T20 Holdings (TWEN) Begins U.S. IPO Effort

A Quick Take On T20 Holdings Pte. Ltd.

T20 Holdings Pte. Ltd. (TWEN) has filed to raise an estimated $23 million in an IPO of its units consisting of ordinary shares and one warrant, according to an F-1 registration statement.

The firm provides a range of energy project services in Papua New Guinea and is developing other potential project locations.

I’ll provide an update when we learn more details about the IPO.

T20 Overview

Singapore-based T20 was founded to provide energy and construction project activities for gas-fired facilities in Papua New Guinea to reduce the reliance on diesel power generation.

Management is headed by Chief Executive Officer Geoffrey Allan Lawrence, who has been with the firm since inception in 2014 and previously held various positions at Fuji Xerox, Ricoh, Toshiba and UPS.

The company’s primary offerings include:

• Contracting

• Consulting

• Engineering

• Construction

• Maintenance

T20 has booked fair market value investment of $11.4 million as of March 31, 2022 from investors including senior management and Fuato Limited.

T20 – Customer Acquisition

The firm has historically done business in Papua New Guinea, operating a 45-megawatt gas-fired power station.

The company has also developed floating storage, regasification and power generation technologies that it believes has significant application throughout the APAC region where numerous smaller islands and communities lack reliable energy sources.

T20 is also developing a geothermal energy project in Germany and is working on other potential projects in Indonesia and Australia.

Selling, G&A expenses as a percentage of total revenue have trended upward as revenues have varied, as the figures below indicate:

Selling, G&A	Expenses vs. Revenue
Period	Percentage
Three Mos. Ended March 31, 2022	11.1%
2021	13.7%
2020	5.6%

(Source – SEC)

The Selling, G&A efficiency multiple, defined as how many dollars of additional new revenue are generated by each dollar of Selling, G&A spend, was 7.0x in the most recent reporting period, as shown in the table below:

Selling, G&A	Efficiency Rate
Period	Multiple
Three Mos. Ended March 31, 2022	7.0
2021	-20.0

(Source – SEC)

T20’s Market & Competition

According to a 2021 market research report by ResearchAndMarkets, the global market for LNG regasification was an estimated 46,458 billion cubic feet in 2020 and is forecast to reach 68,292 billion cubic feet by 2025.

This represents a forecast average annual growth rate [AAGR] of 7.7%.

This expected rate of growth is almost double that of the period from 2015 to 2020.

Also, major countries accounting for regasification capacity in 2020 included the U.S., Japan, South Korea, Spain and China.

Major competitive or other industry participants include:

• New Fortress Energy

• AES

• Hoegh LNG

• GasLog

• Excelerate Energy

T20 Holdings Financial Performance

The company’s recent financial results can be summarized as follows:

• Contracting topline revenue

• Reduced gross profit but higher gross margin

• Lowered operating profit

• Variable cash flow used in operations

Below are relevant financial results derived from the firm’s registration statement:

Total Revenue
Period	Total Revenue	% Variance vs. Prior
Three Mos. Ended March 31, 2022	$ 2,571,000	354.6%
2021	$ 9,250,397	-73.3%
2020	$ 34,623,956
Gross Profit (Loss)
Period	Gross Profit (Loss)	% Variance vs. Prior
Three Mos. Ended March 31, 2022	$ 2,481,739	-788.9%
2021	$ 8,134,012	-45.9%
2020	$ 15,021,713
Gross Margin
Period	Gross Margin
Three Mos. Ended March 31, 2022	96.53%
2021	87.93%
2020	43.39%
Operating Profit (Loss)
Period	Operating Profit (Loss)	Operating Margin
Three Mos. Ended March 31, 2022	$ 1,385,365	53.9%
2021	$ 3,574,090	38.6%
2020	$ 9,250,649	26.7%
Net Income (Loss)
Period	Net Income (Loss)	Net Margin
Three Mos. Ended March 31, 2022	$ 1,108,759	43.1%
2021	$ 2,919,285	113.5%
2020	$ 7,168,232	278.8%
Cash Flow From Operations
Period	Cash Flow From Operations
Three Mos. Ended March 31, 2022	$ (1,560,601)
2021	$ 255,158
2020	$ (2,900,758)
(Glossary Of Terms)

(Source – SEC)

As of March 31, 2022, T20 had $1.2 million in cash and $6.6 million in total liabilities.

Free cash flow during the twelve months ended March 31, 2022, was $75,458.

T20 Holdings Pte. Ltd. IPO Details

T20 intends to raise an estimated $23 million in gross proceeds from an IPO of its units consisting of ordinary shares and one warrant (TWENW) to purchase one ordinary share at an exercise price of 125% of the offering price, although the final amount may differ.

No existing shareholders have indicated an interest to purchase shares at the IPO price.

Management says it will use the net proceeds from the IPO as follows:

Approximately $4 million for project development costs and working capital to develop and execute the Traunstein project, if acquired;

Approximately $4.1 million for project development costs and working capital to develop and execute for the Traunstein project; and

Approximately [$11.9] million for general working capital, including the underwriters’ fees and expenses and other listing costs.

(Source – SEC)

Management’s presentation of the company roadshow is not available.

Regarding outstanding legal proceedings, management says the firm is not currently a party to or under threat from any legal proceedings that would have a material adverse effect on its financial conditions or operations.

The sole listed bookrunner of the IPO is EF Hutton.

Commentary About T20’s IPO

TWEN is seeking U.S. public capital market investment to fund continued development of its Traunstein project in Germany and for additional, unspecified corporate initiatives.

The firm’s financials have reported reduced topline revenue, lowered gross profit but higher gross margin, reduced operating profit and fluctuating cash flow used in operations.

Free cash flow for the twelve months ended March 31, 2022, was $75,458.

Selling, G&A expenses as a percentage of total revenue have trended higher as revenue has fluctuated; its Selling, G&A efficiency multiple was 7.0x in the most recent reporting period.

The firm currently plans to pay no dividends on its ordinary shares for the foreseeable future. Any such dividends contemplated would be required by Singapore law to be paid only out of profits.

T20’s CapEx Ratio is 1.15, which indicates it is spending substantially on capital expenditures as a percentage of its operating cash flow.

The market opportunity for providing LNG energy services is large and expected to grow considerably in the coming years as securing adequate and cleaner-burning energy supplies grows in importance.

EF Hutton is the sole underwriter and IPOs led by the firm over the last 12-month period have generated an average return of negative (66.8%) since their IPO. This is a bottom-tier performance for all major underwriters during the period.

The primary risk to the company’s outlook is the volatile nature of energy prices which may affect project development cycles.

When we learn more information on management’s assumptions for pricing and valuation, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.