Broker: UOB Kay Hian
Date of Report: 21 July 2026
Excerpt from UOB Kay Hian report
Report Summary
Stock: Oiltek International (OTEK SP)
Action: BUY (Maintained)
Target Price: S\$2.78
Upside: +73.8%
Ticker: OTEK SP
Key Highlights:
- Oiltek International is pursuing significant growth through a robust pipeline of Sustainable Aviation Fuel (SAF) projects, joint ventures, and new ventures. The company is targeting several billion ringgit in SAF project orders over the next 12 months, with three potential contracts at the tender stage.
- The group’s major initiative includes a RM1.4b heads of agreement (HOA) with Bioseaga Industries for a SAF production facility in Sabah, Malaysia, where Oiltek will act as the exclusive contractor and has the right of first refusal for equity participation. This could generate RM14m-28m recurring earnings annually—equivalent to 45-90% of 2025 earnings.
- Oiltek is expanding into new and existing markets, focusing on larger-scale projects and building recurring income through asset-light joint ventures.
- The company maintains a strong net cash position, with a dividend payout policy of 40-50% of net profit.
- Valuation is pegged at 28x 2027F PE, with Oiltek currently trading at a discount to regional peers despite higher EPS growth, ROE (>30%), and net margin (>15%).
Actionable Insight: Investors are advised to BUY Oiltek International (OTEK SP) with a target price of S\$2.78, driven by a strong contract pipeline, potential new project wins, and significant earnings growth from the Sabah SAF project.
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