The firm made a relatively quiet IPO in March 2022, raising just over $5 million by selling shares at 23 cents, including only 500,000 shares to the public. With a quick succession of new contracts and strong earnings growth, Oiltek’s shares began a steady climb to become a rare 30-bagger, including dividends and a bonus share issue. It hit a peak of $2.46 on April 21, which lifted Oiltek’s market capitalisation above the $1 billion mark, before easing slightly to close at $2.13 on May 6.
Since listing, Oiltek “graduated” to the Mainboard of the SGX in June 2025, saying the move will enhance the company’s credibility, visibility, liquidity and access to capital. An impending secondary listing on Bursa Malaysia will further expand its shareholder base.
Established in 1980, Oiltek is an integrated provider of process technology and renewable energy solutions for vegetable oils, including global commodities such as palm oil, soybean oil and rapeseed oil. For FY2025 ended Dec 31, the company reported earnings of RM32 million ($10.3 million), representing a y-o-y rise of 7.9% and continuing its streak of increasing earnings since listing. For comparison, in FY2020, the company reported earnings of RM12.1 million.
Oiltek’s share price, which already gained rapidly in the last two years in line with the higher earnings trend, enjoyed a significant uptick earlier this month. On April 6, it surged above $2 after announcing a heads of agreement with BioSeaga Industries to construct a sustainable aviation fuel (SAF) production facility in Sabah. Before the announcement, the counter’s shares closed at $1.55 on the previous trading day.
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BioSeaga Industries is an affiliate of the Brunei-based BioSeaga group, which specialises in the strategic development of food security and renewable and sustainable fuel projects across the region.
Under the agreement, Oiltek is the exclusive contractor for the project. The scope of works includes engineering, procurement, construction and commissioning (EPCC) for the plant’s pre-treatment facilities, SAF production plant, tank farm and logistic bulking infrastructure and partial blending facilities. Oiltek will also provide the necessary preliminary technical expertise and data reasonably required by BioSeaga and its adviser for financial modelling and project planning.
At an estimated value of US$350 million ($446 million), the contract, should it be signed off, would quintuple Oiltek’s order book to above RM1.7 billion. It would also represent Oiltek’s largest ever contract win.
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While the eye-watering size of the potential contract drove Oiltek’s share price higher, another detail in the agreement could signal the company’s next phase of growth, which, according to CEO Henry Yong in an interview with The Edge Singapore, could be “exponential”.
Recurring income
In addition to the provision of EPCC solutions, the agreement included a clause granting Oiltek the right of first refusal to participate in any equity investment, joint venture or ownership opportunity related to the project or its subsequent phases, meaning Oiltek could take an ownership stake in the project.
Yong says co-owning new plants will now be part of his business expansion strategy. “Instead of selling [EPCC solutions] to our client and making a one-time reasonably small profit, we are thinking of participating in the projects as an equity partner with the client,” he notes. For context, Oiltek’s gross profit and patmi margins are 32.5% and 15.1% respectively for FY2025.
For Yong, Oiltek’s participation as an equity owner provides the plant owner with confidence by aligning the interests of both parties, with Oiltek offering synergistic capabilities through operational, maintenance and technological support for the plant.
“For most of the customers, their strength is more on selling the end-product, but they may need support in the plant’s technology,” he adds. “Oiltek, as the solutions provider, can not only oversee routine operations and maintenance, but also step in to fine-tune, redesign or upgrade the facilities when necessary, as it is our forte.”
Yong has high expectations of this strategy to boost the business. “Through this method, we can generate recurring income,” he says. “And this recurring income could be very significant, even outperforming our EPCC business segment.”
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Resilient business model
The EPCC business is Oiltek’s bread and butter. With over 45 years of industry experience, Oiltek provides a comprehensive range of process and engineering solutions across the global vegetable oils industry value chain. It has designed, built and commercialised over 650 plants in more than 35 countries across five continents.
After joining Oiltek in 2008, Yong realised the company was too reliant on a single line of business, concentrating risk. Diversification was therefore seen as critical not just for survival but also for growth. “I don’t like to have a concentration risk, just selling one or two products,” he says. “To diversify, we need to have a very strong innovation.”
To Yong, innovation means delivering differentiated solutions that are unique to Oiltek. He says: “I cannot be selling something commonly available in the market and instead, must sell something better than whatever is in the market.”
A key competitive advantage for Oiltek is its technological edge. The company holds eight technology patents across a range of processes, from palm oil refining and phytonutrient extraction to oil and fats fractionalisation and the processing of palm oil mill effluent (POME). Some of these patents stem from Yong’s own inventions, which he later patented and assigned to the company. Yong is a 1997 first-class honours chemical engineering graduate from the University of Malaya.
Not only have the patents given Oiltek an edge, but they have also enabled the company to expand into the midstream and downstream segments of the food security value chain. “We have built a comprehensive range for the food security segment, meaning that we can construct, design and build the facility to produce all kinds of products from vegetable oils, which not only includes palm oil, but also soybeans, sunflower and rapeseed,” he says. “These products could just be the basic commodity or even niche high-value-added products.”
As an example of its unique capabilities in the food security value chain, Oiltek can formulate calcium salts or rumen-protected “bypass fats” which can be used as feed for cows. Consumption of these products increases milk production. “We are not just involved in building the infrastructure to produce a food product, but we are also utilising our technology to enhance food security by supporting the increase in food production.”
Estimates suggest the global oil and fats market will grow to between US$336 billion and US$646 billion over the next decade. Correspondingly, the vegetable oil market is expected to grow to around US$446 billion in the same time frame. These potential market developments “create opportunities” for Oiltek, according to its FY2025 annual report.
Renewable energy to fuel ‘exponential’ growth
Beyond the vegetable oils industry, Oiltek has also been expanding its renewable and sustainable energy business. In FY2025, renewable energy contributed RM61.7 million in revenue, representing a y-o-y increase of almost 250%.
By focusing on the biodiesel segment, Oiltek can now offer a variety of solutions for other, more sustainable biofuels. These include bioethanol, which is blended into petrol to reduce carbon emissions, and black biochar pellets, which can serve as a carbon-neutral alternative to coal.
More significant for Oiltek is its capability to process POME to produce biogas, which can be used to generate steam for electricity production or be compressed into bio-CNG (compressed biomethane), an emerging, sustainable and reliable baseload energy source for data centres.
Yong believes that structural tailwinds are driving the adoption of renewable energy. Firstly, with the ongoing Middle East conflict, many have observed that it is providing impetus for countries and businesses to reexamine their assumptions on the reliability of energy sourcing. “The situation is no longer about pricing, but availability of energy,” says Yong.
Concern over climate change is a key driver, paving the way for decarbonisation efforts, including the use of cleaner energy. According to Oiltek’s FY2025 results announcement, Indonesia, the world’s biggest palm oil producer, continues to mandate a 40% (B40) biodiesel blend.
In contrast, Malaysia, the world’s second-largest palm oil producer, continues to phase in its biodiesel programme, with a 10% biodiesel blending ratio (B10) for the transportation sector and a 7% blending ratio (B7) for industrial use. Presumably, these mandates provide a consistent stream of opportunities for its core business.
At the same time, the company is eyeing the burgeoning SAF market. From delivering plants capable of treating and cleansing POME and other vegetable oil-based raw materials in compliance with the International Sustainability and Carbon Certification (ISCC) for use as feedstock in the production and manufacture of hydrogenated vegetable oil (HVO) or renewable diesel, Oiltek has gained experience and capabilities which are transferable to the SAF value chain.
According to the International Air Transport Association (IATA), the air transport industry will require around 500 million tonnes of SAF in 2050 to achieve net-zero emissions. However, only around 2 million tonnes of SAF were produced in 2025, necessitating a large-scale increase in SAF production.
With Southeast Asian countries — Vietnam, Indonesia, Malaysia, the Philippines and Thailand — possessing the most abundant feedstock to support SAF production, Oiltek, based in the region, is well-positioned, both figuratively and geographically, to capitalise on the demand for SAF and more accessible feedstock.
Beyond biofuels and SAF, The Edge Singapore understands that Oiltek is also exploring opportunities in green ammonia production, which would expand the company’s offerings into the maritime fuel value chain, meaning Oiltek would be involved in producing green fuels for land, air and sea transportation. “The food segment is our main revenue contributor,” says Yong. “But in the future, the energy segment will be the exponential booster.”
Targeting more opportunities
The deal with BioSeaga is just one opportunity Oiltek is exploring, with Yong noting that the company is actively pursuing other similar projects, particularly in Malaysia and Indonesia. In particular, he sees potential for additional refining capacity in Malaysian Borneo. Despite supplying more than 60% of Malaysia’s crude palm oil (CPO), Sabah and Sarawak lack refining capabilities, says Yong.
“Both states have large land banks for CPO but have relatively small internal refining capacity,” he adds. “This presents a very good opportunity for Oiltek to help develop downstream processing capacity, supporting GDP growth and job creation.”
In addition to abundant resources, Yong says that Sabah and Sarawak’s location is a geographical advantage because goods produced in these two states can be easily shipped to Northeast Asian markets, including China, Korea and Japan.
Beyond diversifying into new segments and geographies, Oiltek is also broadening its shareholder base through a secondary listing on Bursa Malaysia, following its transfer from Catalist to the Mainboard in Singapore.
Yong thinks that the company’s strong operational footprint in Malaysia provides it with greater visibility, adding that the additional listing aims to enhance shareholder value further and potentially increase liquidity.
“We were one of the first companies in the market to actively enhance liquidity, such as undertaking a bonus issue in 2025,” says Yong. “Coupled with a strong outlook, institutional investors will start to show interest in the company.”
He sees Oiltek as a technology company in the growth stage, making efforts to help investors not only better understand its business but also value the company appropriately.
“When I joined Oiltek in 2008, the company’s net tangible assets were only around RM13 million or $5 million based on the then exchange rate,” he adds. “We have managed to transform and diversify the company, earning a valuation of around $33 million when we listed in 2022.”
As mentioned earlier, Oiltek is valued at more than $1 billion when its share price reached $2.46 on April 21. Last year, it won The Edge Singapore’s Centurion Club Awards 2025 — Highest Returns to Shareholders over Three Years Award for the Industrials sector.
With more than 45 years of history, Oiltek is a trusted and reputable global brand, says Yong. By expanding from upstream to downstream across vegetable oils and multiple biofuel value chains over the years, he notes that the company’s vertically integrated solutions give it an additional competitive advantage. “Our integration makes us a one-stop provider which can be attractive to clients who prefer to deal with only one vendor instead of multiple suppliers,” says Yong.
Besides having diverse solutions and a varied customer base across more than 30 markets that minimise concentration risk, Yong adds that Oiltek’s customers comprise large, well-known companies, including those listed in Singapore and Malaysia. He adds that Oiltek has not taken on any debt to fund growth, with the company maintaining a net cash position of around RM100 million. The company has been paying out dividends after its listing as well.
“Perhaps investors should have a better idea of Oiltek’s value,” adds Yong. “Not so many companies have experienced our exponential growth trajectory over the last few years.”
Are there value traps?
Since the BioSeaga announcement, investors have not only jumped into Oiltek shares — interest in two other entities has increased as well: Koh Brothers Eco Engineering, which holds the controlling stake of more than two-thirds in Oiltek, and Koh Brothers Group, which is the controlling shareholder of the former. On the surface, Oiltek’s market cap has far exceeded those of the two entities, suggesting that they are now undervalued.
Some analysts such as Paul Chew of PhillipCapital have reservations about whether this is a correct trade. “Firstly, owning the parent can be a value trap similar to closed-end funds that perpetually trade at a discount to underlying value. Secondly, acquiring the parent company includes inheriting a loss-making and cash flow draining engineering and construction operation,” says Chew.
At least from how the brokerage analysts have reacted by how they’ve raised their respective target prices for Oiltek, this is the counter where they are focusing on.
They include Heidi Mo of UOB Kay Hian, who estimates that a 10% stake in the BioSeaga project could generate around RM14 million to RM28 million of recurring earnings per annum, based on a 10%–20% return on investment (ROI) of the plant’s RM1.4 billion construction value.
Mo, in her April 7 report, sees this as a “significant” sum as it is equivalent to 45%–90% of Oiltek’s FY2025 earnings. She adds that Oiltek is an engineering firm that enjoys “high” return on equity and margins, while providing exposure to the high-growth renewable fuel segment. Mo expects the ongoing Middle East conflict will accelerate adoption and capex for SAF plants which will benefit Oiltek. Valuing the company at 28 times forecasted 2027 P/E, Mo increased her target price to $2.78 from the previous $1.05.
Meanwhile, CGS International’s William Tng projects the company’s net profit to quadruple to RM167 million in FY2027 should the contract be confirmed. He notes in his April 14 report that potential equity participation in future projects could lessen the firm’s dependence on order wins and create a recurring revenue stream.
Tng expects the company’s EPS to grow 300% y-o-y and values the company at 27 times the forecast FY2027 P/E, with a target price of $3.38, a significant jump from the previous 94 cents.
For PhillipCapital’s Chew, Oiltek is expected to gradually secure a recurring earnings stream from maintenance and ownership stakes in SAF plants, with demand for SAF growing at a CAGR of 46% through 2030. Raising FY2027 earnings forecast by 322%, Chew pegs Oiltek’s price to 24 times P/E or $2.72, up from the previous target of $1.18. The valuation is also 50% higher than that of peers listed in Malaysia, with Chew justifying the premium on the company’s growth, high ROE, and RM100 million cash balance.
Similarly, Lim and Tan’s Nicolas Yon also recognises the potential growth in net profit, writing: “Oiltek has cemented its position as a credible mid-cap player, marking a successful transition from its small-cap origins.”
Yon is also cognisant of the significance of Oiltek’s potential diversification from the “cyclical” nature of project-based EPCC work. “It gives Oiltek a clear path to take equity stakes in the SAF plants they build,” he states in his April 20 report.
From a target of 94 cents in July 2025, Yon now values Oiltek at $3.10, or 27 times the forecast FY2027 P/E. He also believes there is still room for growth in the share price, with more potential contract wins, a successful secondary listing in Malaysia, increasing profitability and dividends, and a “seismic” shift in earnings profile from FY2027.
“Beyond ownership, Oiltek is also targeting long-term maintenance and service contracts for these specialised facilities,” adds Yon. “This shift is critical because it transforms the business model from one that relies on constantly winning new contracts to one that captures a steady stream of high-margin income over the 20- to 30-year lifespan of a plant. We view this positively and expect Oiltek’s valuation to reflect a fundamental shift in its business model, assuming Oiltek is successful in its endeavours.”
For Yong, these may be the beginning of a new wave of re-ratings sparked by Oiltek’s “exponential” growth.
