Executive Summary / Key Takeaways

• Resilient Core, Strategic Diversification: TMD Energy Limited (TMDE) operates as a key marine fuel logistics provider in Asia, leveraging a dedicated fleet and regional expertise. While its core bunkering services faced headwinds in the first half of 2025, the company is strategically diversifying into green bioenergy and oil waste collection, aiming to build new revenue streams and enhance its Environmental, Social, and Governance (ESG) commitments.
• Recent Financial Headwinds: The first six months of 2025 saw a notable decline in revenue and a net loss, primarily driven by a slowdown in global trade, a significant drop in average oil prices, and geopolitical tensions. This contrasts with strong revenue and gross profit growth observed in fiscal year 2024.
• Liquidity Management Amidst Challenges: Despite a net working capital deficit and net loss as of June 30, 2025, management expresses confidence in meeting financial obligations, supported by cash reserves, substantial trade facilities, and a structured debtor repayment plan, bolstered by proceeds from its April 2025 Initial Public Offering (IPO).
• Competitive Landscape and Niche Strengths: TMDE operates in a highly competitive market dominated by global energy giants. Its competitive advantages lie in operational agility, regional expertise, and integrated services in specific Asian markets, though it faces vulnerabilities due to its smaller scale and newer market presence.
• Outlook Hinges on Market Recovery and Strategic Execution: Future growth is dependent on a recovery in global trade and shipping activity, successful execution of its green energy initiatives, and effective management of ongoing geopolitical and commodity price volatility.

Setting the Scene: TMD Energy's Position in the Global Marine Fuel Arena

TMD Energy Limited (TMDE) stands as a comprehensive provider of marine fuel logistics and related services, primarily operating across key Asian maritime hubs including Malaysia, Singapore, Hong Kong, Indonesia, and Vietnam. The company's core business revolves around integrated bunkering services, which encompass the ship-to-ship transfer of marine fuels such as marine gas oil, low sulfur fuel oil, and very low sulfur fuel oil, supported by a fleet of 15 bunkering vessels. This operational backbone is complemented by ship management services and, historically, vessel chartering.

The global marine fuel industry, in which TMDE operates, is currently influenced by several significant macroeconomic and geopolitical currents. A slowdown in global trade and shipping activity, exacerbated by a tariff crisis in early 2025, has disrupted shipping schedules and cargo flows, leading to reduced demand for marine fuel. Geopolitical instability, particularly conflicts in the Middle East since late 2023, has heightened security risks in major shipping lanes, lengthening voyage times and increasing operational costs across the industry. Furthermore, the broader energy sector is witnessing a continuing shift toward alternative energy sources, which, coupled with softer global consumption and weaker economic growth, exerts downward pressure on traditional oil demand. These dynamics create a challenging yet evolving landscape for marine fuel providers like TMDE.

A Legacy Forged in Fuel: Evolution and Strategic Consolidation

TMD Energy Limited was incorporated on October 17, 2023, in the Cayman Islands, initially serving as an investment holding company. Its current operational structure is the result of a series of strategic reorganizations and acquisitions orchestrated by its ultimate holding company, Straits Energy Resources Berhad (STRAITS) (Straits), which had acquired a pivotal operating subsidiary, Tumpuan Megah Development Sdn. Bhd., in 2018.

The period leading up to TMDEL's formation saw significant strategic shifts. In July 2023, the company temporarily discontinued its third-party vessel chartering services, redeploying a vessel to its bunkering fleet to meet increasing fuel cargo demand. This internal reallocation, alongside the conversion of a water barge into a bunker vessel, underscored a focused effort to enhance core bunkering capabilities. Extensive corporate restructuring under common control occurred in late 2023 and early 2024, consolidating various subsidiaries under Straits Marine Fuels Energy Sdn. Bhd. (SMF), which TMDEL subsequently acquired. A significant milestone was the consummation of TMDEL's Initial Public Offering (IPO) on the NYSE American on April 22, 2025, raising gross proceeds of $11.59 million. This capital infusion is crucial for future endeavors and growth initiatives. Following the IPO, the company adjusted its fiscal year end from December 31 to June 30 on May 16, 2025, to align with its holding company.

Operational Engine: Bunkering at the Core

TMDE's financial performance is predominantly driven by its bunkering services segment, which consistently contributes over 99% of the Group's revenue. In fiscal year 2024, the bunkering segment demonstrated robust growth, with revenue increasing by $56.60 million to $688.20 million from $631.60 million in FY2023. This growth was primarily fueled by a 6% increase in the volume of oil cargo bunkered, reaching 989,512 metric tons, and an expansion of the customer base from 90 to 101 customers. Gross profit for bunkering services surged by 42.30% to $15.60 million, and the average gross profit per metric ton improved by 34.20% to $15.81, reflecting enhanced operational efficiency and strategic market penetration.

However, the first six months of 2025 presented significant challenges. Revenue from bunkering services decreased by 22.90% to $275.40 million from $357.30 million in the comparable 2024 period. This decline was largely attributable to an 11.20% decrease in the volume of oil cargo bunkered, falling to 514,025 metric tons, and a 17.90% decrease in the average oil price. Despite expanding its customer base from 53 to 77 customers, the slowdown in global trade, the tariff crisis, and weaker economic growth collectively reduced overall demand for marine fuel. Consequently, gross profit for bunkering services fell by 29% to $3.80 million, and the average gross profit per metric ton compressed by 20% to $7.42, primarily due to elevated operating costs, logistical disruptions, and narrowed spreads between selling prices and procurement costs.

Beyond the Bunker: Diversification and ESG Initiatives

While bunkering remains its core, TMDE is actively pursuing strategic diversification. The ship management services segment, supported by a team of qualified professional mariners, manages both in-house and third-party vessels. This segment generated approximately $0.90 million in revenue for the six months ended June 30, 2025, a significant increase from $0.175 million in the prior year period, driven by the addition of new customers.

Looking ahead, TMDE is making a strategic pivot towards sustainable energy. In May 2025, the company announced an expansion into oil waste collection as a core Environmental, Social, and Governance (ESG) initiative. This aims to collect sludge oil and used cooking oil for sale to third-party partners for processing into biodiesel, thereby diversifying revenue streams. Further solidifying this direction, in June 2025, TMDE entered into a Memorandum of Agreement with ISCC-EU certified Malaysian bioenergy firm Double Corporate Sdn Bhd to explore a strategic collaboration for the EU and Asia market. These initiatives represent TMDE's roadmap for future technological relevance, aiming to position the company within the evolving green energy landscape and mitigate risks associated with traditional fossil fuels.

Competitive Currents: Positioning Against Industry Giants

TMDE operates in a highly competitive marine bunkering industry, vying with global energy giants such as World Fuel Services Corporation (WFS), BP plc (BP), Shell plc (SHEL), and Chevron Corporation (CVX), as well as numerous regional players. These larger competitors benefit from immense scale, extensive global networks, and significant R&D budgets for energy transition initiatives.

TMDE's competitive advantages stem from its regional focus and integrated service offerings. Its dedicated fleet and in-house vessel management allow for operational agility and potentially faster, more responsive service delivery in its key Asian markets. This localized expertise can foster stronger customer relationships and navigate regional regulatory nuances more effectively than larger, more diversified players. However, TMDE's smaller scale and newer market presence are significant vulnerabilities. It faces challenges in competing on price with the cost leadership of larger rivals and in matching their innovation speed in areas like digital bunkering platforms or advanced low-carbon fuel solutions. The company's concentration risk is also notable, with Customer A accounting for 91.43% of revenues and Supplier A for 71.81% of total cost of revenues for the six months ended June 30, 2025. This dependency could impact its competitive standing and operational resilience.

Financial Fortitude: Navigating Headwinds and Capital Allocation

TMD Energy's consolidated financial performance in the first half of 2025 reflects the challenging market conditions. Total revenue for the six months ended June 30, 2025, decreased by 22.7% to $276.34 million, leading to a gross profit of $3.98 million, down 28.2% from the prior year period. The company reported a net loss of $4.52 million for this period, a significant shift from the net income of $1.13 million in the first six months of 2024. This loss was influenced by a $1.50 million net foreign currency loss due to the strengthening of the Malaysian Ringgit and Singapore Dollar against the U.S. Dollar, an increase in interest expense by $0.80 million to $2.80 million from higher trade financing utilization, and an 8.8% rise in general and administrative expenses to $3.30 million due to salary adjustments and directors' remuneration post-listing. Notably, the company recorded an income tax benefit of $1 million, primarily from an over-provision in FY2024. The financial statements for this period are unaudited.

Despite a net working capital deficit of $8.70 million and the net loss as of June 30, 2025, management believes it can meet its financial obligations for the next 12 months. This confidence is underpinned by $7.10 million in cash and cash equivalents, anticipated access to $91.80 million in trade facilities and $11.20 million in supplier purchasing limits, and a $15 million repayment plan with major debtors scheduled through May 2026. The $11.59 million gross proceeds from the April 2025 IPO also significantly bolstered liquidity.

Net cash used in operating activities for the six months ended June 30, 2025, was $20.30 million, impacted by increased accounts receivable and advance payments, while financing activities provided $12.80 million, largely from the IPO and net borrowings. Capital expenditures of $2.10 million for the period were financed internally, primarily for dry-dock activities to maintain its fleet.

Outlook and Risks: Charting a Volatile Course

TMD Energy's outlook is a blend of cautious optimism and strategic adaptation. Management anticipates that existing cash, operational cash flow, and IPO proceeds will sufficiently cover operational working capital and capital expansion requirements for the next 12 months. The strategic initiatives in oil waste collection and green bioenergy collaboration signal a proactive approach to diversify revenue streams and align with global sustainability trends, potentially opening new markets and enhancing long-term resilience.

However, significant risks persist. The company's heavy reliance on a few key customers and suppliers exposes it to substantial concentration risk. The cyclical nature of the shipping industry, coupled with ongoing geopolitical conflicts and trade tensions, directly impacts demand for marine fuel and can lead to volatile operating results. Fluctuations in crude oil prices and inflationary pressures could further increase operating costs and tighten cash flows. Additionally, foreign currency exchange rate risks, environmental liabilities from fuel operations, and the challenge of retaining key management personnel remain critical considerations for investors. The success of TMDE's strategic pivot into green energy will be crucial in mitigating some of these long-term risks and securing a sustainable growth trajectory.

Conclusion

TMD Energy Limited is a regional marine fuel logistics provider at a pivotal juncture, balancing the inherent volatility of its core bunkering business with ambitious strategic diversification. While the first half of 2025 presented financial headwinds driven by external market forces, the company's robust operational foundation, demonstrated by its FY2024 performance, and its proactive steps into green bioenergy and oil waste collection underscore a forward-looking strategy. The successful IPO has provided essential capital, bolstering liquidity as TMDE navigates a complex global environment.

For discerning investors, TMDE represents an opportunity in a foundational industry undergoing transformation. The investment thesis hinges on the company's ability to leverage its regional expertise and operational agility to maintain its competitive edge in traditional bunkering, while simultaneously executing its strategic pivot into sustainable fuel solutions. Monitoring the impact of global trade dynamics, commodity price stability, and the tangible progress of its green initiatives will be key to assessing TMDE's potential for sustained growth and enhanced shareholder value in the evolving energy landscape.