• Few stocks on the SGX, where re-ratings tend to be measured, has ever matched Oiltek’s run -- a 2,000% gain in two years (from ~11 cents to $2.38) taking it to a market cap of just over S$1 billion. • It's the sort of move associated with exceptional execution, a powerful thematic tailwind, and an explosion of earnings potential. • Malaysia-based Oiltek's business is anything but commonplace -- it designs and constructs processing infrastructure that converts sludge from oil palm plantations and converts it to useful oils such as biodiesel. Oiltek has designed, built and commercialised over 650 plants in more than 34 countries across 5 continents. • The big market that lies ahead for it is sustainable aviation fuel (SAF), for which a US$350 million contract (Engineering, Procurement, Construction, and Commissioning) is in the midst of finalisation between Oiltek and a third party. • This has triggered a very sharp re-rating of Oiltek stock by analysts, the latest of whom is CGS International's William Tng. Read excerpts below ... |
How 3 analysts view Oiltek:
|
Metric / Assumption |
PhillipCapital (Paul Chew) |
UOB KH (Heidi Mo) |
CGS Int'l (William TNG) |
|
Target Price |
S$2.72 |
S$2.78 |
S$3.38 |
|
Valuation Multiple |
24x FY27e PE |
28x 2027F PE |
27x FY27F P/E |
|
Valuation Justification |
50% premium to listed peers in Malaysia (trading at 16x PE, 2 years forward). |
1 Standard Deviation above historical PE mean, still trades at 25% discount to tech manufacturers in S'pore and Malaysia. |
2 Standard Deviations above its FY23-26F average P/E multiple, justified by a projected 81% EPS CAGR (FY25-28F). |
|
FY27e Revenue |
RM908.8 million |
RM700.0 million |
RM881.4 million |
|
FY27e Net Profit |
RM150.2 million |
RM131.9 million |
RM167.2 million |
|
Profitability Assumptions |
High ROE (projected 69.4% in FY27e) and strong net cash balance sheet. |
>30% ROE, and net margins >15% (projecting 18.8% in FY27). |
95.0% ROE and a 18.97% net margin projected for FY27F. |
Excerpts from CGS International report
Analyst: William Tng, CFA
■ On 6 Apr 2026, Oiltek announced an HOA for a SAF facility. If converted into a definitive agreement, its order book could reach a record RM1.75bn. ■ We assume Oiltek will be able to convert this HOA into its order book and will complete the project over FY27-28F. ■ This could see Oiltek’s FY27F EPS grow 300% yoy and, at our unchanged 27x FY27F P/E target, raise our TP to S$3.38. |
Potential record order book if HOA is converted into order
On 6 Apr 2026, Oiltek International announced that its subsidiary, Oiltek Malaysia (unlisted) entered into a Heads of Agreement (HOA) with BioSeaga Industries Sdn Bhd (unlisted) for the provision of construction services of a Sustainable Aviation Fuel (SAF) production facility, with a planned capacity of c.300 metric tonnes per day, in Sabah, Malaysia. 
Henry Yong, CEO of Oiltek.BioSeaga is an affiliate of the Brunei-based BioSeaga group, which specialises in the development of food security and renewable and sustainable fuel projects across the region.
Subject to entry into a definitive agreement, Oiltek Malaysia shall act as the exclusive contractor for the project and undertake the Engineering, Procurement, Construction, and Commissioning (EPCC) works for the plant’s pre-treatment facilities, SAF production plant, tank farm and logistics bulking infrastructure, and partial blending facilities.
The contract value is c.RM1.4bn, by Oiltek’s estimate; if converted, this would boost Oiltek order book to RM1.75bn (from RM350m as at 23 Feb 2026), which is its highest since Oiltek was listed in Mar 2022.
Oiltek Malaysia would also have the right of first refusal to participate in any equity investment, joint venture, or ownership opportunity related to this project or its subsequent phases.
 "We believe the successful execution of this SAF project could pave the way for similar wins."-- William Tng, CFA, analyst |
FY27F net profit could quadruple
We assume that Oiltek will convert this HOA into a definitive order and that the company will complete this project over FY27-28F.
This results in our FY27F net profit quadrupling to RM167m from FY26F.
We believe the successful execution of this SAF project could pave the way for similar wins.
At the same time, potential equity participation in these projects could lessen its dependence on order wins and create a recurring revenue stream for Oiltek.
We reiterate our Add call on Oiltek given its potentially record order book. Given our projection of FY25-28F EPS CAGR of 81%, we reiterate our 27x FY27F P/E valuation (still based on 2 s.d. above its FY23-26F average P/E multiple in view of its strong CAGR). Re-rating catalysts and downside risks Re-rating catalysts: further order wins and accretive M&A. Risks: order cancellations/delays, a weaker US$ vs. RM, and unanticipated disruptions in raw material supply (which will affect Oiltek’s ability to complete its projects). |
→ See also:The Oiltek Upgrade: How Two Analysts Justify S$2.70+ Target Prices
Is Koh Brothers Eco A Cheap Way to Own Hot Stock Oiltek?
