The UOBKH analysts expect even more order wins as customers gain “more clarity” on US tariffs. “Oiltek is in a better position to win more new orders as some of its customers have been pushing back their capex spending due to the tariff uncertainties. Given that four months have passed since the start of the US tariff policy on April 20, Oiltek’s customers are starting to get more clarity on the potential impact of the US tariffs. Hence, their capex spending for new plants and equipment should resume.”
As the international aviation industry targets to reach net-zero emissions by 2050, sustainable aviation fuel (SAF) is gaining importance and could lead to more contract wins for Oiltek in the future, write Mo and Cheong.
Oiltek has solutions to treat vegetable oil-based raw materials as feedstock in hydrotreated vegetable oil production. This can be used to produce SAF, which is needed to contribute around 65% of the reduction in emissions needed by the aviation industry, according to the International Air Transport Association (IATA).
Oiltek’s management remains optimistic about long-term prospects, say the UOBKH analysts.
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According to Precedence Research, the global fats and oils market size was valued at US$257 billion in 2023 and is projected to surpass US$403 billion by 2033.
“Population growth and rising food demand will lead to greater demand for both edible and non-edible oils and fats, especially vegetable oils,” say the analysts. “Oiltek is a clear beneficiary as it is a solutions provider for all vegetable oils such as palm oil, soybean oil and rapeseed oil”
Furthermore, higher biodiesel blending requirements in Malaysia from B10 to B20 and in Indonesia from B35 to B40 in 2025 will likely boost demand for biodiesel and drive growth in Oiltek’s renewable energy segment, they add.
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Strengthening moats
Oiltek’s management previously mentioned three “moats” for its operations. These are: “proprietary technologies” in equipment design that could enhance the functions, productivity and quality of its equipment; “constant innovation” with the target of at least one new product design every six months, such as in the field of biodiesel, SAF, biomass feedstocks and renewable energy; and an asset-light and lean business model with only around 90 staff members.
This lean model enables Oiltek to be “very cost competitive” compared to its competitors, which are mostly Europe-based companies, says UOBKH.
Meanwhile, Oiltek continues to see progress in its plan to expand into the manufacturing business to build its recurring revenue base, say Cheong and Mo.
“However, Oiltek will be selective in taking on higher-margin projects that have strong customer demand. such as the SAF and renewable energy feedstocks industries. In addition, Oiltek does not plan to incur major capex as it aims to only reinvest its profit from the construction of the plant and only take a minority stake,” they add.
Enhancing value via a dual listing
UOBKH thinks Oiltek should continue to explore more options to enhance shareholder value.
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These include declaring a bonus issue, increasing dividend, organising more investor engagement sessions, seeking strategic shareholders, working with new strategic partners and even a dual listing to increase its shareholder base, according to Cheong and Mo.
“We think Oiltek could explore a dual listing exercise like UMS if it is able to drive further valuation re-rating, given their Malaysia-based operations,” they add.
The UOBKH analysts have raised their earnings estimates for 2026 and 2027 by 11% and 10% respectively after increasing revenue estimates by 9% and 5% to account for more potential order wins in 2H2025
They have also raised their net margin forecasts on higher operating leverage at Oiltek from a higher revenue base.
“We have raised our price-to-earnings (P/E) multiple to account for more corporate actions that could increase trading liquidity and enhance investor base. In addition, we think good project execution, more contract wins and expansion into recurring revenue models could lead to a further re-rating of the stock,” write Cheong and Mo.
UOBKH’s valuation multiple of 27 times FY2026 P/E implies a 1.5 times standard deviation above Oiltek’s one-year historical mean.
Oiltek transferred to the Mainboard in June. As at 11.45am, shares in Oiltek are trading 1.5 cents higher, or 2.3% up, at 68 cents. Oiltek shares have more than doubled in value year to date.
