“Our plan in the very beginning was to list in Malaysia,” Yong tells The Edge Singapore. With its home base in Malaysia, the world’s second-largest producer of palm oil, Oiltek had every reason to be part of Bursa, he says. SGX ultimately became its listing destination as Singapore’s status as an international business hub resonated with Oiltek’s global reach.
The company, which made its trading debut in March 2022 with an IPO price of 23 cents, builds plants that refine vegetable oils and produce biodiesel, a renewable fuel made from animal fats, vegetable oils or used cooking oils. Oiltek’s plants are found in some 35 countries across five continents.
Its customers include palm oil mills, biodiesel producers, food and agribusiness companies, and industrial energy users looking to optimise efficiency and environmental compliance.
“We started to doubt ourselves in the first two years. Our share price was flat. There was no liquidity,” Yong recalls. “Did we make the right decision to choose Singapore?”
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The turnaround came in 2024, when Oiltek’s shares broke out from a tight trading band of just a few cents from its IPO price and soared above $1 by the end of the year. “Our prediction was correct: if we are good, people will start to recognise us, but it did take a longer time,” he says.
In seeking to sustain investors’ interest, the company submitted an application to SGX last month for a proposed transfer to the mainboard. The upgrade, according to Oiltek, will enable it to attract even more investors and tap both equity and debt capital markets for funds when necessary.
Just a few days after filing that application, it entered into a heads of agreement with a subsidiary of Indonesian oil and gas company Pertamina. The goal is to form a joint venture in Indonesia for the building of a so-called pre-treatment unit and for Oiltek to supply feedstock to this facility for Kilang Pertamina Internasional to produce sustainable aviation fuel and hydrotreated vegetable oils.
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Both parties are in talks to sign a definitive agreement. Oiltek, which will build the pre-treatment unit, will be able to generate recurring income from supplying the feedstock once the facility is up and running. Most of its income is currently project-based and non-recurring.
According to Yong, supplying sustainable aviation fuel is big business as current global production is simply not sufficient. “If you pick up the whole world’s vegetable oils — be it peanut, sunflower, rapeseed or canola — and convert every single drop of it into jet fuel, it is not even enough for 50% of the industry’s requirements.”
That is why the aviation industry needs a more sustainable source of supply, he says. “Sustainable aviation fuel is not from palm oil. It’s actually from waste oil. Pertamina is working with us to refine this waste into a feedstock to produce sustainable aviation fuel.”
Global production of sustainable aviation fuel reached only a million tons last year, according to data from the International Air Transport Association (IATA). While this was double the output for 2023, it accounted for just 0.3% of jet fuel production worldwide last year.
Production for this year is expected to reach 2.1 million tons, estimates IATA, which blames the slow growth on continued government subsidies to oil companies for the exploration and production of fossil oil and gas.
A week after announcing the collaboration with Pertamina, Oiltek proposed to reward shareholders with two bonus shares for every ordinary share held. A total of 286 million new bonus shares will be issued, effectively enlarging its share base to 429 million shares after the exercise, which will be put to a vote at Oiltek’s AGM in April.
Strong growth trajectory
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The quick succession of investor-friendly initiatives by Oiltek so far this year is no coincidence. The way Yong sees it, business is booming and the company needs all the support it can get from investors to grow even further.
After all, palm oil is the most consumed vegetable oil in the world. It is also a key ingredient for many daily items including cosmetics, pharmaceuticals, shampoos, deodorants and detergents.
Efforts by countries to promote renewable energy are also driving demand for Oiltek’s services. Notably, mandatory biodiesel blending policies in countries like Indonesia and Malaysia are keeping Oiltek fully engaged with the industry.
Biodiesel blending combines biodiesel with petroleum diesel in precise ratios, creating a fuel that works in diesel engines with little to no modification. This effectively reduces carbon emissions and consumption of fossil fuels.
Against this backdrop, Oiltek has been able to increase its annual revenue year after year, even during the Covid pandemic. Last year, revenue and earnings reached all-time highs of RM230 million ($69.1 million) and nearly RM30 million respectively.
Notably, the company has no bank borrowings and had over RM106 million in cash as at end-2024. It has not even utilised any of the $3.6 million net proceeds raised from its IPO in 2022.
Oiltek’s biodiesel plants are increasingly being sought after amid rising demand for renewable energy / Photo: Oiltek International
Threats from Trump’s tariffs?
But even with the buoyant industry outlook and the company’s strong fundamentals, can Oiltek withstand the economic storm sweeping the world following Donald Trump’s return to the White House early this year?
Already, the slew of tariffs announced by the US president have given the Federal Reserve reason to pause interest rate cuts and stoked concerns that the trade wars he has started could tip the world’s largest economy into recession.
Yong is unperturbed for now. The US, he believes, will eventually rescind whatever it has levied on its trade partners as Trump’s ultimate goal is really to hit out only at China by getting other countries to also impose tariffs on Chinese goods.
“The ultimate enemy is only one — China. I believe he will remove the tariffs for other markets, provided they agree to impose their own tariffs on China,” Yong figures.
“As far as we are concerned, we don’t use too many Chinese goods or Chinese parts. The components for our plants are mostly from Europe and Malaysia. I don’t see much of an impact as of now.”
Oiltek’s focus at the moment is to continue innovating so that it remains relevant to the industry, says Yong. “We innovate every 180 days.” Such devotion has sparked new ideas that the company has been able to commercialise.
“We are one of the early companies to use pump fatty acid distillate, which is a waste material produced from the refining of crude palm oil, to convert into rumen fat, also known as bypass fat. Rumen fat helps cows produce more milk.”
At the end of the day, Yong says Oiltek should be seen as an agritech company. “We are a technology company with an agriculture platform. Agriculture is a necessity and it gives resilience to a tech company like us. We have the advantages of fast growth, which is expected of most tech companies, and resilience, which is inherent in agriculture.”
Oiltek is tracked by analysts from four broking houses — CGS International, Lim & Tan Securities, Phillip Securities and UOB Kay Hian. All of them have a “buy” or “add” recommendation. Their target price ranges from $1.37 to $1.50, implying potential upside of as much as 11% from the stock’s 52-week high of $1.35 recently.
