Oiltek International Ltd: Executing Its Value-Up Strategy
CGS International Research Report | March 27, 2025
Oiltek International Ltd, a leading provider of integrated process technology and renewable energy solutions, has continued to execute its strategic initiatives aimed at improving shareholder returns. The company’s recent key developments include:
Developing a Recurring Revenue Stream
Oiltek has entered into a heads of agreement (HOA) with PT Kilang Pertamina Internasional to develop a Pre-Treatment Unit (PTU) and supply feedstock, exploring alternative feedstocks to replace Crude Palm Oil (CPO) for sustainable aviation fuel.
This proposed partnership aligns with the International Air Transport Association’s (IATA) goal of achieving net-zero carbon dioxide emissions by 2050, which will require 3,000 to 6,500 new renewable fuel plants.
Seeking Mainboard Listing Upgrade
Oiltek has applied for a transfer from the Catalist board to the Mainboard of the Singapore Exchange, which the company believes will enhance its image, attract more investors, and improve share liquidity and performance.
Oiltek believes a Mainboard listing will help the company recruit better talent.
Proposed 2-for-1 Bonus Issue
Oiltek has proposed a 2-for-1 bonus issue to reward shareholders and increase the accessibility of investing in the company, thereby encouraging trading liquidity and broader investor participation.
Reiteration of “Add” Rating
CGS International maintains its “Add” rating on Oiltek, with an unchanged target price of S$1.43, representing a 14.4% premium to sector average.
Key catalysts include further order wins and accretive M&As, while risks include order cancellations/delays, unfavorable forex movements, raw material price spikes, and supply chain disruptions.
Oiltek’s strategic initiatives demonstrate its commitment to enhancing shareholder value and positioning the company for long-term growth. The proposed Mainboard listing, recurring revenue stream development, and bonus issue are expected to improve the company’s visibility, liquidity, and investor appeal, positioning it for continued success in the agribusiness sector.
