their orders might vary significantly and it is difficult for us to forecast future orders accurately. Our customers’ level of demand may fluctuate due to factors out of our control, such as changes in their business strategies, purchasing preferences and product trends. If any of our major customers terminates its business relationship with us, and we fail to secure new customers or new orders from other existing customers in a timely manner, our business operations, financial performance and profitability would be adversely affected.

We depend on a limited number of suppliers, which makes us susceptible to supply shortages or price fluctuations that could diminish our operating results.

We currently purchase refined marine fuel products from a limited number of suppliers. For FY2022, FY2023, 6M2023 and 6M2024, we purchased marine fuel products from 16, 18, 14 and 12 suppliers, respectively. In particular, the percentage of our total purchases from our largest supplier for FY2022, FY2023, 6M2023 and 6M2024 amounted to approximately 55%, 47%, 40% and 83%, respectively, while the percentage of our aggregated purchases from our five largest suppliers for FY2022, FY2023, 6M2023 and 6M2024 amounted to approximately 94%, 96%, 79% and 94%, respectively. Our term contracts with our suppliers usually last for 3 months.

If our relationship with any of our other key suppliers terminates or if any of our key suppliers suffers a disruption in production, we may not be able to obtain a sufficient quantity of refined marine fuel on acceptable terms and without interruption in our business. We may experience difficulties and delays in obtaining marine fuel from alternative sources of supply. Any interruption or delay in the supply of marine fuel, or the inability to obtain fuel from alternate sources at acceptable prices and within a reasonable amount of time, would impair our ability to meet scheduled deliveries to our customers and could cause customers to cancel orders or impose penalties.

The refined marine fuel that we purchase from our 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.

If the refined marine fuel that we purchase from our suppliers fails to meet the specifications we have agreed to supply to our customers, we could lose our customers and be subject to claims or other liabilities. The loss of customers and increased liabilities would reduce our earnings and could have a material adverse effect on our business, weaken our financial condition and reduce our results of operations.

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.

We purchase from the physical suppliers to deliver marine fuel to our customers in locations where we do not have physical presence. The failure of the physical supplier to perform these services in accordance with the terms we have agreed with them and our customers could affect our relationships with our customers and subject us to claims and other liabilities which could harm our business or negatively affect our financial results. If any of the physical suppliers fails to perform its obligations to us, you will not have any recourse directly against the physical suppliers.

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.

Due to the nature of our business, we may increase the volume of our marine fuel inventories. Depending upon the price and price movement of refined marine fuel, our marine fuel inventories may subject us to a risk of financial loss. Pricing terms with our suppliers and customers and hedges by way of oil futures or other instruments, should we enter into them, may not adequately protect us in the event of a substantial downward movement in the price of marine fuel.

We are exposed to inventory risk and this would adversely affect our Group’s business, financial condition and results of operations.

Our inventories are subject to global economic and political factors that will affect the oil price movements that may not be favourable to our Company and may impact our financial results. However, we are mitigated as our inventories are delivered to our customers within a short turnaround period.

Even though we have entered into contracts with our suppliers, such contracts are not related to any of our contracts with our customers, and as such there is no guarantee that any marine fuel purchased under such contracts with our suppliers will be sold to our designated customers. If we are unable to consume sufficient marine fuel from our suppliers to meet the base quantity under contracts with our suppliers, our suppliers have the right to file a claim against us, which, in turn, will adversely affect our business, financial condition and results of operations.

In addition, in the event that the marine fuel supplied to our customers is not up to the standard specified by our customers, our customers will seek compensation from us, which, in turn, will adversely affect our business, financial condition and results of operations

We rely on the expertise of our senior management and our inability to retain key personnel could interrupt our business and limit our growth.

Our success depends to a significant degree upon the abilities and efforts of our management team and our ability to hire and retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining key personnel could negatively impact our results of operations and financial condition. We believe that Dato’ Sri Kam Choy Ho and Dato’ Leong Yan Yoong (an executive Director nominee) are important members of our Board and Dato’ Sri Kam Choy Ho, Dato’ Leong Yan Yoong and Mr. Chee Mun Hoh are important members of our proposed management team and that the loss of the services or involvement in our business on the part of either one of them would have a material adverse effect on our Company.

As we expand our fleet, we may not be able to recruit suitable employees and crew for our tankers which may limit our growth and cause our financial performance to suffer.

As we expand our fleet, we will need to recruit suitable crew, shoreside, administrative and management personnel. We may not be able to continue to hire suitable employees as we expand our fleet of tankers. If we are unable to recruit suitable employees and crews, we may not be able to provide our services to customers, our growth may be limited and our financial performance may suffer.

We may be subject to demurrage charges which will negatively impact our results of operations and financial condition.

Despite our efforts to closely monitor and manage our logistics operations, there remains an inherent risk of incurring demurrage charge. Demurrage charges arise when there are delays in the loading or unloading or cargo from a vessel within an agreed timeframe. While we strive to ensure that cargo is handled efficiently and in adherence with the agreed timeframe, we cannot assure you that we will completely eliminate the risk of demurrage charge. There are various factors that are beyond our control, such as equipment malfunctions, labor dispute, adverse weather conditions and port congestion. If we are unable to load or upload our cargo timely, we will be subject to demurrage charges, which will negatively impact our results of operations and financial condition.

We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on our results of operations.

We may be, from time to time, involved in disputes with and subject to claims from, among others, our employees, customers, suppliers and other parties from time to time in respect of various matters, including delay in delivery, complaints about the quality of marine fuel and personal injury which may lead to claims for damages against us. These disputes may include, among other things, contract disputes, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business.

There is no assurance that we may be able to resolve every instance of a dispute by way of negotiation and/or mediation with the relevant parties. If we fail to do so, it may lead to legal and other proceedings against us, and consequently we may have to incur significant expenses for defending ourselves or initiate proceedings against other parties to protect our interest. Contingent liabilities may be recognized in our financial statements in respect of the disputes and adjustment will be made to our revenue which may have a material adverse effect on our results of operations. Furthermore, if we fail to obtain favorable outcomes in such proceedings, we may be liable to pay significant amounts of damages which may adversely affect our operations and financial results.

Our insurance may not provide adequate coverage for all potential loss and claims relating to our business operations and/or assets, and any uninsured losses incurred, may be substantial and therefore adversely affect our operations and financial results.

We maintain insurance coverage against, among other things, hull and machinery insurance, protection and indemnity insurance, cargo insurance, general liability insurance, work injury compensation insurance, and group personal accident insurance and group health plan insurance (group hospitalization and surgical coverage). However, our insurance coverage may not adequately protect us against all potential claims, damages and liabilities that we may incur in the course of our business operations, which may result in an adverse effect on our business. If we are held responsible for any damages, liabilities or losses and our insurance is insufficient or unavailable to cover the claims, there would be an adverse effect on our business, results of operations and financial position.

In addition, there is no guarantee that insurance coverage will always be available to us at economically favorable premiums (or at all) or that, in the event of a claim, the level of insurance currently maintained by us or in the future is or will be adequate or cover the entire claim/liability. We may be subject to liabilities which have not been insured adequately at all. Any uninsured risks may result in substantial costs and the diversion of resources, which could adversely affect our results of operations and financial condition.

With respect to losses which are covered by our insurance policies, it may be a difficult and lengthy process to recover such losses from insurers. In addition, we may be unable to recover the amount from the insurer. Even we are able to recover certain losses from our insurers, our premiums might increase and it might be hard for us to renew our insurance policies. Therefore, if we are held liable for uninsured losses or amounts and claims for insured losses exceeding our insurance coverage, our operations and financial results may be adversely affected.

Maritime claimants could arrest our vessels, which could disrupt our cash flow.

Crew members, suppliers of goods and services to a vessel and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flows and require us to pay a significant amount of money to have the arrest lifted. In addition, in some jurisdictions under the “sister ship” theory of liability, a claimant may arrest both the vessel that is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one vessel in our fleet for claims relating to another vessel in our fleet.

Terrorist attacks, piracy and international hostilities have previously affected the shipping industry, and any future attacks could negatively impact our results of operations and financial condition.

Terrorist attacks, such as the attack on the M.T. Limburg in October 2002, could adversely affect our operations and directly impact our vessels or charterers. We conduct our marine fuel supply operations outside of the United States, and our business, results of operations, cash flows and financial condition could suffer by changing economic, political and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political instability, terrorist or other attacks, war, piracy or international hostilities.

Security, political and economic instability in the Middle East may harm our business.

The escalating conflicts between Israel and its neighboring countries and Islamist militia and political groups since late 2023, particularly the Israel-Gaza Strip and attacks targeting vessels in the southern Red Sea, has introduced geopolitical tensions and security risks within the Middle East region. The fear of disruption to oil exports has led to a surge in worldwide crude oil price. Concurrently, the price of bunkering surges globally, which is associated with the risk premium and the on-going flourishing demand around the globe. Any significant increase in marine fuel price might tighten the operating cash flows of our Group, which may, in turn, adversely affect our working capital requirements or financial conditions.

Adverse conditions in the shipping industry may reduce the demand for our products and services and negatively affect our results of operations and financial condition.

Our business is focused on the physical supply and marketing of refined marine fuel to the shipping industry. Adverse economic conditions in the shipping industry, such as low charter rates or high operating costs, may have an adverse effect on our customers. In addition, any political instability, terrorist activity, piracy activity or military action that disrupts shipping operations will adversely affect our customers. Any adverse conditions in the shipping industry may reduce the demand for our products and services and negatively affect our results of operations and weaken our 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 earnings.

The success of our business depends on our ability to purchase, sell and deliver marine fuel products to our customers. Material disruptions in the availability or supply of oil may have an adverse effect on our suppliers. In addition, any political instability, natural disasters, terrorist activity, military action or other similar conditions may disrupt the availability or supply of oil and consequently decrease the supply of refined marine fuel. Decreased availability or supply of marine fuel may reduce our operating results, revenues and earnings.

In the highly competitive marine fuel supply industry, we may not be able to successfully compete for customers with new entrants or established companies with greater resources.

We are subject to aggressive competition in all aspects of our business. Our competitors are numerous, ranging from large multinational corporations, which have significantly greater capital resources than us, to relatively small and specialized firms. In addition to competing with fuel resellers, such as World Fuel Services Corporation (“World Fuel Services”) and BP Sinopec Marine Fuels Pte Ltd, we also compete with the major oil producers that market fuel directly to large commercial shipping companies. We may not be able to successfully compete for customers because of increased competition from the major oil producers or our suppliers who may choose to market directly to large as well as smaller shipping companies, or to provide less advantageous price and credit terms to us. Also, due in part to the highly fragmented market, competitors with greater resources could enter the marine fuel supply industry and operate larger fleets of bunkering tankers through consolidations or acquisitions and may be able to offer better terms than we are able to offer to our customers.

We operate in a highly regulated industry and significant compliance costs and efforts may adversely affect our business and profitability.

The ownership, operation and management of vessels is highly regulated. Our operations are subject to compliance of extensive international conventions, treaties, international and local laws, and regulations in force from time to time in the countries and ports where our vessel visit, the jurisdictions in which our vessels are registered, and the international conventions and regulations adopted by the IMO and the jurisdictions in which we operate, including but not limited to the International Safety Management Code, the Maritime Labor Convention, the International Convention for the Prevention of Pollution from Ships, International Convention for the Safety of Life at Sea 1974, International Regulations for Preventing Collisions at Sea 1972 and Petroleum Development Act 1974. See “Regulations” for further details.

Our 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 our vessels.

We are subject to various environmental laws and regulations dealing with the handling of marine fuel products. We currently store marine fuel inventories on our bunkering tankers and we may, in the future, maintain marine fuel inventories at several other locations in fixed or floating storage facilities. Our operations involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among other things. If we are involved in a spill or other accident involving hazardous substances, if there are releases of marine fuel products we own, or if we are found to be in violation of environmental laws or regulations, we could be subject to liabilities that could have a materially adverse effect on our business and operating results. We are also subject to possible claims by customers, employees and others who may be injured by a fuel spill, exposure to fuel, or other accidents. If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil or criminal liability.

In particular, our operations are subject to numerous laws and regulations in the form of international conventions, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These regulations include, but are not limited to, (i) the International Convention on Civil Liability for Oil Pollution Damage of 1992; (ii) the International Convention for the Prevention of Pollution from Ships of 1973; and (iii) the International Convention for the Safety of Life at Sea of 1974. We refer you to the discussion in the section of this prospectus entitled “Regulations” for a description of environmental laws and regulations that affect our business.

A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Some environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. An oil spill could result in significant liability, including fines, penalties, criminal liability and remediation costs for natural resource damages as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Our insurance policies covering certain environmental risks may not be sufficient to cover all such risks and any claim may have a material adverse effect on our business, results of operations, cash flows and financial condition.

Compliance with applicable laws, regulations and standards, may require us to make additional capital expenditures for the installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. In order to satisfy these requirements, we may, from time to time, be required to take our vessels out of service for extended periods of time, with corresponding losses of revenues. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including costs relating to air emissions, maintenance and inspection, elimination of tin-based paint, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could reduce our results of operations and cash flows and weaken our financial condition. Also, in the future, market conditions may not justify these expenditures or enable us to operate some or all of our vessels profitably during the remainder of their economic lives.

Our business operations may be affected if we fail to renew or maintain licenses or certifications required to operate.

We are required to obtain a variety of licenses and certifications as required under the jurisdiction which our vessels operate in. See “Regulation” for further details. There can be no assurance that we will not be subject to suspension, revocation or termination of our major licences, permits or approvals in the event of non-compliance with any terms or conditions thereof, or pursuant to any regulatory action. While we have not in the past encountered any difficulties in renewing or obtaining our major licences, permits and approvals for our business operations, there can be no assurance that we will be able to renew such licences, permits and approvals in a timely manner or at all in the future. We also cannot assure that there will not be variation, modification or imposition of additional conditions attached to the licences, permits and approvals which may adversely affect our business, financial condition, results of operations and prospects. Any failure to renew or maintain our major licences, permits and approvals in the future could materially and adversely affect our business, financial condition, results of operations and prospects.

Natural disasters, acts of war, political unrest and epidemics, which are beyond our control, may cause damage, loss or disruption to our business.

Natural disasters, acts of war, political unrest and epidemics, which are beyond our control, may materially and adversely affect the economy, infrastructure and livelihood of our customers. Our business, financial condition, results of operations and prospects may be materially and adversely affected if such natural disasters occur in places where we operate or where our products are sold, whether directly or indirectly. Political unrest, acts of war and terrorists attacks may cause drastic movement in oil prices and the stability of oil supply, any of which could materially and adversely affect our sales, cost of sales, overall results of operations and financial condition. The potential for war or terrorists attacks may also cause uncertainty and cause our business to suffer in ways beyond our prediction.

As at the date of this prospectus, although the dramatic surge in international oil price has stopped gradually, the Ukraine crisis is still underway and its outcome remains uncertain. We cannot predict how the oil market will react to future news of the Ukraine crisis, or other wars, natural disasters or social unrest, and our business performance, results of operations and financial condition could be adversely affected should any of these events happen in the future. For details, see “Industry and Market Data – Overview of the Oil and Gas Industry”.

Our vessel operations have inherent risks that could negatively impact our results of operations and financial condition.

Our vessels and fuel oils that they carry are at risk of being damaged or lost because of events such as marine disasters, bad weather, mechanical failures, human error, war, terrorism, piracy and other circumstances or events. All these hazards can result in death or injury to persons, loss of revenues or property, environmental damage, higher insurance rates, damage to our customer relationships, delays or rerouting. Adverse weather may also significantly affect the timing on delivery of oil, and lead to disputes with customers if not handled carefully.

If our vessels suffer damage, they may need to be repaired. The costs of vessel repairs are unpredictable and can be substantial. We may have to pay repair costs that our insurance policies do not cover. The loss of earnings while these vessels are being repaired, as well as the actual cost of these repairs, would decrease our results of operations. If one of our vessels were involved in an accident with the potential risk of environmental contamination, the resulting media coverage could have a material adverse effect on our business, our results of operations and cash flows and weaken our financial condition.

Apart from our normal repair and maintenance, our fleet of vessels are scheduled to periodic dry-docking approximately every thirty (30) months to maintain the operational condition of the vessels which is necessary for its licensing renewal and to meet safety requirements imposed by oil terminals, suppliers and customers. Any operational disruption, including as a result of technical issues with any of the vessels, can increase operating cost as such disruption may result in additional dry docking and maintenance costs.

Failure to detect misconduct of our personnel, agents or third parties may impair our reputation

While we have put in place internal control policies and procedures which are designed to prevent and mitigate the risks of fraud, illegal act or misconduct of our Directors, employees, agents, clients and/or third parties, we cannot assure you that we would be able to effectively prevent the occurrence of misconduct, which may involve, among others, the entering into of unauthorised transactions or the conducting of illicit activities resulting in unknown and/or unmanageable risks or losses, improperly using or disclosing confidential or inside information, recommending transactions that are not suitable for clients or the engaging in fraudulent acts or otherwise not complying with applicable laws or our internal control procedures. There is no assurance that there will not be any misconduct by our Directors, employees, agents, clients and/or third parties, or that future incidents of misconduct of them will not subject us to serious penalties or limitations on our business activities.

It is not always possible to deter or prevent misconduct of our Directors, employees, agent or clients, and the precautions we take to prevent and to detect such activity may not be effective in all cases. Any misconduct may also result in investigation against our Group by regulatory bodies and such investigation may require us to devote substantial resources in handling such investigation, which may affect our operations. We could also suffer from adverse publicity, reputational damage or litigation losses that may arise from the misconduct of our personnel, which may have a material adverse effect on our business, financial conditions, growth prospect and results of operations.

Failure to maintain effective internal controls could cause our investors to lose confidence in us and adversely affect the market price of our common stock. If our internal controls are not effective, we may not be able to accurately report our financial results or prevent fraud.

Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, requires that we maintain internal control over financial reporting that meets applicable standards. We may err in the design or operation of our controls, and all internal control systems, no matter how well designed and operated, can provide only reasonable assurance that the objectives of the control system are met. Because there are inherent limitations in all control systems, there can be no assurance that all control issues have been or will be detected. If we are unable, or are perceived as unable, to produce reliable financial reports due to internal control deficiencies, investors could lose confidence in our reported financial information and operating results, which could result in a negative market reaction and a decrease in our stock price.

If we identify any material weaknesses in our internal control over financial reporting, and we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, we may be late with the filing of our periodic reports, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected. As a result of such failures, we could also become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, and become subject to litigation from investors and stockholders, which could harm our reputation, financial condition or divert financial and management resources from our core business, and would have a material adverse effect on our business, financial condition and results of operations.

We are working to remediate the material weakness and are taking steps to strengthen our internal control over financial reporting through the development and implementation of processes and controls over the financial reporting process. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies - Internal Control”. However, we cannot assure you that these measures will significantly improve or remediate the material weakness described above.

We may not maintain strict quality control measures and safety standards and our failure or deterioration of our quality control system would adversely affect our operation and financial condition.

Our Group’s operations and reputation are significantly dependent on maintaining strict quality control measures and safety standards, which, in turn, depends on a number of factors, including the implementation of our quality control and safety policies as well as the composition of our quality control team. Failure to comply with and adhere to these quality and safety standards could have severe adverse effects on our business and have a material adverse effect on our reputation in the market among current or prospective customers, which could, in turn, lead to fewer orders in the future and harm our financial condition and operating results.

We are exposed to foreign currency fluctuations as our transactions are substantially denominated in US$, which may adversely affect our business, financial condition and results of operations.

Our business activities are substantially denominated in US$, while our assets and liabilities are denominated in our functional currency (i.e. RM, US$ and SGD). Our reporting currency is US$. When we prepare our consolidated financial statements, sales in foreign currencies are converted into US$ at average exchange rates of the relevant financial years whereas foreign currency balance sheets are translated into US$ at the rates as at the balance sheet date. Accordingly, the profits derived in foreign currencies would be lower should there be any weakening in the exchange rate of US$ against RM and SGD.

We may not pay any dividends on the Ordinary Shares.

Dividends may be paid out of our distributable profits in accordance with applicable laws. The ability to pay dividends is contingent upon our capacity to generate sufficient distributable profits. During FY2022, FY2023, 6M2023 and 6M2024, the Operating Subsidiaries did not declare any dividend to its then shareholders. We cannot guarantee when, if, or in what form, dividends will be paid on the Ordinary Shares following the listing. A declaration of dividends must be proposed by our Board and will be based on, and limited by, various factors, including our business and financial performance, capital and regulatory requirements and general business conditions. Furthermore, we may not have sufficient profits to make dividend distributions to our shareholders in the future, even if our financial statements prepared in accordance with International Financial Reporting Standards indicate that our operations have been profitable.

Risks Related to Our Corporate Structure

We rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business.

Our Company is a holding company, and we rely on dividends and other distributions on equity paid by our subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our subsidiaries incur debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Any limitation on the ability of our Operating Subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Risks Related to our Ordinary Shares

There has been no public market for our 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.

Prior to this offering, there has not been a public market for our Ordinary Shares. We plan to apply for the listing of our Ordinary Shares on the NYSE American. An active public market for our Ordinary Shares, however, may not develop or be sustained after the offering, in which case the market price and liquidity of our Ordinary Shares will be materially and adversely affected.

In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may significantly affect the market price of our Ordinary Shares, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our Ordinary Shares shortly following this offering. If the market price of our Ordinary Shares after this offering does not ever exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following volatility in our share price, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and operating results and divert management’s attention and resources from our business.

We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company”.

Upon consummation of this offering, we will incur significant legal, accounting and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, impose various requirements on the corporate governance practices of public companies. We are an “emerging growth company”, as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company”, or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our Board or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

If we fail to meet applicable listing requirements, NYSE American may delist our Ordinary Shares from trading, in which case the liquidity and market price of our Ordinary Shares could decline.

Assuming our Ordinary Shares are listed on NYSE American, we cannot assure you that we will be able to meet the continued listing standards of NYSE American in the future. If we fail to comply with the applicable listing standards and NSYE American delists our Ordinary Shares, we and our shareholders could face significant material adverse consequences, including:

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities”. Because we expect that our Ordinary Shares will be listed on NYSE American, such securities will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if we were no longer listed on NYSE American, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities.

Volatility in our Ordinary Shares price may subject us to securities litigation.

The market for our Ordinary Shares may have, when compared to seasoned issuers, significant price volatility and we expect that our Ordinary Share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

The price and the trading volume of our Ordinary Shares may be volatile which could result in substantial losses for investors purchasing our Shares under this offering.

The price and trading volume of our Ordinary Shares may be volatile. The market price of our Ordinary Shares may fluctuate significantly and rapidly as a result of the following factors, among others, some of which are beyond our control:

There were instances of extreme stock price run-ups followed by rapid price declines and stock price volatility seemingly unrelated to company performance following a number of recent initial public offerings, particularly among companies with relatively smaller public floats. Such volatility, including stock run-up, may be unrelated or disproportionate to the actual or expected operating performance and financial condition or prospects of such companies, making it difficult for investors to assess the rapidly changing value of our Ordinary Shares.

In addition, if the trading volumes of our Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Ordinary Shares. This low volume of trades could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional shares of ordinary shares and our ability to obtain additional financing in the future. No assurance can be given that an active market in our ordinary shares will develop or be sustained. If an active market does not develop, holders of our ordinary shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

Our pre-IPO shareholders will be able to sell their shares after completion of this offering subject to restrictions under the Rule 144.

Our pre-IPO shareholders, may be able to sell their Ordinary Shares under Rule 144 after completion of this offering. Because these shareholders have paid a lower price per Ordinary Share than participants in this offering, when they are able to sell their pre-IPO shares under Rule 144, they may be more willing to accept a lower sales price than the IPO price. This fact could impact the trading price of the stock following completion of the offering, to the detriment of participants in this offering. Under rule 144, before our pre-IPO shareholders can sell their shares, in addition to meeting other requirements, they must meet the required holding period. We do not expect any of the ordinary shares to be sold pursuant to Rule 144 during the pendency of this offering.

If you purchase our Ordinary Shares in this offering, you will incur immediate and substantial dilution in the book value of your shares.

Investors purchasing our Ordinary Shares in this offering will pay a price per share that substantially exceeds the pro forma as adjusted net tangible book value per Ordinary Share. As a result, investors purchasing Ordinary Shares in this offering will incur immediate dilution. For more information on the dilution you may experience as a result of investing in this offering, see “Dilution”.

We will be a “controlled company” within the meaning of NYSE American rules and we will qualify for and may rely on exemptions from certain corporate governance requirements.

We will be a “controlled company” within the meaning of NYSE American Company Guide. As at the date of this prospectus, 76.68% of the issued share capital of the Company is owned by Straits. Straits therefore beneficially owns 76.68% of our total voting power as at the date of this prospectus. Following completion of this offering, 66.39% of the issued share capital of the Company will be owned by Straits, which will beneficially own 66.39% of our total voting power. Dato’ Sri Kam Choy Ho, the Chairman of our Board and the Chief Executive Officer of our Company, is also the Group Managing Director of Straits, and that three other Director nominees, namely Dato’ Leong Yan Yoong (An Executive Director of Straits), Datin Fong Shiang Ng (An Independent Non-Executive Director of Straits) and Mr. Kok Chaw Leong (An Independent Non-Executive Director of Straits), are also directors of Straits, and Mr. Chee Mun Hoh, the Chief Financial Officer of our Company, is also the Group Chief Financial Officer cum General Manager of Straits.

Under the NYSE American rules, a company of which more than 50% of the voting power with respect to the election of directors is held by an individual, a company or a group of persons acting together is a “controlled company” and may elect not to comply with certain stock exchange rules regarding corporate governance, including the following requirements:

If we elect to be treated as a controlled company and use these exemptions, you may not have the same protections afforded to stockholders of companies that are subject to all of NYSE American rules regarding corporate governance, which could make our Ordinary Shares less attractive to investors or otherwise harm our stock price.

Our 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 our results of operations or the price of our Ordinary Shares.

We anticipate that we will use the net proceeds from this offering for our oil bunkering and shipping related business and other corporate purposes. Our management will have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of our Ordinary Shares.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Upon the closing of this offering, we will become subject to the periodic reporting requirements of the Exchange Act. We will design our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

We do not intend to pay dividends for the foreseeable future.

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases. Under Cayman Islands law, we may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result our Company being unable to pay its debts as they become due in the ordinary course of business.

Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our share price or trading volume to decline.

If a trading market for our Ordinary Shares develops, the trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts. As a newly public company, we may be slow to attract research coverage and the analysts who publish information about our Ordinary Shares will have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our share price, our share price could decline. If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our share price or trading volume to decline and result in the loss of all or a part of your investment in us.

Investors may have difficulty enforcing judgments against us, our Directors and management.

We are incorporated under the laws of the Cayman Islands and all of our Directors and officers reside outside the United States. Moreover, many of these persons do not have significant assets in the United States. As a result, it may be difficult or impossible to effect service of process within the United States upon these persons, or to recover against us or them on judgments of U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands could render you unable to enforce a judgment against our assets or the assets of our Directors and officers.

There is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our Directors or officers predicated upon the civil liability provisions of the securities laws of the U.S. or any state in the U.S. or (ii) entertain original actions brought in the Cayman Islands against us or our Directors or officers predicated upon the securities laws of the U.S. or any state in the U.S.

The U.S. and the Cayman Islands do not have a treaty providing for reciprocal recognition and enforcement of judgments of courts of the U.S. in civil and commercial matters and that a final judgment for the payment of money rendered by any general or state court in the U.S. based on civil liability, whether or not predicated solely upon the U.S. federal securities laws would not be enforceable in the Cayman Islands, however, the courts of the Cayman Islands will in certain circumstances recognize and enforce a foreign judgment, without any re-examination or re-litigation of matters adjudicated upon, provided such judgment:

Subject to the above limitations, in appropriate circumstances, a Cayman Islands court may give effect in the Cayman Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.

The laws of the Cayman Islands relating to the protection of the interest of minority shareholders are different from those in the United States.

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by the memorandum and articles of association, as may be amended from time to time, and by the Cayman Islands Companies Act and common law of Cayman Islands. The rights of shareholders to take action against our directors, action by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands and our articles of association. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. In addition, shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association and any special resolutions passed by such companies, and the register of mortgages and charges of such companies) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our post-offering memorandum and articles of association that will become effective immediately prior to completion of this offering to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

The laws of the Cayman Islands relating to the protection of the interests of minority shareholders differ in certain respects from those established under statutes or judicial precedent in existence in the United States and other jurisdictions. Such differences may mean that the remedies available to our minority shareholders may be different from those they would have under the laws of other jurisdictions, including the United States. Potential investors should be aware that there is a risk that provisions of the Cayman Islands Companies Act may not offer the same protection as the relevant laws and regulations in the United States may offer, and should consider obtaining independent legal advice on the implications of investing in foreign-incorporated companies.

We qualify as a foreign private issuer and, as a result, we 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.

Upon the closing of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors and principal shareholders purchase or sell our shares. In addition, foreign private issuers are not required to file their annual report on Form 20-F until one hundred twenty (120) days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within seventy-five (75) days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

If we lose our status as a foreign private issuer, we 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. We may also be required to make changes in our corporate governance practices in accordance with various SEC and NYSE American rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain and maintain directors’ and officers’ liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our Board.

As a foreign private issuer, we are 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 we complied fully with corporate governance listing standards.

As a foreign private issuer, we are permitted to take advantage of certain provisions in the NYSE American rules that allow us to follow our home country law for certain governance matters. Certain corporate governance practices in our home country, the Cayman Islands, may differ significantly from NYSE American corporate governance listing standards. Currently, we do not plan to rely on some home country practices with respect to our corporate governance after we complete this offering. However, if we choose to follow home country practices in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the NYSE American corporate governance listing standards applicable to U.S. domestic issuers.

There can be no assurance that we 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 our Ordinary Shares.

A non-U.S. corporation will be a PFIC for any taxable year if either (i) at least 75% of its gross income for such year consists of certain types of “passive” income; or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income, or the asset test. Based on our current and expected income and assets (taking into account the expected cash proceeds and our anticipated market capitalization following this offering), we do not presently expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. In addition, there can be no assurance that the Internal Revenue Service, or IRS, will agree with our conclusion or that the IRS would not successfully challenge our position. Fluctuations in the market price of our Ordinary Shares may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test may be determined by reference to the market price of our Ordinary Shares. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. If we were to be or become a PFIC for any taxable year during which a U.S. Holder holds our Ordinary Shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See “Taxation — Passive Foreign Investment Company Consequences”.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

We are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example, more than 50% of our Ordinary Shares are directly or indirectly held by residents of the United States and we fail to meet additional requirements necessary to maintain our foreign private issuer status. If we lose our foreign private issuer status on this date, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the NYSE American rules. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.

We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies, including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we remain an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We do not plan to opt out of such exemptions afforded to an emerging growth company. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective data.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “may”, “might”, “will”, “could”, “would”, “should”, “expect”, “intend”, “plan”, “goal”, “objective”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue” and “ongoing”, or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this prospectus are based upon information available to us as of the date of this prospectus and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements include statements about:

You should refer to the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus forms a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

INDUSTRY AND MARKET DATA

This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties, as well estimates by our management based on such data. The market data and estimates used in this prospectus involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such data and estimates. While we believe that the information from these industry publications, surveys and studies is reliable, the industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of important factors, including those described in the section titled “Risk Factors”. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us. This section contains information from an industry report commissioned by us and prepared by Protégé Associates Sdn. Bhd. (“Protégé Associates”), an independent market research firm, to provide information regarding our industry and our market position.

MALAYSIAN ECONOMIC REVIEW

In 2023, Malaysia’s economic growth moderated to 3.7% amidst a challenging external environment. This was mainly due to slower global trade, the global tech downcycle, geopolitical tensions and tighter monetary policies. On the domestic front, growth has been supported by the continued recovery in economic activity and labour market conditions. Figure 1 depicts Malaysia’s real gross domestic product (“GDP”) at 2015 prices from 2018 to 2023.

Figure 1: Malaysia’s Real GDP, 2018-2023

Source: Bank Negara Malaysia (“BNM”)

Figure 2 depicts the performance of key economic sectors in Malaysia for the first half of 2023 (“1H2023”) and the first half of 2024 (“1H2024”).

Figure 2: The Malaysian Economic Performance by Sector, 1H2023 and 1H2024

Source: BNM

Malaysia’s economy grew 5.1% in the 1H2024 from 4.1% in 1H2023. The growth was driven by stronger private consumption and government spending, which increased by 5.3% and 5.5%, respectively, as well as the strong performance of the construction sector.

In 1H2024, the construction sector grew by 14.4% (1H2023: 6.9%), driven by higher growth in the residential buildings and civil engineering sub-sectors. The agriculture sector grew by 4.5% (1H2023: 0.2%) due to improved oil palm output. Meanwhile, the manufacturing sector grew by 3.3% (1H2023: 1.7%) due to improved exports from recovering external demand. The mining sector recovered to register a growth of 4.2% (1H2023: -0.2%) due to growth in the natural gas sub-sector from higher production.

Moving forward, the Malaysian economy is expected to improve due to resilient domestic expenditure and a recovery in external demand. On the external front, the International Monetary Fund has projected a rebound in global trade from 0.4% in 2023 to 3.3% in 2024 and 2025. BNM has forecasted the Malaysian economy to grow by 4-5% in 2024 due to the tech upcycle, improvement in tourist arrivals and spending and implementation of investment projects. The Malaysian economy is further supported by stronger external demand driving higher exports, alongside continued domestic employment and wage growth that support household spending. Nonetheless, the growth outlook is still subject to downside risks stemming from weaker-than-expected external demand and larger declines in commodity production.

OVERVIEW OF THE OIL AND GAS INDUSTRY

Overview of the Global Oil and Gas Industry

The world crude oil production increased by 0.57% from 72.82 million barrels per day in 2022 to 73.24 million barrels per day in 2023. The Middle East region remained as the largest crude oil producing region, contributing 23.81 million barrels per day while the Asia-Pacific region contributed 6.21 million barrels per day in 2023. On a closer look, the top 5 crude oil producing countries in the world in 2023 were the United States (“US”), Saudi Arabia, Russia, Iraq, and China. For the Asia-Pacific region, major crude oil producing countries are China, India, Indonesia, and Malaysia. Major crude oil producing countries in the Middle East region include Iran, Iraq, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates.

As prices of crude oil have been cyclical, Protégé Associates has used the historical price movements of the Europe Brent Spot Price free on board (“FOB”) as a proxy for the overall price trend of crude oil in the world. The diagram below depicts the movement of monthly crude oil prices since 2020 up to June 2024. Prior to 2020, the crude oil price hovered between USD60.00 to USD75.00 per barrel notably influenced by trade dispute between the US and China as well as slowing global economic growth.

Figure 3: Historical Monthly Crude Oil Price, January 2020 to June 2024

Source: Protégé Associates

In 2020, the crude oil prices have been under heavy downward pressures due to 2 major shocks to the world economy; the price war sparked by Saudi Arabia and the fuel demand destruction caused by the Coronavirus Disease 2019 (“COVID-19”) pandemic. The crude oil prices had plummeted from USD63.65 per barrel in January 2020 to USD18.38 per barrel in April 2020, caused by contraction in global oil demand and massive selloffs amid a significant global oversupply.

Nonetheless, oil demand had picked up in the second half of the year and global oversupply of oil had gradually alleviated as movement and travel restrictions eased and economic activities resumed in many countries. Furthermore, news of the roll-out of COVID-19 vaccines raised optimism on oil demand recovery. By December 2020, the crude oil price rose to USD49.99 per barrel.

In 2021, the crude oil prices continued to recover despite a resurgence in COVID-19 cases. The rise in demand for oil following a recovery in economic activities quickly eliminated the oil glut situation. With oil producers unable to promptly resume production, the rise in demand led to demand outpacing supply. The Organization of Petroleum Exporting Countries (“OPEC”) and its allies (collectively known as OPEC+) agreed to production cut in late 2020 as well as limit production increases throughout 2021 to support higher crude oil prices. The crude oil prices increased from USD54.77 per barrel in January 2021 to USD74.17 per barrel in December 2021 (the yearly average crude oil price was USD70.86 per barrel for 2021).

In 2022, the crude oil prices continued to climb higher. The global supply chain experienced disruptions as a result of the war between Russia and Ukraine. Russia’s involvement in the war has raised concerns about the country’s oil supply given its position as one of the largest exporters of oil globally. Crude oil prices have hovered between USD100.45 and USD122.71 per barrel from March to August 2022. Subsequently, due to recession fears in some major economies as well as the economic slowdown in China, the crude oil prices dipped below USD100.00 per barrel in September 2022. Crude oil prices stabilised at USD80.92 by the end of December 2022 resulting from OPEC+ production cuts coupled with China’s decision to ease its COVID-19 Zero Policy in December 2022.

In April 2023, OPEC+ announced a further production cut of 1.16 million barrels per day. Saudi Arabia later pledged an additional voluntary output reduction of 1 million barrels per day for the month of July. In September 2023, crude oil prices rose to USD93.72 per barrel as OPEC+ nations announced the continuation of oil production cuts through to the end of 2023. Oil prices then declined to US77.63 per barrel amidst weaker global economic activity, output from the United States, and exports by Russia. In November 2023, OPEC+ agreed to extend the production cuts into the first quarter of 2024. Further, China’s economic recovery has continued to keep crude oil prices stable. By December 2023, the crude prices stood at USD77.63 (the average price was USD82.47 per barrel for 2023). The crude oil prices stood at USD82.25 per barrel in June 2024.

The world marketed production of natural gas was consistent for 2022 and 2023, with production amounting to 4.256 trillion standard cubic meters and 4.283 trillion standard cubic meters respectively. After the Americas (1.232 billion standard cubic metres) and Eurasia (869,331.00 million standard cubic metres), the Middle East region was the 3rd largest regional source of marketed production of natural gas, contributing 756,577.00 million standard cubic metres of the world marketed production of natural gas in 2023 while the Asia-Pacific region stood at 723,171.00 million standard cubic metres in 2023. On a closer look, the 5 countries with the highest marketed production of natural gas in the world in 2022 were the US, Russia, Iran, China, and Qatar. For the Asia-Pacific region in particular, major countries for marketed production of natural gas include China, Australia, Indonesia, and Malaysia.

In terms of the world refinery capacity, it has increased slightly from 101.46 million barrels per calendar day in 2022 to 102.92 million barrels per calendar day in 2023. In 2023, the Asia-Pacific region had the highest refinery capacity at 36.39 million barrels per calendar day while the refinery capacity of the Middle East region stood at 10.65 million barrels per calendar day. Countries in the Asia-Pacific and the Middle East regions with refinery capacity of more than 2.00 million barrels per calendar day in 2023 were China, India, Japan, South Korea, Iran and Saudi Arabia. Similarly, the world output of petroleum products has also increased from 90.64 million barrels per day in 2022 to 92.60 million barrels per day in 2023. The Asia-Pacific region has remained as the largest petroleum products producing region with 34.47 million barrels per day produced in 2023 while the output of petroleum products in the Middle East region stood at 8.57 million barrels per day. Countries in the Asia-Pacific and the Middle East regions with output of petroleum products of more than 2.00 million barrels per day in 2023 were China, India, Japan, South Korea and Saudi Arabia.

Overview of the Malaysian Oil and Gas Industry

The entire ownership in, and the exclusive rights, power, liberties and privileges of exploring, exploiting, winning and obtaining petroleum onshore or offshore in Malaysia are vested to a Malaysian government wholly-owned company called Petroliam Nasional Berhad (“PETRONAS”) as stipulated by Article 2 of the Petroleum Development Act 1974. PETRONAS carries out exploration, development and production activities in Malaysia through production sharing contracts (“PSC”) between PETRONAS (or its subsidiaries) and other oil and gas companies. PETRONAS has an exploration and production (“E&P”) subsidiary named PETRONAS Carigali Sdn. Bhd. (“PETRONAS Carigali”). In order to get a share of the total production, PSC contractors are obligated to provide all the financing and bear all the risk of exploration, development and production activities. A new petroleum arrangement named Risk Service Contract (“RSC”) was introduced by PETRONAS, whereby the contractors provide services for the development and production of oil and gas resources on behalf of PETRONAS. Contractors incur all upfront investment and will be reimbursed upon the commencement of commercial production.

The Malaysian oil and gas industry is part of the broader mining and quarrying sector which accounted for RM97.51 billion or 6.22% of the Malaysian’s real GDP in 2023. Out of the mining and quarrying sector, the crude oil and condensate, and natural gas related activities contributed RM88.22 billion or 5.63% of the Malaysian’s real GDP in 2023.

In 2023, Malaysia is a net importer of crude petroleum (by value) with a trade deficit of RM29.74 billion. The export value of crude petroleum amounted to RM31.93 billion while the import value of crude petroleum amounted to RM61.69 billion. On another note, Malaysia is a net exporter of refined petroleum products (by value) in 2023. The export value of refined petroleum products amounted to RM133.87 billion while the import value of refined petroleum products amounted to RM130.25 billion during the year.

Figure 4: Malaysia’s External Trade Value of Crude Petroleum, Refined Petroleum Products and LNG, 2019 – 2023

Source: Department of Statistics Malaysia (“DOSM”)

Heavy investments made in recent years such as the Pengerang Integrated Complex and Integrated Aroma Ingredients Complex have started to bear fruit and bolster the downstream capabilities of the country. PETRONAS has successfully ventured into specialty chemicals and has higher refining capacity to balance Malaysia’s gasoline supply and demand. Furthermore, PETRONAS is now better positioned to undertake more blending of oil to meet demand for low-sulphur oil from shippers following the new fuel regulations by the IMO.

Malaysia is also a prominent exporter of natural gas in the Asia and Pacific region and has been exporting more than RM40.00 billion worth of LNG per annum. The country’s exports of LNG (including natural gas through pipelines) were valued at RM42.32 billion and RM42.48 billion in 2018 and 2019 respectively. Nonetheless, the value of exports of LNG from Malaysia fell to RM29.87 billion in 2020 and RM38.19 billion in 2021, respectively because of COVID-19. Exports of LNG rebounded strongly in 2022, with exports value reaching RM68.00 billion. The growth was propelled by the continued spike in natural gas prices and an increasing demand as countries seek for alternative fuel sources amid the on-going Russian-Ukraine war. The export value of LNG amounted to RM60.23 billion in 2023. With key LNG assets such as PETRONAS Floating LNG Facilities (PFLNG-1 and PFLNG-2) and the PETRONAS LNG Complex in Bintulu, Sarawak, being one of the world’s largest LNG production facilities at a single location, Malaysia is well positioned to gain further traction towards the monetisation of gas and strengthen its position as a reliable LNG supplier.

The Oil and Gas Services and Equipment Industry

Figure 5: The Value Chain of the Oil and Gas Industry

Source: Protégé Associates

The oil and gas industry revolves around the exploration, extraction and processing of crude oil and natural gas, and is segmented into upstream, midstream, and downstream sectors, as depicted in Figure 5 above. The upstream sector involves the exploration, development and extraction of crude oil or gas from onshore or offshore oil or gas fields. The midstream sector involves transporting of crude and refined petroleum products to refinery, processing, and storage facilities. Lastly, the downstream sector involves refining of crude oil, processing of natural gas, manufacturing of petroleum and petrochemical products, and marketing and retailing of petroleum and petrochemical products to end-users.

OGSE refers to broad categories of products and services that support the needs of the oil and gas value chain from upstream to downstream sectors. In Malaysia, OGSE can be divided into 2 types, namely standardised work and equipment categories (“SWECs”) for services and SWECs for products classified by PETRONAS. Some examples of SWECs for services include consultancy services, electrical engineering and maintenance, engineering design, architecture and draughting services, floating and mobile offshore facilities, manpower supply, marine transportation and support services, offshore facilities construction as well as pipeline and associated services. Meanwhile, some examples of SWECs for products include chemicals, drilling equipment and materials, electrical, instrumentation, insulation, pipes, mechanical, rotating equipment, civil and structural, subsea and valves.

Our Group is primarily involved in the OGSE industry where it provides bunkering services, vessel management services, and vessel chartering services.

The Marine Transportation and Support Services Market in Malaysia

Marine transportation and support services in Malaysia is among one of the services related activities in the oil and gas industry in Malaysia. The marine transportation and support services market encompasses the transportation of personnel, equipment, and supplies, as well as extracted oil and gas, and refined petroleum products across water bodies.

A closer look at the marine transportation and support services market reveals that it consists of marine vessels, marine or ship repairs and maintenance, marine operations services, marine services, marine systems for repairs and services and vessel cleaning services.

Descriptions of each of the segment in the marine transportation and support services are as follows:

1. Marine vessels;

This segment involves the provision of marine or offshore support vessels (“OSVs”) such as anchor handling tug (“AHT”), anchor handling tug and supply (“AHTS”), self-propelled accommodation vessel, fast crew boat, safety standby vessel (“SSV”), barges (including cargo barges and bunker barges), supply vessel, crude oil tanker, LNG tanker and petroleum product tanker including personnel for various reasons such as transportation, accommodation space and storage purposes. Ship brokers and shipping agency services are also considered to be grouped under this segment.

2. Marine/ship repairs and maintenance;

This segment involves various repairs and maintenance of marine/ship including repair and maintenance works on but not limited to main engine, auxiliary engine, boilers and economisers, deck and engine cranes, cargo pumping system, navigation and communications equipment, steam turbines, heat exchangers and air coolers as well as general ship repairs.

3. Marine operations services;

This segment involves various services which include but are not limited to cleaning and disposal services, thickness gauging, non-destructive tests services, calibration of measuring instruments, classification society survey, specialised survey, vessel tracking and monitoring system and fuel monitoring system.

4. Marine services;

This segment involves services which include but are not limited to lashing, mooring or unmooring and lifting, stuffing and unstuffing of containers and marine security services.

5. Marine systems for repairs and services; and

This segment involves the provision of labour, materials, consumables, equipment and facilities necessary for repair, maintenance, testing and commissioning of various systems for the Single Point Mooring System and jetty.

6. Vessel cleaning services.

This segment involves the provision of vessel cleaning services.

Introduction to Bunkering Industry

Bunkering is the process of supplying ships with fuel to power the propulsion system of a ship. Such fuel is often referred to as bunkers and the most common types of bunkers are low sulphur fuel oil, high sulphur fuel oil, and low sulphur marine gasoil. Other bunkers include marine diesel oil, marine fuel oil, heavy fuel oil, LNG, liquefied petroleum gas, chemical biofuel, ethanol, methanol, ammonia, and hydrogen.

Bunkering has historical roots dating back to the era of coal-powered steam engines, when coal was stored in dedicated bunkers on board ships. Today, the term “bunkering” commonly pertains to the storage of oil products on vessels and usually takes place either onshore from shore-based terminals to ships or offshore at sea through ship-to-ship (“STS”) transfer operations. The scope of bunkering services extends to providing marine fuels for various types of seafaring vessels, including oil tankers, container ships, cargo vessels, cruise liners, and ferries. Bunkering services are also employed in vessels used in the upstream oil and gas sector, such as OSVs, submersible and semisubmersible rigs, and floating production storage and offloading (“FPSO”) vessels.

Bunkering services can be divided into 2 types, namely onshore bunkering services and offshore bunkering services. Onshore bunkering services involve transferring marine fuels from shore-based facilities to ships. Offshore bunkering services involve STS fuel transfer, often conducted by refuelling vessels, barges, or product tankers in harbours, near the shore, or in open waters. Bunkering is a crucial service within the worldwide maritime sector, ensuring that ships have the essential fuel required for their journeys to destinations.

Figure 6: Types of Bunkering Services

Source: Protégé Associates

STS Transfer Operations

The STS transfer operations are generally commissioned by oil traders. Oil traders tend to purchase large volumes of crude oil and fuel oil from oil producing countries such as countries in the Middle East. The sizes involved are often in the volumes of 150,000 to 300,000 mt. These commodities are stored in FPSO vessels such as very large crude carriers (“VLCCs”) and ultra large crude carriers (“ULCCs”) and shipped to various destinations around the world. However, due to the size of these massive vessels, accessibility to ports is often restricted. Smaller vessels such as bunkers or lightering service vessels are then needed to transfer the crude oil and fuel oil to areas that cannot be accessed by the larger vessels.

Bunkers or lightering service vessels of different sizes can be used for transferring oil products depending on the intended destinations. For example, 30,000 mt vessels are used when delivering to countries or large corporations while smaller 3,000 to 5,000 mt bunkers are used when delivering to smaller-scale customers.

Figure 7: Sample Process Flow of an STS Transfer Involving Oil Products

Source: Protégé Associates

The Oil Products Transfer Process

The bunkering industry, in relation to oil products transfer operations, involves a comprehensive and critical set of procedures that need to be carefully executed in accordance to related international conventions particularly on the safety of life at sea and prevention of pollution from ships. There are generally five phases involved in oil products transfer operations with each phase requiring a set of different procedures. The phases of oil products transfer operations are as follows:

1. Pre-arrival Planning;

A lot of preparation is required at this stage. It needs to be ensured that the involved parties have compatible design and equipment and comply with the requirements needed for the oil products transfer. This is important to ensure that the mooring operations, hose handling and communications can be conducted in a safe and efficient manner.

At this stage, there will also be an exchange of information between the involved parties, including ship information, nature of cargo, distribution of cargo on board, estimated time of arrival as well as ship’s draught and trim on arrival. In the case of ship to terminal transfers, additional information such as the speed and angle to approach the jetty as well as requests for tank cleaning will also be conveyed.

In terms of communications, the procedures involving language, transfer instructions, navigational warnings, communications during operations and procedures for communication failure need to be established. All the relevant equipment such as fenders, hoses, pipe reducers, mooring equipment, lighting and ancillary equipment such as wires and shackles should be made available and inspected to determine the state of condition prior to commencing the oil products transfer operations.

2. Arrival;

A thorough preparation for ships (for STS transfer operations) and the terminal (for ship to terminal transfer operations) is required before manoeuvres can begin. The preparation includes the following tasks:

At this stage, various information such as mooring arrangements, sequence of loading or discharging of tanks as well as maximum draught and freeboard anticipated during operations are exchanged between parties involved.

3. Berthing;

Ship manoeuvring and mooring are the main activities at this stage. For ship manoeuvring, there are different sets of processes depending on the type of manoeuvring involved. In STS transfer operations, ship manoeuvring can include manoeuvring alongside with two ships under power, manoeuvring a combined two-ship system to anchor, underway transfer and manoeuvres with one ship at anchor. For ship to onshore terminal transfer operations, ships are generally manoeuvred to berth at the jetty facility of the terminal.

During the berthing process, tugboats are often used to assist ship manoeuvring. At this stage, all cargo and ballast tank lids and ullage ports should be closed, no matter what grade of oil is being or has been carried, unless all the cargo tanks are gas free of hydrocarbon vapour. Tugboats and other support vessels must not be permitted to come alongside before the mooring master is satisfied that it is safe for them to do so. Tugboats should have adequate fendering to avoid causing damage and should push the ship at appropriate positions which should be indicated by markings.

4. Cargo transfer; and

This stage involves the actual physical transfer of cargo such as crude oil and fuel oil. Firstly, all pre-transfer procedures need to be completed. The oil products transfer operations may be started only after an agreement is obtained (either verbally or in writing) from the responsible person(s) of the involved parties.

The operations should begin at the agreed slow rate so that the receiving party is able to check that the cargo pipeline system is correctly set. When the receiving party’s tanks are reaching their filling limits, the transfer rate should also be reduced to an agreed topping off rate.

However, the cargo transfer operations should be suspended during occasions such as:

Unmooring is the main activity at this stage, with unmooring checks performed during this process. Tugboats are used to assist the unmooring activity of the ships.

Introduction to Vessel Chartering Services

Vessel chartering services is the rental of vessels by one party to another based on the requirements of the renter. Generally, the party renting out the vessel is the shipowner and the party who is taking the vessel on rent is the charterer. A shipowner may be an individual or an organisation that owns the vessel(s) which are registered under a ship registry. The charterer may be transporting either goods or passengers. Charterers may be transporting goods or passengers on behalf of a different party while some charterers may charter a vessel and re-rent it to another party for a profit. The shipowner and charterer are required to enter into a contract which stipulates the responsibilities of each party. A shipbroker, a party which brings together a shipowner and a charterer, may also be involved during the transaction. Shipbrokers may represent either the shipowner or the charterer during contract negotiations and usually specialises in specific types of cargo. For example, a tanker broker specialises in chartering tanker vessels for the movement of oil products.

There are 3 most common types of vessel charters, namely the voyage charter, time charter, and the demise (otherwise known as bareboat) charter.

Figure 8: Description of the 3 Most Common Types of Vessel Charters

Source: Protégé Associates

Notable global vessel charterers in the O&G industry include Tidewater Inc, Solstad Offshore ASA, and PACC Offshore Services Holdings Ltd. Malaysian vessel charterers include Icon Offshore Berhad and Alam Maritim Resources Berhad.

Introduction to Vessel Management Services

Vessel management services is the process of managing a single vessel or fleet of vessels and is generally undertaken by a party that uses another company or individual’s vessel. Vessel management includes operational management, technical management, as well as crewing. Operational management generally involves management of the day-to-day running of the vessel and scheduling. Technical management generally includes maintenance activities and project management. Crew management includes sourcing, recruitment, selection, deployment, scheduling, training, and management of the crew that are on the vessels. Outsourcing management of vessels may be beneficial for shipowners with limited experience or for shipowners without the time and resources to manage their own vessel or fleet.

Notable global vessel management services providers include Schulte Group, OSM Group, and Thome Group while Malaysian vessel management services providers include Icon Offshore Berhad, and Jasa Merin Ship Management Sdn. Bhd.

OVERVIEW OF THE GLOBAL BUNKERING INDUSTRY

In 2020, lockdowns imposed due to the COVID-19 pandemic resulted in temporary bans on imports and exports and led to a reduction in demand for marine fuel. This in turn hampered the global bunker fuel market during the year. According to data from the International Maritime Organization (“IMO”), global bunker demand dropped by 5.51%, from approximately 229.1 million mt in 2019 to approximately 216.5 million mt in 2020. In terms of breakdown by shipping segments, bunker demand from container ships decreased by 4.56%, declining from 59.6 million mt in 2019 to 56.9 million mt in 2020. Passenger ships experienced the most significant decline in 2020, falling by 58.75% to 0.3 million mt as compared to 0.8 million mt in 2019, while cruise ships decreased by 53.50% to 3.1 million mt. On the other hand, bulk carriers saw a 0.95% increase, reaching 55.3 million mt in 2020 (2019: 54.7 million mt), while tankers increased by 2.86% to 44.1 million mt in 2020 compared to 42.9 million mt in 2019.

However, as movement and travel restrictions eased, and economic activities recovered in many countries, the bunker fuel market rebounded from increased demand from the global maritime transport and shipping industry. The growth of the global bunker fuel market was primarily driven by demand for marine fuels, serving a wide range of end-users, including oil and gas vessels, marine transporters, military fleets, and naval ships. At the same time, the expansion of the bunker fuel market was also linked to factors such as increased global trade, growth in marine transportation, and heightened activity in the upstream oil and gas sector. This growth was also supported by regulations set by the IMO regarding sulphur content in marine fuel and the rise in offshore oil and gas exploration activities. As such, data from the IMO showed that demand for global bunker increased by 3.83% from 216.5 million mt in 2020 to 224.8 million mt in 2021. In terms of breakdown by shipping segments, bunker demand from container ships increased by 8.78% from 56.9 million mt in 2020 to 61.9 million mt in 2020. Demand from passenger ships saw the biggest rise on the year, increasing by 33.33% to 0.4 million mt in 2021 from 0.3 million mt in the previous year. Demand from cruise ships also saw a recovery, increasing by 19.35% from 3.1 million mt in 2020 to 3.7 million mt in 2021 while demand from bulk carriers increased by 4.88% from 55.3 million mt in 2020 to 58.0 million mt in 2021. On the other hand, demand from tankers declined by 5.90% to 41.5 million mt in 2021 (2020: 44.1 million mt).

Conversely, the 2023 IMO Greenhouse Gas (“GHG”) Strategy envisages a reduction in carbon intensity of international shipping (to reduce carbon dioxide (“CO2”) emissions per transport work), as an average across international shipping, by at least 40% by 2030. Furthermore, the new requirement for Efficiency Existing Ship Index (“EEXI”) and Carbon Intensity Indicator (“CII”) came into effect on 1 January 2023, marking a significant step in the maritime industry’s journey to decarbonisation. These new requirements represent an important stride towards the IMO goal of decreasing annual greenhouse gas emissions by 50% from international shipping by 2050, compared with 2008 levels. Under these mandatory measures, all ships that fall under the scope are required to calculate 2 ratings: their attained EEXI to determine energy efficiency, and their annual operational CII and associated CII rating.

Carbon intensity links GHG emissions to the amount of cargo carried over distance travelled. The outcome of this calculation determines the annual reduction factor needed to ensure continuous improvement of a ship’s operational carbon intensity within a specific rating level from A (best) to E (worst). As such, efforts within the shipping community that are in line with the 2015 Paris Agreement to cut GHG emission and to reduce fuel consumption are expected to hinder the market’s expansion.

In addition to the environmental and regulatory shifts, the move towards digitalisation is becoming a key enabler for optimising bunker business models, promoting transparency, fostering sustainability, and driving the decarbonisation of shipping through innovative solutions. Digital technologies, such as artificial intelligence and data analytics, are helping bunkering industry players reduce costs and minimise human error while improving accountability and compliance, making it easier to detect fraud, as well as improving efficiency in fuel management.

On a positive note, there is a growing shift towards using eco-friendly bunker such as LNG and biofuels as an alternative marine fuel and is poised to present lucrative growth prospects for the global bunker fuel market. Additionally, Red Sea ship diversions, which led to a growing number of vessels opting for a longer route around Africa to avoid potential attacks in the Red Sea, are altering refuelling patterns and boosting demand for bunker fuel at far-flung ports, likely further boosting bunker demand. The estimated value of the global bunker fuel market was approximately USD110 billion in 2020. With an estimated annual growth rate of 4%, the global bunkering industry is projected to reach USD160 billion by 2030.

Figure 9: The Historical Size and Growth Forecast for the Global Bunkering Industry, 2021-2028

Notes:

1) ^e denotes estimate, ^f denotes forecast

2) Compound annual growth rate (“CAGR”) (2024-2028) (base year of 2023) = 3.9%

Source: Protégé Associates

In terms of bunkering ports, several have risen to prominence on the global stage. These top bunkering ports include Zuoying (Taiwan); Fujian (China); Shanghai (China); Jebel Ali Port & Free Zone (the United Arab Emirates); Hong Kong (China); Rotterdam (the Netherlands); Antwerp (Belgium); Singapore; Houston (US); and Fujairah (the United Arab Emirates). The above-mentioned bunkering ports play a vital role in ensuring the smooth operation of shipping and international trade, serving as refuelling hubs for a diverse range of vessels, from container ships to tankers and cruise liners.

HISTORICAL MARKET PERFORMANCE AND GROWTH FORECAST OF THE MALAYSIAN OGSE INDUSTRY

The potential size of the OGSE industry in Malaysia is heavily dependent on the capital expenditure committed by PETRONAS. As the custodian of Malaysia’s petroleum resources, PETRONAS allocates budgets and determines upstream and downstream oil and gas projects that will be undertaken in Malaysia which have a positive impact on the participation rate and revenue stream of OGSE industry players. For the purpose of this report, Protégé Associates has used the annual domestic capital expenditure programme of PETRONAS as a proxy to gauge the historical performance and future outlook of the OGSE industry in Malaysia.

Our Group is primarily involved in the OGSE industry where it provides bunkering services, vessel management services, and vessel chartering services.

Figure 10: Historical Size and Growth Forecast of the OGSE Industry in Malaysia, 2021-2028

Notes:

1) ^f denotes forecast

2) CAGR (2024-2028) (base year of 2023) = 1.34%

Source: PETRONAS and Protégé Associates

The PETRONAS domestic capital expenditure increased by 23.78% from USD3.38 billion in 2021 to USD4.06 billion in 2022 driven by the growth of the Malaysian oil and gas industry. Amidst the continued disruption in global oil supply chain due to the Russian-Ukraine war as well as the economic recovery in a post-pandemic environment, PETRONAS has continued to strengthen our business and pursue capital expenditure on exploration, development, and production activities to sustain and grow production in Malaysia.

The domestic capital expenditure of PETRONAS increased by 40.89% from USD4.06 billion in 2022 to USD5.72 billion in 2023 due to PETRONAS’ investments in key projects such as the Nearshore Floating LNG project in Sabah, the Kasawari Gas Field development, and the carbon sequestration (i.e., process of capturing and storing atmospheric carbon dioxide) facilities in Sarawak. PETRONAS’ robust spending was supported by stronger average crude oil prices throughout the year.

Based on its 2024-2026 Activity Outlook, PETRONAS is committed to its sustaining and growing Malaysia’s oil and gas production over the next three years. It has planned approximately 300 facilities improvement plans to be carried out annually for the next three years to maximise production efficiency and sustainability of oil and gas supply. The plans include rejuvenation projects, replacement of gas turbines and generators, as well as other major maintenance works. To further improve efficiency, decommissioning activities will be undertaken for approximately 150 matured assets to restore the area to a safe and environmentally stable condition while disused assets will be assessed for potential reuse or repurposing.

In addition, PETRONAS production operations vessels tender for 2024 consists of 3+3 years contracts for approximately 145 vessels across different sub-segments. PETRONAS has also increased its vessel demand to an estimated 397 vessels in 2024 from around 250-270 Malaysian-flagged vessels currently. The demand-supply gap in vessels is likely to spur an influx of new vessels in the future, which bodes well for the local bunkering industry.

According to PETRONAS, its capital investment allocation between 2023 to 2027 is expected to be 43.0% higher than the last five years (between 2018 to 2022), primarily due to scaling up investments in the core business, lowering its emissions as well as investing in new business to future-proof the PETRONAS’ portfolio. Moving forward, the annual domestic capital expenditure of PETRONAS is projected to grow from USD5.78 billion in 2024 to USD6.11 billion in 2028, registering a CAGR of 1.34% during the forecast period. Against the backdrop of economic recovery in the post-pandemic environment, PETRONAS will continue to invest in core business activities and growth projects in continuing their effort to support and contribute towards the resilience of the OGSE industry.

INTRODUCTION TO PORTS IN MALAYSIA

Currently, Malaysia has a total of 7 main federal ports, namely Penang Port, Port Klang, Kuantan Port, Kemaman Port, Johor Port, Port of Tanjung Pelepas and Bintulu Port. Meanwhile, all the ports in Sabah and Sarawak (except Bintulu Port and Labuan Port) are under the jurisdiction of the state governments of Sabah and Sarawak respectively. The administration of these ports is legislated under the respective port authority and port act.

Figure 11: Location of Main Federal Ports in Malaysia

Source: Protégé Associates

Penang Port

Penang Port is located on the Straits of Malacca on the northwest coast of Peninsular Malaysia. Penang Port offers a variety of facilities and modern equipment to handle containers, liquid bulk cargo, dry bulk cargo and general cargo. For the first 2 quarters of 2024 (“Q1 to Q2 2024”), Penang Port registered a total cargo throughput of 16,201,767 million tonnes, and 2,069 ships berthed at the port during the same period.

Figure 12: Total Cargo Throughput in Penang Port, 2020 – Q1 to Q2 2024

Source: Penang Port Commission

Figure 13: Total Number of Ships Calling by Penang Port, 2020 – Q1 to Q2 2024

Source: All Ports and Marine Department

Port Klang

Port Klang, located on the Straits of Malacca on the west coast of Peninsular Malaysia, is approximately an hour away from Kuala Lumpur and around 300 kilometres from Singapore. The port is considered one of the busiest ports in Malaysia, with the highest cargo throughput among the ports in Malaysia. During Q1 to Q2 2024, Port Klang registered a total cargo throughput of 7.1 million TEUs, and 6,839 ships berthed at the port during the same period.

Figure 14: Total Cargo Throughput in Port Klang, 2020 – Q1 to Q2 2024

Source: Port Klang Authority

Figure 15: Total Number of Ships Calling by Penang Port, 2020 – Q1 to Q2 2024

Source: All Ports and Marine Department

Kuantan Port

Kuantan Port is located on the eastern seaboard of Peninsular Malaysia, right at the heart of the country’s petrochemical industry. Kuantan Port has emerged as a major force in the east coast region. The port is equipped with top-of-the-line facilities and services and boasts extensive market outreach and a robust global shipping network. During Q1 to Q2 2024, Kuantan Port registered a total cargo throughput of 141,218 TEUs, and 2,067 ships berthed at the port during the same period.

Figure 16: Total Cargo Throughput in Kuantan Port, 2020 – Q1 to Q2 2024

Source: All Ports and Marine Department

Figure 17: Total Number of Ships Calling by Kuantan Port, 2020 – Q1 to Q2 2024

Source: All Ports and Marine Department

Kemaman Port

Kemaman Port is located on the east coast of Peninsular Malaysia in the state of Terengganu. During Q1 to Q2 2024, Kemaman Port registered a total of cargo throughput of 3.5 million Freight Weight Tonnes (“FWT”), and 241 ships berthed at the port during the same period.

Figure 18: Total Cargo Throughput in Kemaman Port, 2020 – Q1 to Q2 2024

Source: Kemaman Port Authority

Figure 19: Total Number of Ships Calling by Kemaman Port, 2020 – Q1 to Q2 2024

Source: All Ports and Marine Department

Johor Port

Johor Port, located at the southern tip of Peninsular Malaysia, provides a comprehensive range of port services to meet the various needs of its customers. It is the first port in Malaysia to be accorded with Free Zone status. It has an annual capacity of 1.45 million units for container services; 8 million FWT for dry bulk services; 2 million FWT for breakbulk services and 15 million FWT for liquid bulk services. During Q1 to Q2 2024, Johor Port registered a total cargo throughput of 505,359 TEUs, and 1,987 ships berthed at the port during the same period.

Figure 20: Total Cargo Throughput in Johor Port, 2020 – Q1 to Q2 2024

Figure 21: Total Number of Ships Calling by Johor Port, 2020 – Q1 to Q2 2024

Source: All Ports and Marine Department

Port of Tanjung Pelepas

Port of Tanjung Pelepas, located at the southern tip of Peninsular Malaysia, is the premier transshipment port in Malaysia. The port is equipped with state-of-the-art facilities, equipment and information technology systems integrating all port users. It has the capacity to handle up to 12.5 million TEUs annually. It is also worth noting that Port of Tanjung Pelepas ranked the top 6 under the Container Port Performance Index 2022, rising from the 12^th place in 2021, according to the United Nations Conference of Trade and Development (“UNCTAD”). During Q1 to Q2 2024, 2,287 ships berthed at the port.

Figure 22: Total Number of Ships Calling by Port of Tanjung Pelepas, 2020 – Q1 to Q2 2024

Source: All Ports and Marine Department

Bintulu Port

Bintulu Port which is located in Northeast Sarawak, lies on the route between the Far East and Europe. It is also the main route for the export of LNG from Malaysia. In addition, Bintulu Port also offers modern and sophisticated facilities and equipment for handling containers, liquid and dry bulk cargo as well as general cargo. During Q1 to Q2 2024, Bintulu Port registered a total cargo throughput of 42.8 million mt, and 7,356 ships berthed at the port during the same period.

Figure 22: Total Cargo Throughput in Bintulu Port, 2020 – Q1 to Q2 2024

Source: Bintulu Port Authority

Figure 23: Total Number of Ships Calling by Bintulu Port, 2020 – Q1 to Q2 2024

Source: All Ports and Marine Department

COMPETITIVE ANALYSIS

TMD Energy Limited (“TMDEL”) is a subsidiary of Straits, which is a public listed company on the ACE Market of Bursa Malaysia. TMDEL Group is primarily involved in the OGSE industry where it provides bunkering services, vessel management services, and vessel chartering services.

The bunkering industry in Malaysia is considered to be competitive. We compete with marine fuel traders and brokers such as Singapore, Europe, Middle East, for services and end customers. We also compete with physical suppliers of marine fuel products for business from traders and brokers as well as end customers. Our competitors include both large corporations and small, specialised firms. We believe that our ability to compete effectively within the bunkering industry is dependent on several factors such as sufficient working capital, track record and relationships with customers and suppliers, technical knowledge and experience, and good customer service. Companies require sufficient working capital or favourable credit terms to source and procure the necessary bunker prior to supplying it to their customers. Although a bunker supplier may have favourable credit terms, sufficient working capital may be required in the event of gaps between purchasing and selling on credit terms. A track record of service is testament to the ability of a company to provide bunkering services effectively to their customers over the years. Additionally, the relationships fostered between a bunkering company and their customers and suppliers can lead to repeat business or a consistent supply of different bunkers as required by customers. Technical knowledge and experience are required to ensure that companies are able to provide solutions to their customers and ensure that all services are provided in compliance with the relevant local and international standards and regulations. Lastly, good customer service such as responsiveness, clear communication, and reliability while catering to customers’ needs will allow for a company to build customer relationships and secure repeat orders, as well as possible business growth through recommendations from customers.

MARKET SHARE

For the FY2023, TMDEL Group generated revenue of USD633.84 million, representing 0.53% share of the global bunkering industry of USD119.32 billion. At the same time, TMDEL Group’s revenue of USD633.84 million for the financial year FY2023 is equivalent to 11.08% share of the OGSE industry in Malaysia of USD5.72 billion in 2023.

KEY INDUSTRY DRIVERS

The presence of strategic petroleum reserves

To maintain national fuel security and protect the economy during an energy crisis, crude oil is often stockpiled into what is commonly known as strategic petroleum reserves. The drawdown and replenishment or addition of strategic petroleum reserves can also act as a stabilising force against sharp movements in the prices of crude oil. As such, the presence of strategic petroleum reserves brings a positive impact to the overall development of the oil and gas industry including the OGSE industry.

Continuing close attention and support from the Malaysian government

The local OGSE industry, in particular bunkering activities, can look forward to the continuing close attention and support from the Malaysian government in the form of national strategic policies. This support is driven by the industry’s growth potential and its positive impact on the country’s economy, as it acts as a catalyst for a more dynamic and competitive maritime ecosystem. Several agreements have been established by the Malaysian government to improve the bunkering activities in Malaysia, including:

a) the Malaysian government will intensify efforts to ensure all obligations and conditions under the International Convention for the Prevention of Pollution from Ships (“MARPOL”) are implemented, including the use of double hull double bottom ships in order to boost the competitiveness of the bunkering industry and ensure environmental sustainability;

b) Tankers with single-hull double-bottom delivered before July 1996, are allowed to carry oil and their operation can continue subject to the below conditions:

● The tanker must be less than 5,000 tonnes deadweight;

● Not allowed to carry heavy grade oil;

● Restricted to navigate within Malaysian waters only; and

● The ships must be classified with any organisation recognised by the Malaysian Marine Department with the appropriate Class Notation.

The aforementioned terms and conditions came into force through a new Malaysia Shipping Notice issued by the Malaysian Maritime Department. These policies take into account the needs and wishes of industry players in Sarawak and Sabah, as well as inland areas or islands where they use small vessels and usually consist of single hull vessels or licensed boats.

Furthermore, the Ministry of Transport Malaysia has emphasised the government’s commitment in supporting Malaysian bunkering companies and tanker owners, especially those who are willing to invest capital in double hull double bottom vessels and modern equipment that can offer high quality bunkering services in line with Malaysia’s goal of becoming a world-class bunkering hub.

Strategic location on major shipping routes including the Straits of Malacca and the South China Sea

Malaysia is strategically located within the major shipping routes including the Straits of Malacca and the South China Sea, two of the ASEAN region’s main maritime corridors navigate through Malaysia’s territorial waters and exclusive economic zones. These two maritime corridors are vital for the trillion-dollar global shipping industry, as well as for the enforcement agencies of Asia-Pacific nations.

In particular, the Straits of Malacca has served as the primary connecting link between Europe, the Middle East, and South Asia on one side and Southeast and East Asia on the other. Furthermore, the Straits of Malacca is the shortest shipping route connecting the Indian Ocean to the Pacific Ocean. On the other hand, the South China Sea is a vital trade route linking the main arteries of trade in Southeast Asia, connecting waterways from Singapore and Malaysia to Indonesia, the Philippines, and Taiwan. This strategic location has established Malaysian ports as vital hubs for international trade and shipping activities. Vessels traveling through this route often require bunkering services, and Malaysia’s proximity to this vital passage makes it an attractive destination for refuelling. Consequently, Malaysia is well-positioned to leverage its strategic location and develop into a prominent bunker hub.

Strong leadership by PETRONAS

PETRONAS acts as a custodian of Malaysia’s petroleum resources and has been actively involved in spearheading efforts to stimulate the growth in the local O&G industry including its stakeholders such as the local bunkering industry. In Malaysia, PETRONAS fosters collaborations and partnerships in the oil and gas industry by working with operators in petroleum activities across the value chain and throughout the entire asset life. O&G industry players in Malaysia, including the local bunkering industry players can also look forward to a transformed PETRONAS Technical Standards with the expected full adoption of the International Standards which can create mutually beneficial outcome in terms of cost, quality, reliability, safety, and schedule. Further traction in standardisation can help to reduce cost and open up opportunities to create greater value for manufacturers, suppliers and principals. In addition, digitalisation, permanent reservoir modelling and enhanced oil recovery methods are expected to continue improving oil recovery rate from mature oil fields and drive the advent of tight oil and shale gas.

Continuing investments driving upstream and downstream oil and gas activities

Due to the normal maturation of the traditional shelf basins with mostly economically attractive fields, we can expect more future offshore exploration activities to be conducted in deep and ultra-deep water. Meanwhile, the development of the downstream sector of the local oil and gas industry is expected to gain further traction with the continuing investments in the petroleum products industry, as well as the supply of lower carbon and sustainable solutions such as sustainable aviation fuel and LNG bunkering to customers.

In 2022, there were 18 approved oil and gas projects with investments worth RM23.90 billion compared to 16 approved oil and gas projects with investments worth RM17.09 billion in 2021. These projects can help to spur further activities in the local oil and gas industry, bringing derived demand for the local bunkering industry.

POTENTIAL INDUSTRY CHALLENGES

Tighter environmental regulations

With international shipping accounting for approximately 3% of global GHG emissions, decarbonisation has become an increasingly urgent priority. The 2023 IMO GHG Strategy, which includes environmental regulations aimed at reducing CO2 emissions and the environmental impact of shipping, presents ongoing challenges to the bunkering industry. Furthermore, from 1 January 2023, it became mandatory for all ships to calculate their attained EEXI to measure their energy efficiency and to initiate the collection of data for the reporting of their annual operational CII and CII rating. To meet more stringent environmental regulations, both the shipping industry players and ports will need to seek alternative fuels like LNG, methanol, ammonia, renewable energy such as electricity, or implement operational changes such as retrofit their ships with energy efficient technologies. However, this shift is likely to raise the overall operational costs for industry players. Ports and carriers have the potential to reshape the competitive landscape in favour of low-emission shipping. Yet, this transformation may create a two-tier system of ports and maritime corridors, with only a small proportion being ready for alternative energy adoption. Consequently, the number of feasible routes could be limited.

Another significant source of maritime pollution arises from bunker oil spills, and these risks are growing. The environmental impact of oil spills is immense as they can damage marine ecosystems, coastal environments, and damage to aquatic life. Ships deliver over 80% of world trade and hence, the bunkering industry is affected by the tighter national and regional environmental regulations.

Market uncertainty due to fluctuations in oil prices, geopolitical tensions, and global economic conditions

During the COVID-19 pandemic, global oil demand contracted due to lockdown measures causing a decline in crude oil prices. The rollout of vaccines and lifting of lockdown measures subsequently led to the recovery of oil demand and higher crude oil prices in 2021. However, in 2022, crude oil prices became volatile due to Russia-Ukraine war which disrupted oil supply and caused a spike in crude oil prices. Furthermore, recession fears in some major economies as well as the economic slowdown in China further dampened crude oil prices. More recently, the outbreak of the Hamas-Israel war has caused oil prices to spike upwards marginally. Despite the conflicts, crude oil prices stood at USD77.63 per barrel in December 2023. The price of crude oil has since increased slightly, reaching USD83.48 per barrel in February 2024. The crude oil price stood at USD82.25 in June 2024. The fluctuation in the crude oil prices has made it increasingly challenging for OGSE companies to forecast their earnings and plan ahead due to rapid market changes and increasing uncertainty.

A slower global economic recovery dampened by geopolitical tensions, coupled with high inflation, is likely to weaken consumer sentiment and reduce consumer spending power. Additionally, higher freight rates for businesses which may be passed on to consumers may also reduce demand for goods and thus reduce trade demand. As global trade falters due to these factors, the OGSE industry, in particular bunkering activities, faces its own set of challenges. Reduced trade activity results in fewer ships in operation, translating into decreased demand for bunkering services.

Increasing Threat of Substitutability from Greener and Renewable Sources of Energy

Greater knowledge of the environmental impact of fossil fuels and the advancements in technology have led to the rise of vehicles that use alternatives fuels. According to the International Energy Agency, global electric car sales exceeded 10.0 million in 2022, a 55.0% increase from 6.6 million sales in 2021. Global electric car sales continued to increase in 2024, reaching close to 14 million new electric cars sold during the year. This figure is projected to increase to approximately 17.0 million by the 2024 as countries try to reach their energy transition goals to reduce GHG emissions and combat climate change. Additionally, as environmental and cost concerns become more prominent, greener and renewable energy sources such as solar, wind, hydro and biomass are increasingly being explored to replace fossil fuel. The abovementioned factors are likely to impact the demand for O&G and OGSE in the long term future. However, green and renewable sources of energy are not expected to make a marked dent in the demand for fossil fuels during the forecast period because fossil fuels remain the familiar and more cost-efficient choice for the majority of major energy users. Despite efforts to diversify and promote cleaner energy alternatives, the infrastructure and scale for renewable energy sources are not yet at a level to significantly replace the demand for fossil fuels in the near term.

Higher investment costs and capital expenditures to align with the green transition

The maritime industry is increasingly embracing greener and more sustainable practices, driven by environmental regulatory changes and global efforts in reducing CO2 emissions. As a result, bunkering companies are required to adapt to these shifting industry norms by adopting eco-friendly technologies, enhancing fuel efficiency, and reducing their carbon footprint. As such, bunkering industry players may need to increase their investments and capital expenditures, whether through retrofitting or replacing their existing fleets or expanding their bunker storage facilities. These measures are essential for aligning with the ongoing green transition in shipping and safeguarding competitiveness. This could, however, lead to occasional volatility in of their profitability.

BARRIERS TO ENTRY

Bunkering industry players need to fulfil various obligations for their respective floating storage unit that include obtaining the statutory certificates and in compliance with the requirements of the Malaysian Merchant Shipping Ordinance 1952 and its regulations as required by the Malaysian Marine Department. Besides that, bunkering industry players are required to obtain approval from the Royal Malaysian Customs Department (“RMCD”) to carry out bunkering activities. Bunkering industry players are also required to obtain a licence under the Control of Supplies Act 1961 which allows them to undertake the sale of petrol, and all grades of diesel fuel, and mixture of diesel fuel and biofuel.

Additionally, the need to ensure an adequate and skilled workforce in the bunkering industry comes with high recruitment and/or training costs. As a result, potential entrants are expected to incur costs in engaging and/or training their employees with specialised skill sets and necessary technical expertise to be involved in bunkering operations. Hence, bunkering is considered to have relatively high regulatory barriers to entry. This can restrain the number of entrants to the market as well as the size of the market.

OUTLOOK OF THE OGSE INDUSTRY IN MALAYSIA

The positive outlook for the local OGSE industry is mainly driven by the continuing close attention and support from the Malaysian government in the form of national strategic policies, recognising its strategic importance as a key source of revenue and an economic driver. The government’s commitment to supporting local bunkering activities in particular is demonstrated through proactive discussion sessions and the establishment of several agreements with local bunkering stakeholders to build Malaysia as a bunkering hub. Malaysia’s strategic location, bounded by the Straits of Malacca and the South China Sea, gives the country an advantage in developing a prominent bunkering hub. The growth of bunkering activities is also expected to be supported by PETRONAS’ strong leadership, which means that the local OGSE industry including the bunkering industry is being guided by steady hands in navigating its future direction. Furthermore, continuing influx of investments that can stimulate more upstream and downstream O&G activities is also likely to boost the growth of the local OGSE industry, including bunkering activities.

On the flip side, industry players in the local OGSE industry need to be mindful of the latest national and regional environmental regulations. Meeting these more stringent requirements may lead industry players to incur high costs in implementing operational changes. Market uncertainty stemming from fluctuations in oil prices, geopolitical tensions, and global economic conditions will ultimately pose a challenge to OGSE companies in terms of their earnings and profitability. In addition, consumer sentiment and spending power is expected to be challenging due to the global economic conditions, inflationary pressure, and higher freight rates. Growth of the industry may also be dampened by higher investment costs and capital expenditures to align with the green transition as well as the barriers to entry as potential entrants are required to obtain licenses, registrations and/or approvals to provide OGSE, thus restraining the number of entrants into the industry.

Nevertheless, the growth in the OGSE industry in Malaysia is expected to follow closely the projected growth in the domestic capital expenditure of PETRONAS which is projected to grow from USD5.78 billion in 2024 to USD6.11 billion in 2028, registering a CAGR of 1.34% during the forecast period.

USE OF PROCEEDS

Based upon an initial public offering price of $3.50 per Ordinary Share (the midpoint of the price range set forth on the cover page of this prospectus), we estimate that we will receive net proceeds from this offering, after deducting the estimated underwriting discounts and commissions, out-of-pocket expense allowance and the estimated offering expenses payable by us, of approximately $7,787,256 if the underwriters do not exercise their over-allotment option, and $9,276,418 if the underwriters exercise their over-allotment option in full.

Each $1.00 increase (decrease) in the assumed initial public offering price of $3.50 per share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) the net proceeds to us from this offering by $3,100,000, assuming that the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts, out-of-pocket expense allowance and estimated offering expenses payable by us. An increase (decrease) of 1.0 million in the number of Ordinary Shares we are offering would increase (decrease) the net proceeds to us from this offering by $3,100,000, assuming the assumed initial public offering price remains the same, and after deducting the underwriting discounts, out-of-pocket expense allowance and estimated offering expenses payable by us.

The primary purposes of this offering are to create a public market for our shares for the benefit of all shareholders. We plan to use the net proceeds of this offering as follows:

● 55% of the proceeds for the purchase of cargo oil;

● 29% for defraying listing expenses; and

● the balance of 16% for working capital and other general corporate purposes.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this registration statement. We reserve the right to change the use of proceeds that we presently anticipate and describe herein.

To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

DIVIDEND POLICY

We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our Board after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the Board deems relevant, and subject to the restrictions contained in any future financing instruments.

For FY2022, FY2023, 6M2023 and 6M2024 and up to the date of this prospectus, we did not declare or pay any dividends. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our subsidiaries by way of dividend payments.

The declaration, amount and payment of any future dividends will be at the sole discretion of our Board, subject to compliance with applicable Cayman Islands laws regarding solvency. Our Board will take into account general economic and business conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and other implications on the payment of dividends by us to our shareholders or by our subsidiaries to us, and such other factors as our Board may deem relevant.

Under Cayman Islands laws and our memorandum and articles of association as may be amended from time to time, our Board may only authorize payment of a dividend to shareholders out of profits or share premium at such time and of such an amount as they determine if they are satisfied on reasonable grounds that immediately following payment of the dividend we will be able to pay our debts as they become due in the ordinary course of business. Any other future determination to pay dividends will be made at the discretion of our Board. Our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our Board. There is no further Cayman Islands statutory restriction on the amount of funds which may be distributed by us by dividend.

As we are a holding company, we rely on dividends paid to us by our subsidiaries for our cash requirements, including funds to pay any dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. Our ability to pay dividends to our shareholders will depend on, among other things, the availability of dividends from our Operating Subsidiaries.

Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars.

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2024 on:

You should read this information together with our audited consolidated financial statements appearing elsewhere in this prospectus and the information set forth under the sections titled “Selected Consolidated Financial Data”, “Exchange Rate Information”, “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

It also reflects the sale of Ordinary Shares in this offering at an assumed initial public offering price of $3.50 per share (the midpoint of the price range set forth on the cover page of this prospectus), and after deducting the underwriting discounts, out-of-pocket expense allowances and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting the underwriting discounts (8.5%) and estimated offering expenses.

Each $1.00 increase (decrease) in the assumed initial public offering price of $3.50 per ordinary share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) the pro forma as adjusted amount of total capitalization by $3,100,000, assuming that the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts, out-of-pocket expense allowance and estimated offering expenses payable by us. An increase (decrease) of 1.0 million in the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of total capitalization by $3,500,000, assuming no change in the assumed initial public offering price per ordinary share as set forth on the cover page of this prospectus.

DILUTION

If you invest in our Ordinary Shares in this offering, your interest will be immediately diluted to the extent of the difference between the initial public offering price per ordinary share in this offering and the net tangible book value per ordinary share after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the net tangible book value per ordinary share. As of June 30, 2024, we had a historical net tangible book value of $15,656,852, or $0.78 per ordinary share. Our net tangible book value per share represents total tangible assets less total liabilities, all divided by the number of Ordinary Shares outstanding as of June 30, 2024.

After giving effect to the sale of Ordinary Shares in this offering at the assumed initial public offering price of $3.50 per Ordinary Share (the midpoint of the price range set forth on the cover page of this prospectus), we will have 23,100,000 Ordinary Shares outstanding, and after deducting the underwriting discounts, out-of-pocket expense allowance and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value at June 30, 2024 would have been $24,999,599, or $1.08 per ordinary share. This represents an immediate increase in pro forma as adjusted net tangible book value of $0.30 per ordinary share to existing investors and immediate dilution of $2.42 per ordinary share to new investors. The following table illustrates this dilution to new investors purchasing Ordinary Shares in this offering:

Each $1.00 increase (decrease) in the assumed initial public offering price of $3.50 per ordinary share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) our pro forma as adjusted net tangible book value as of June 30, 2024 after this offering by approximately $1.08 per ordinary share, and would increase (decrease) dilution to new investors by $2.42 per ordinary share, assuming that the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts, out-of-pocket expense allowance and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.

To the extent that we issue additional Ordinary Shares in the future, there will be further dilution to new investors participating in this offering.

EXCHANGE RATE INFORMATION

The functional currency of our entities located in Malaysia (save for Labuan) is RM, the functional currency of our entities located in Labuan is USD and the functional currency of our entities located in Singapore is SGD. Our consolidated financial statements are presented in USD. We use USD as reporting currency in our consolidated financial statements and in this prospectus. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the period. Gains or losses resulting from foreign currency transactions are included in the accompanying consolidated statement of income and other comprehensive income.

Translations of balances in the consolidated balance sheets from RM and SGD into USD as of December 31, 2022 were calculated at the rate of RM 1.00 to USD 0.2262 and SGD 1.00 to USD 0.7443 respectively, while that of December 31, 2023 were calculated at the rate of RM 1.00 to USD 0.2172 and SGD 1.00 to USD 0.7577 respectively. Translations of balances in the consolidated balance sheets from RM and SGD into USD as of June 30, 2023 were calculated at the rate of RM 1.00 to USD 0.2142 and SGD 1.00 to USD 0.7374 respectively, while that of June 30, 2024 were calculated at the rate of RM 1.00 to USD 0.2121 and SGD 1.00 to USD 0.7382 respectively.

The translations of balances in the consolidated statements of income and consolidated statements of cash flow from RM and SGD into USD for FY2022 were calculated at the rate of RM 1.00 to USD 0.2274 and SGD 1.00 to USD 0.7253 respectively, while that for FY2023 were calculated at the rate of RM 1.00 to USD 0.2194 and SGD 1.00 to USD 0.7447 respectively. The translations of balances in the consolidated statements of income and consolidated statements of cash flow from RM and SGD into USD for 6M2023 were calculated at the rate of RM 1.00 to USD 0.2245 and SGD 1.00 to USD 0.7486 respectively, while that for 6M2024 were calculated at the rate of RM 1.00 to USD 0.2118 and SGD 1.00 to USD 0.7486 respectively.

CORPORATE HISTORY AND STRUCTURE

Our Corporate History

The history of our Group’s involvement in the OGSE industry can be traced back to 2016, when its ultimate holding company, Straits then known as Raya International Berhad (“RIB”) ventured into the provision of oil bunkering services. Since then, RIB had on June 20, 2017 changed its name to Straits Inter Logistics Berhad and subsequently to its current name, Straits Energy Resources Berhad, on August 19, 2021.

The table below sets out the key events and milestones in the bunkering and oil trading history and development of Straits: