NASDAQ:UFG
Tom Kerr, CFA: Hello, everyone! My name is Tom Kerr. I'm a senior equity analyst at Zacks Small Cap Research, and welcome to another episode of our CEO fireside chat program. Today we have the CEO of Uni-Fuels Holdings, Koh Kuan Hua. Uni-Fuels, whose ticker is UFG, is a fast-growing Singapore-based company that is a global provider of marine fuel solutions. They help marine vessels procure fuel across various international markets and time zones. Typical customers include container ships, cruise liners, tankers, naval ships, and many others. We initiated coverage of Uni-Fuels in June of this year with a price target of $5. The company actually went public in January of 2025. Welcome.
Koh Kuan Hua: Thank you, Tom. Pleasure to be here today.
TK: Maybe we'll start with just a few minutes on the background of the company and its history that led to going public in early 2025.
KKH: Uni-Fuels was first intercepted in October 2021 in Singapore and was managed by the previous owner. The core business includes supplying marine fuel as both a reseller and broker globally to shipping companies operating in different market segments, such as tanker containers, offshore, etcetera. In December 2023, I acquired 100% of the ownership of Uni-Fuels Private Limited from the previous owner. In anticipation of accelerating the Company's growth and expansion, the company underwent a corporate reorganization in early 2024 to prepare for an IPO. A new parent company, Uni-Fuels Holdings Limited, was incorporated in March 2024. The parent company owns 100% of Uni-Fuels Group Incorporated and an intermediate holding company, which in turn holds 100% of Uni-Fuels Private Limited in Singapore, which is the company's main and sole operating entity. At that time, we started trading in the US on the Nasdaq under the Tickle symbol UFG on January 14, 2025, and basically, the rest is history.
TK: Great, thanks for the background. Maybe let's get into the weeds a little bit and some details on the business itself. Can you talk about the types of fuels that you provide to your marine customers?
KKH: We provide our customers with a product mix of very low sulfur fuel oil, high sulfur fuel oil, low sulfur MGO, and blended bio marine fuel, depending on the vessel that customers plan to leave their bunkers through our integrated global supply network around the world. So VLSFO, also known as a very low sulfur fuel oil, and HSFO, also known as a high sulfur fuel oil, are residues of marine fuels used to power the main engines of larger commercial vessels. As the name suggests, VLSFO has a low sulfur content of 0.5% max, while HSFO has a higher sulfur content of 3.5% max. The use of VLSFO began sometime around 2020 to meet the IMO 2020 sulfur cap regulation, which requires ocean-going vessels to comply with sulfur emissions kept at 0.5% outside emission control areas. So, the use of HSFO remains for use by vessels that have installed scrubbers, or basically, exhaust gas cleaning systems. That allows ship operators to burn cost-efficient HSFO and still meet emission regulations. So MGO, also known as marine gas oil, or rather low-sulphur marine gas oil, is a type of distillate marine fuel used to power the main engine of smaller ships, as well as for specialized applications, such as to power auxiliary engines. It is a clear, refined fuel with low viscosity and low sulfur content, typically containing less than 0.1% to 0.5% sulfur.
TK: Okay, great. Thanks for that summary. You touched on this a little bit just now, but a big trend in the marine fuels industry is a move towards clean energy, as traditional fuels are often associated with air pollution or greenhouse gas emissions. Can you talk about the industry moves towards biofuels, and specifically, how Uni-Fuels plans to participate in that area of biofuels?
KKH: Yes. So the marine fuel industry is undergoing transformation, driven by tightened emission regulations and global push toward decarbonization, although notably conventional fuel conventional fuels, like the PSFO and HSFO, still dominate the market today. Given the lack of infrastructure beyond the main bunkering ports, or for economic reasons, one of the most promising solutions. Gaining traction is the use of biofuels through bio-blended marine fuels like the B24, which can significantly reduce greenhouse gas emissions compared to conventional, fossil-based marine fuel, often without requiring major engine modifications. So, we have seen significant growth in biofuels being used as an intermediate fuel transition fuel by large-scale ship operators, such as those from the container segment. Biomarine fuel or bio-blended marine fuel is a type of marine fuel that combines conventional fossil-based marine fuel with a proportion of biofuel derived from biomass or biomass residue. At the moment, the biofuels that are considered promising in the shipping industry are Fatty Acid Methyl Ester, also known as FAME, and hydrotreated vegetable oil, also known as HVO. These are basically dropping solutions that can be used in existing infrastructure. For example, B24 VRSFO plan refers to a VRSFO plan that consists of 24% FAME bio content from sustainable sources. So, we are happy to share that our Singapore operating entity has received our ISCC EU and ISCC PLUS certifications, which enable us to trade ISCC-certified biofuels for customers who wish to explore and validate alternative fuels, such as bio-blended marine fuels, positioning us for future growth opportunities as the market continues to evolve.
TK: Alright, that's good news. Thanks for the details on that. Let's move and talk about the specific process, and how you deliver these fields, because the company, you're not a heavy asset. You don't own a lot of infrastructure, but you deal with trading and brokering of these fuels, so can you explain, maybe, how a typical transaction works?
KKH: That's right. So, the participants within the supply chain of conquering generally include refiner cargo blenders, storage providers, physical distributors, us, and the end customers, such as ship owners, operators operating in different market segments, or resellers operating in a similar capacity as us. Under our reselling business, we buy from physical distributors or other resellers, and we sell to end customers, which includes shipping companies or other resellers. We add value by providing agile and flexible pricing solutions, trade credit terms, global market insights, and operational expertise. So, under our brokering business, we act as an intermediary facilitating transactions between customers and third-party suppliers, such as the physical distributor or another reseller, in exchange for a bridge fee, tapping into our strong market relationship to help customers achieve their operational objectives. So, as a global provider of marine fuel solutions, our purpose is always to facilitate smooth, compliant, efficient transactions, providing customers with peace of mind whenever they go with us.
TK: No, that's a great business model to not have to rely on heavy infrastructure and capital investments, and that stuff. Can you talk about your global market presence? Which countries or cities are you currently operating out of? And are there potential sites for further expansion around the world?
KKH: Currently, we are operating out of our headquarters in Singapore with regional hubs in Dubai, Shanghai, and Seoul. We selected these locations strategically, because they are either located in, or in close proximity to, major conquering ports, and they are also in key marine time and training hubs areas with strong access to customer and supplier networks. So currently, our team is about 30 people strong, represented by around 10 different nationalities. That diversity really gives us an edge; it helps us understand the nuances of the market that we operate in, and also build deeper relationships on the ground as part of our expansion strategy. We are now looking to grow our footprint in other high-impact shipping regions, especially in Europe, the US, and a few other strategic locations we are evaluating. The bigger picture here is to build a global network that gives us the flexibility to serve customers better, stay closer to our suppliers, and move quickly when the market shifts. So, it's basically about creating a scalable and resilient platform for [all involved].
TK: That’s great, sounds like a lot of growth opportunities ahead of you. Maybe switch to a financial question real quick. You guys have experienced rapid revenue growth recently. In 2024, I think your revenue had more than doubled. I think in 2023, your revenue had also more than doubled compared to 2022. Can you talk about what led to those faster growth rates? And maybe what can we expect going forward?
KKH: In 2023, our total revenue grew significantly by 130% from 30.8 million for the year ended December 31st, 2022, to 70.8 million for the year ended December 31st, 2023. In 2024, our total revenues further increased significantly by 119% from 70.8 million for the year ended December 31st, 2023, to 155.2 million for the year ended December 31st, 2024. These increases were primarily driven by the rapid growth of our reselling business, which accounted for nearly all of our revenue in 2024. That year, we experienced substantial expansion in both customer reach and geographical coverage. Our customer base nearly doubled, increasing from 83 as of December 31st, 2023, to 156 by the end of 2024. So, while the number of ports we serve grew from 51 to 87, over the same period, this followed significant growth in 2023, when the number of customers ports related to our marine fields rose from 13 customers and 30 ports in 2022 to 83 customers and 51 ports. So, as we continue to grow, we expect our market share to increase in the coming years, delivering year-on-year growth, and our operating margins to improve over time as we scale and streamline our operations across our global offices, eventually driving our operating income meaningfully higher.
TK: Alright, sounds good. Once again, great growth opportunities ahead. Maybe one or 2 more questions. Let's talk about the competition, or mainly just the competitive advantages should help you continue that growth in the future. So, what are the competitive advantages you think you guys have versus this business?
KKH: We believe in delivering value where it matters the most. Our global reach allows us to serve shipping companies across major shipping corridors and bunkering hubs, as well as underserved niche supply ports. This ensures consistent fuel availability, resilient supply options depending on where the vessels operate, and positions us to grow alongside our customers’ expanding footprints. We pair that reach with our integrated local supply expertise, enabling us to execute deliveries efficiently, navigate port-specific complexities, and ensure high service reliability even in challenging regions where we provide local knowledge, giving our customers peace of mind. We also offer our customers access to comprehensive conventional marine fuel grids as well as alternative fuels, such as biofuels. Our ability to deliver tailored solutions aligned with each customer's operational, commercial, and compliance needs allows us to support our customers based on their evolving needs. Last, but not least, know that we are still at the early stages. We are still actively developing the capabilities, supplier relationships, and internal expertise needed to participate in the marine fuel transition with regulatory requirements, like the fuel EU marine time, EU ETS, driving demand for lower emission solutions. So, we aim to play a role by sourcing alternative fuels, understanding compliance framework, and advising customers on commercially viable options as the market which is opening up long-term growth opportunities in the transforming market. At the end of the day, our focus remains on delivering high-impact value by leveraging our capabilities to serve real market needs in traditional marine fuel markets as well as during the energy transition.
TK: Well, great. Let's just have one more question on here in the interest of time. Are there any closing comments or important information we may have missed? Or maybe just give us what you think your key investment points are for an investment in Uni-Fuels.
KKH: Okay. So, to wrap up before the end of this call, let me summarize why Uni-Fuels presents a compelling investment opportunity. We are a fast-growing global provider of marine fuel solutions operating in a large, essential market. Our business is built to deliver tangible value in areas that matter most to bunker buyers, such as operational clarity, certainty, and cost efficiency, among others. We have built a scalable business model that is positioned for market growth; our scalable model is designed to handle growing volumes without needing a proportional increase in overhead costs, which enables us to grow fast, efficiently, and with minimum friction. We offer investors opportunities to gain diversified exposure across different market shipping segments due to our operating model across different markets. And finally, we have an experienced team with in-depth knowledge and a proven track record. Our management team has an average of around 18 years of working experience in the industry, working in different roles, starting from scratch.
TK: Well, great! That's been a great summary. To read all of our reports at Zacks Small Cap Research, investors can go to scr.zacks.com as well as our various social media channels. To find more specific information on the company, you can also go to Uni-Fuels’ website at uni-fuels.com. That concludes our fireside chat, and thanks again.
KKH: Thank you. It's been a pleasure sharing our story today, and I appreciate your interest and support as we continue building our company's future.
TK: Thank you very much.
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