UOB Kay Hian
22 July 2025

Oiltek International: Dual Listing Ambitions and SAF Opportunities Power Strong Growth Outlook

Overview: Oiltek International’s Strategic Moves for Regional Dominance

Oiltek International, a leading provider of renewable energy equipment, is accelerating its growth strategy with a proposed secondary listing on Bursa Malaysia. This move is designed to broaden the company’s regional footprint, enhance visibility among Malaysian investors, increase trading liquidity, and create additional avenues for future capital raising. Oiltek’s robust orderbook and exploration of new opportunities, particularly in the sustainable aviation fuel (SAF) sector, underscore its commitment to long-term growth and innovation.

Key Highlights and Investment Thesis

• Proposed Dual Listing: Oiltek is seeking a secondary listing on Bursa Malaysia to boost its regional presence and tap into a broader investor base.
• Strong Orderbook: As of April 2025, Oiltek maintained a robust orderbook of RM402 million, providing strong revenue visibility through 2025.
• SAF Pilot Plant Opportunity: The company is in discussions for a strategic role in a pioneering SAF pilot plant program in Sarawak, alongside SEDC Energy and Sulzer.
• Innovation and Proprietary Technology: Oiltek’s edge is driven by several proprietary technologies in process and renewable energy equipment, and a commitment to launching at least one new product design every six months.
• Asset-Light, Cost-Competitive Model: With just around 90 employees, Oiltek remains highly cost-efficient compared to its mostly Europe-based competitors.

Valuation and Target Price Upgrade

• Oiltek’s valuation is currently at a premium—about 40% higher for 2026 PE compared to Malaysian peers.
• The broker has raised the target price by 7.5% to S\$0.86, up from S\$0.80, reflecting continued earnings momentum and the potential for a valuation re-rating after the dual listing.
• This revised target is based on a 29x 2026F PE, pegged to 0.95x PEG with a 5% discount to the 1.0x PEG benchmark, implying a slight discount to two standard deviations above Oiltek’s one-year historical mean PE.

Financial Performance and Forecasts

Orderbook Strength and Global Reach

Oiltek’s orderbook stood at RM402 million as of 16 April 2025, up from RM355 million in February. This includes approximately RM61.9 million in new contracts across Africa, the Americas, Thailand, Indonesia, and Malaysia. Projects span process plant design and delivery (soapstock acidulation, dry fractionation, physical refining), storage tank installation, biogas plant upgrades, and biodiesel consultancy. These contracts are expected to drive FY25 performance and highlight Oiltek’s global reach and execution capabilities.

Strategic Role in Sustainable Aviation Fuel (SAF) Sector

Oiltek is in advanced discussions with SEDC Energy (a subsidiary of the Sarawak Economic Development Corporation) and Sulzer to participate in a pioneering SAF pilot plant in Sarawak. Oiltek’s experience includes:

• Delivering a 600-metric-tonne-per-day biodiesel plant in Bintulu
• Supplying a palm oil mill effluent (POME) oil treatment facility for hydrotreated vegetable oil (HVO) feedstock production

SAF is emerging as a critical enabler of net-zero carbon targets for the aviation sector by 2050. The International Air Transport Association (IATA) projects that SAF could deliver 65% of the required emissions reductions. As Oiltek provides process solutions for HVO production, it is well-placed to capture upcoming SAF-related opportunities, especially as global mandates tighten.

Peer Comparison: Oiltek vs. Malaysian Renewable Energy Companies

• Oiltek’s PE multiples are above the peer average (2025F PE: 31.2x vs 21.2x), reflecting its strong growth prospects, proprietary technologies, and capital-light model.
• Oiltek’s net margin (12.1% for 2025F) and ROE (41.7%) are also well ahead of the peer group.
• Net cash position is exceptionally strong, with net debt to equity at (126.0)% for 2025F.

Share Price Catalysts and Risks

• Upside potential from higher-than-expected order wins and better gross margins due to scale.
• Proposed dual listing, if executed, may further boost trading liquidity and valuation multiples.

Risks are not explicitly discussed, but investors should monitor execution of new projects, regulatory approvals for the dual listing, and progress on the SAF pilot plant.

Dividend Policy and Cash Flow

• Dividend yield is projected at 1.4% for 2025F, rising slightly in subsequent years.
• Net cash inflow is expected to turn positive from FY25 as working capital stabilizes after recent contract wins and expansion.

Oiltek maintains a strong liquidity profile, with a projected ending cash balance of RM115.9 million for 2025F and no debt on its balance sheet.

Biodiesel Production Trends in Indonesia and Malaysia

Oiltek is well-positioned to benefit from the ongoing expansion in biodiesel production in Southeast Asia. The production trend shows consistent growth in both Indonesia and Malaysia, supporting demand for Oiltek’s processing technologies and expertise.

Conclusion: Oiltek’s Roadmap for Growth and Regional Leadership

Oiltek International stands out in the renewable energy equipment sector with its asset-light model, proprietary technology, robust orderbook, and strategic moves to deepen its regional presence. With the proposed dual listing on Bursa Malaysia and the pursuit of high-growth opportunities in SAF and renewable oils, Oiltek is poised for continued earnings growth and potential valuation re-rating.
Investors seeking exposure to the fast-growing renewable energy and sustainable aviation fuel sectors in Asia should watch Oiltek closely for further order wins, margin expansion, and successful execution of its regional strategy.