Oiltek Shares Soar 400% YTD: Will Parent Company Koh Brothers Eco Ride the Wave?

Oiltek International, a biofuel refinery and processing firm, has seen its stock skyrocket more than fourfold in 2024, making it the second-best performing stock on the Singapore Exchange (SGX). As investors applaud its rising contract wins and robust financial performance, the spotlight is now turning to its parent company, Koh Brothers Eco Engineering.

Oiltek’s latest contract win, a RM45.5 million ($13.5 million) deal in Latin America announced on Oct 29, has sparked investor confidence in new market opportunities. The company’s cumulative contracts for FY2024 now stand at a record RM400.9 million. On Nov 19, Oiltek announced a stellar RM8.98 million in Q3 earnings, up 83.2% year-on-year, with its 9M earnings climbing 63.9% to RM19.3 million.

Riding on global trends of increased demand for edible oils such as palm, soybean, and rapeseed oil, Oiltek’s stock surged to close at $1 on Nov 20, exceeding Phillip Securities’ revised target price of $1.19. Analyst Paul Chew attributes the growth to higher margins and strong project execution, predicting earnings of RM25.8 million for FY2024, up 11%.

With Oiltek’s market capitalization reaching $143 million, Koh Brothers Eco Engineering’s 68.14% stake is valued at $84.5 million — more than Koh Brothers Eco’s total market cap. This valuation disparity has investors questioning whether the parent company is undervalued, particularly as it secures major government contracts.

On Nov 19, Koh Brothers Eco announced a $77.6 million contract for work on the Toa Payoh Integrated Development, lifting its total order book to $585.7 million. Previous wins include a $200.7 million PUB project at the Tuas Water Reclamation Plant and a $186 million HDB contract for the Kallang Integrated Development.

While Oiltek captures headlines for its rapid growth, Koh Brothers Eco Engineering may soon attract attention as a potential value play. The question remains: can it capitalize on its subsidiary’s momentum and deliver similar gains to shareholders?

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