Oiltek International Limited: FY2025 Financial Review and Investor Analysis

Oiltek International Limited, a Singapore-listed engineering solutions provider for the fats & oils and renewable energy sectors, released its condensed interim financial statements for the six months and full year ended 31 December 2025. This article provides a detailed financial analysis, key performance metrics, and strategic commentary based exclusively on the company’s latest official disclosures.

Key Financial Metrics and Performance Overview

Segment Results and Exceptional Items

• Segment Performance: The Edible & Non-Edible Oil Refinery segment saw a sharp decline in revenue (-30.7% YoY), primarily due to the substantial completion of large projects in Indonesia and Africa in the previous year. Product Sales and Trading also fell (-18.3% YoY). However, Renewable Energy revenue surged by 249.7% YoY, reflecting new project wins in Malaysia and a strategic shift toward sustainability-related engineering solutions.
• Gross Margin Expansion: Despite lower revenue, gross profit improved by 24.8% YoY, and gross margin rose from 23.9% to 32.5%, due to greater profitability from project mix and cost savings.
• Foreign Exchange Losses: The company recorded a net other loss of RM8.23 million (vs. a net gain of RM2.61 million the previous year) due to the weakening of the US dollar against the Malaysian ringgit, impacting monetary assets and liabilities.
• Administrative Expenses: Increased by 15.6% YoY, mainly from higher staff costs, selling and distribution expenses, and professional fees.
• Impairment Allowance: A net reversal of RM0.5 million for the year, reflecting improved collections of previously impaired receivables.

Dividends

The Board proposed a final dividend of 0.70 Singapore cents per share for FY2025, subject to approval, in addition to an interim dividend of 0.50 cents already paid (total: 1.20 cents per share). This is lower than the previous year’s total of 2.70 cents per share, reflecting the larger share base after a substantial bonus issue and a more conservative payout policy.

Balance Sheet and Cash Flows

• Net Assets: RM99.86 million at 31 December 2025, up from RM84.29 million a year prior, despite share base dilution from a 3-for-1 bonus issue.
• Cash Position: Cash and bank balances remain strong at RM99.72 million, despite net outflows for dividends and working capital.
• Receivables: Trade and other receivables fell sharply, mainly due to collection of prior milestone billings.
• Contract Assets/Liabilities: Contract assets rose as revenue recognition outpaced customer billing, while contract liabilities fell due to the completion of earlier projects.
• Operating Cash Flow: Positive at RM14.06 million for FY2025, swinging from a negative outflow the year before.

Strategic and Market Commentary

Order book stands at a robust RM312.8 million, to be delivered over the next 18–24 months. The company highlights a positive long-term outlook for both the Edible & Non-Edible Oil Refinery and Renewable Energy segments, citing global demand trends in vegetable oils and sustainable aviation fuel (SAF). The report notes that macroeconomic uncertainty and geopolitical tensions could delay some customer capital expenditure, but management remains “cautiously positive” moving forward.

Chairman’s Statement

“The Group remains positive on the long-term outlook of the Edible & Non-Edible Oil Refinery segment as global consumption of fats and oils continues to steadily expand and grow, driven by rising demand across food, beverage and industrial applications… The increasing demand for vegetable oils creates opportunities for the Group as an engineering solutions provider… At the same time, the global trend of environmental sustainability continues to present potential opportunities for the Group’s Renewable Energy segment… The Group has the relevant experience and capabilities for the SAF value chain, as it has designed and delivered plants capable of treating and cleansing palm oil mill effluent (‘POME’), as well as any other vegetable oil-based raw materials in compliance with the International Sustainability & Carbon Certification (‘ISCC’) for use as feedstock in the production and manufacture of hydrogenated vegetable oil (‘HVO’) or renewable diesel, which can be upgraded to SAF… As many parts of the world experience the devastating effects of global climate change driven by global warming, and with sustainability becoming a global priority, the Group remains positive of the long-term growth prospects in the renewable energy sector. As part of its focus on renewable energy, the Group continues to develop new and innovative processes for renewable energy products, in order to provide more support and solutions for the sustainability efforts of its existing customers and markets. The Group may from time to time, evaluate potential joint venture opportunities as part of its growth strategy, where such arrangements are commercially viable and aligned with its business objectives.”

Tone: The statement is optimistic, with a strong focus on sustainability, project pipeline, and industry growth, but tempered by acknowledgment of macroeconomic uncertainties.

Other Notable Disclosures

• No share buybacks, new fundraising, or asset sales occurred during the year.
• No related-party transactions above S\$100,000 were reported.
• No acquisitions, divestments, or new subsidiaries were reported.
• Directors’ remuneration was not disclosed in detail in the report.

Conclusion & Investor Recommendations

Overall Assessment: Oiltek delivered higher profits despite lower revenue, driven by margin expansion and a favorable project mix. The balance sheet remains strong with ample liquidity and a solid order book. However, the payout ratio and dividends per share have dropped, largely due to a bonus share issue and a more conservative approach. The company is well positioned in sectors with long-term growth tailwinds (vegetable oils, renewable energy/SAF), but faces near-term risks from currency volatility, project timing, and macroeconomic uncertainty.

Investor Guidance

• For existing shareholders: Hold. The company’s fundamentals remain robust, with a strong order book and a positive outlook in core and emerging segments. Maintain your position and monitor for any signs of margin compression, project delays, or further dividend policy changes.
• For potential investors: Consider accumulating on weakness. The current valuation may understate the long-term growth potential, especially given the company’s strategic positioning in sustainability trends. However, new entrants should be mindful of near-term risks, especially around earnings volatility and foreign exchange exposure.

Disclaimer: This analysis is based solely on information found in the company’s official FY2025 financial report. It does not constitute investment advice. Investors should consider their own risk tolerance and consult a licensed advisor before making investment decisions.

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