Unifuels Holding Limited (UFG)

Unifuels Holding Limited: Financial Analyst Report

Executive Summary

• Report Date: 2025-04-30
• Period Covered: Full Year 2024 (fiscal year ended December 31, 2024)
• Form Type: 20-F
• Ticker: UFG (Nasdaq Capital Market)

Profit and Loss Analysis

• Total Revenue rose 119% to $155.19 million in 2024, driven by a 121% surge in marine fuel resale ($155.18 M vs. $68.0 M in 2023).
• Brokerage commissions fell to $0.012 M (vs. $0.634 M in 2023) as the firm shifted resources to its higher-volume resale channel.
• Cost of revenue climbed in line with sales, up 122% to $152.01 M, yielding a gross profit of $3.18 M (2.05% margin).
• Operating expenses increased from $0.88 M to $2.97 M, reflecting investment in sales headcount and back-office support.
• Net Income plunged to $0.17 M from $1.21 M, down 85.9%, as margin pressures offset top-line growth.

Balance Sheet and Debt

• Cash and Restricted Cash stood at $5.82 M year-end 2024 (vs. $6.02 M 2023).
• Short-term bank loans rose to $1.51 M (up 26.4%), drawn under two revolving facilities in Singapore to fund working capital.
• Working Capital remained positive at approximately $3.72 M.

Reasons for Profit Decline

1. Margin Compression: Aggressive, competitive pricing to expand market share led to a drop in resale margins.
2. SG&A Build-out: Hiring of sales-marketing teams, higher professional fees and public-company compliance costs.
3. Shift in Revenue Mix: Lower-margin resale replaced higher-margin brokerage fees.

Pros and Cons

Pros:

• Rapid top-line growth and scalable resale model.
• Strong cash conversion and positive working capital.
• Nasdaq listing and improved equity base bolster credibility.

Cons:

• Very thin gross margins (~2%) increase vulnerability to fuel‐price swings.
• Debt up by 26%, interest costs rising in a higher‐rate environment.
• Profitability under pressure from elevated SG&A and public-company overhead.

Conclusion and Recommendations

Unifuels has established a leading regional footprint in marine fuel resale, achieving robust revenue growth. However, low resale margins and rising operational costs have compressed profits. To stabilize earnings, management should optimize pricing discipline, improve brokerage throughput and tightly control overhead. Monitoring debt levels and maintaining liquidity will be critical in 2025.

• Revenue by channel (2024): 99.99% marine fuel resale ($155.18 M), 0.01% brokerage commissions ($0.012 M).
• Revenue by geography (2024 sales of $155.18 M): Singapore 37.6%, Malaysia 28.4%, China 8.6%, Others (including Hong Kong, South Korea, UAE, Thailand, Indonesia, Timor-Leste) 25.4% combined.
• Customer concentration: Top customer represented ~10% of 2024 revenue; top three customers ~20%.

Unifuels is positioned for continued volume growth through its Singapore hub and emerging Korea office, leveraging trade-finance facilities to fund working capital. Profit recovery hinges on margin improvement and a rebalancing toward higher-margin brokerage. Key challenges include managing fuel‐price volatility, interest costs and public-company overhead. Opportunities exist in expanding into new fuel types (LNG, biofuels), deepening vendor diversification and building out credit management. Financial health indicators (positive working capital, manageable debt levels) are intact, but sustained profitability requires tighter cost control and pricing adjustments. Continuous investment in digital trading tools and risk‐management solutions will support long-term competitiveness.