Oiltek International: Record-High Revenue and Promising Growth

Oiltek International, a provider of renewable energy equipment, delivered an outstanding performance in 2024 with record-high revenue and net profit figures. The company’s revenue surged to RM230.3m, representing a 15% year-on-year (yoy) growth, while net profit climbed 55% yoy to RM30m. This exceeded both the broker’s and consensus estimates by 12% and 14%, respectively.

Key Growth Drivers

The edible and non-edible oil refinery segment was the primary growth driver, achieving a 23% yoy increase to RM193.9m. This growth stemmed from new projects secured in Malaysia during 2023. On the other hand, the renewable energy segment faced a 30% yoy decline, largely due to the completion of a major project in Indonesia in 2023. Product sales and trading revenue rose marginally to RM18.8m, driven by higher demand for parts and engineering components from Malaysian customers.

Financial Highlights

• Gross Profit: RM55.1m (+40% yoy), with gross margins expanding by 4.4ppt to 23.9%.
• Net Margin: Improved by 3.4ppt to 12.9%.
• Dividend Proposal: A higher final dividend per share (DPS) of 1.8 S cents, bringing the total DPS for 2024 to 2.7 S cents, up from 1.6 S cents in 2023.

Orderbook Strength

Oiltek’s orderbook stood at RM355m as of February 12, 2025, a near-record high. This includes RM207m in new orders secured during 2024, which are expected to be fulfilled over the next 18 to 24 months.

Future Prospects

Oiltek is well-positioned to benefit from macro trends, including the rising global demand for edible and non-edible oils due to population growth and higher food demand. Additionally, increased biodiesel blending requirements in Malaysia (B10 to B20) and Indonesia (B35 to B40) are expected to boost Oiltek’s renewable energy segment.

Recommendation

The broker maintains a BUY recommendation with an upgraded target price of S\$1.37, up from the previous S\$1.22. This is based on a 19x 2025F PE, pegged to a 0.9x PEG ratio.

Peer Comparison: Understanding the Competitive Landscape

The report provides a detailed comparison of Oiltek International with its peers in the market. Here’s a breakdown of the performance metrics:

Where Oiltek Stands

Oiltek International’s PE ratio for 2025 stands at 15.9x, making it one of the more attractive options in the sector. With a market cap of US\$121m, its ROE of 31.7% and dividend yield of 2.2% further highlight its strong investment potential.

Conclusion

Oiltek International has proven its capabilities with record-breaking financial performance in 2024, driven by robust growth in its oil refinery segment. Its promising orderbook, coupled with macroeconomic trends like increased biodiesel demand and the rise of sustainable aviation fuels (SAF), positions the company for further success. With a strong recommendation to BUY and an attractive target price of S\$1.37, Oiltek remains a compelling investment opportunity in the renewable energy and refinery equipment sector.

The peer comparison further underscores Oiltek’s competitive edge, particularly in terms of valuation and return on equity. Investors seeking exposure to the growing renewable energy and oil refinery markets should consider Oiltek International as a top choice.