Oiltek International Limited Delivers Strong Profit Growth Despite Revenue Dip in 3Q2025 and 9M2025

Key Financial Performance Highlights

• Profit Growth Amid Revenue Decline: Despite a notable decrease in revenue, Oiltek International Limited reported higher profits for both the quarter and the nine-month period ended 30 September 2025. This resilience is attributed to improved gross margins and cost management.
• Revenue:
  • 3Q2025: RM47.44 million (down 29.8% from RM67.60 million in 3Q2024)
  • 9M2025: RM148.26 million (down 11.8% from RM168.05 million in 9M2024)
• Gross Profit:
  • 3Q2025: RM17.62 million (down 11.5% from RM19.91 million in 3Q2024)
  • 9M2025: RM50.06 million (up 27.0% from RM39.42 million in 9M2024)
• Profit After Tax:
  • 3Q2025: RM9.54 million (up 6.2% from RM8.98 million in 3Q2024)
  • 9M2025: RM23.67 million (up 22.9% from RM19.26 million in 9M2024)
• Gross Profit Margin Expansion:
  • 3Q2025: 37.1% (up from 29.5% in 3Q2024)
  • 9M2025: 33.8% (up from 23.5% in 9M2024)
• Strong Financial Position:
  • Net Assets: RM92.00 million as at 30 September 2025 (up 9.2% from RM84.29 million as at 31 December 2024)
  • Cash and Bank Balances: RM92.80 million (down 12.6%, mainly due to RM15.47 million dividend payout)

Segment Performance and Margins

The revenue decline was primarily due to lower contributions from the Edible & Non-Edible Oil Refinery and Product Sales and Trading segments. However, this was partially offset by growth in the Renewable Energy segment. Notably, the gross profit margin for the group improved significantly, driven by better margins in the Edible & Non-Edible Oil Refinery and Product Sales and Trading segments.

Market Outlook and Strategic Positioning

• Long-term Growth in Fats and Oils Market: The global fats and oils market is projected to grow from USD337.1 billion in 2025 to USD549.0 billion by 2035 (CAGR of 5.0%). This expansion is expected to benefit Oiltek, a key engineering solutions provider for vegetable oils, including palm, soybean, and rapeseed oils.
• Renewable Energy Segment:
  • Indonesia is moving towards a B50 biodiesel blend by 2026, while Malaysia is expanding its biodiesel programs. These policy trends are supportive of demand for engineering solutions in renewable fuels.
  • Oiltek has designed and delivered plants capable of processing feedstocks for hydrogenated vegetable oil (HVO) and sustainable aviation fuel (SAF), both key in the global energy transition.
  • The global SAF market is expected to require up to USD45 billion in investments by 2030, with Southeast Asia poised to become a leading production hub.
• Innovation Focus: Oiltek is investing in new processes for renewable energy products, aiming to support customers’ sustainability goals and capture more opportunities in the green transition.

Order Book and Forward Visibility

Order Book: As at the announcement date, Oiltek’s outstanding order book stands at RM361.6 million, to be fulfilled over the next 18 to 24 months. This provides robust earnings visibility and underpins management’s positive outlook for the business.

Potentially Price-Sensitive Highlights for Shareholders

• Profitability Resilience: Despite a significant drop in revenue, Oiltek delivered higher net profits and expanded gross margins, highlighting operational efficiency and improved profitability.
• Dividend Payout: The company’s decision to pay a RM15.47 million dividend demonstrates confidence in its cash flow and financial strength, though it did reduce cash reserves.
• Strong Order Book: The sizeable RM361.6 million order book suggests continued revenue streams and potential for further profit growth.
• Exposure to High-Growth Sectors: Oiltek is positioned to benefit from megatrends in sustainability, renewable energy, and global fats and oils demand.
• Macroeconomic Risks: Management cautions on global economic volatility, trade tensions, and geopolitical risks, which could impact operations and financial performance.

Conclusion and Investor Takeaways

Oiltek International Limited’s latest business update reveals a company that is successfully navigating sectoral challenges, with a clear focus on margin improvement, innovation, and long-term market trends. The improved profitability, robust order book, and continued investments in renewable energy solutions are all positive indicators for future growth. However, investors should remain aware of macroeconomic uncertainties and monitor global trade and policy developments closely.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisers before making investment decisions. The information provided is based on the company’s unaudited business update as at 11 November 2025 and is subject to change.

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