Oiltek International

[weijian]

A micro cap supposed to list on Bursa Malaysia, before it eventually listed (raised 5mil gross proceeds with 30% of it listing expenses) on the SGX about 2.5years ago.

If its ultimate parent Koh Bro Group had delayed Oiltek's IPO plans by a year or two, it probably wouldn't have been listed here.

So, the Group currently has a order book of 378mil (to be fulfilled over the next 2years) when it did ~60mil of revenue in a full year 2023. That is a lot of revenue (and probably earnings) visibility down the road. No wonder share price has doubled since the start of the year!

Oiltek International secures new contracts from Africa, Central America and Malaysia worth RM19.5 million

• The new contracts bring its tally of new contracts secured in 2024 to-date to approximately RM152.3 million
 • The Group’s current order book of approximately RM378.3 million will be fulfilled in the next 18-24 months barring any unforeseen circumstances

https://links.sgx.com/FileOpen/Oiltek%20...eID=819130

[weijian]

A micro cap supposed to list on Bursa Malaysia, before it eventually listed (raised 5mil gross proceeds with 30% of it listing expenses) on the SGX about 2.5years ago.

If its ultimate parent Koh Bro Group had delayed Oiltek's IPO plans by a year or two, it probably wouldn't have been listed here.

So, the Group currently has a order book of 378mil (to be fulfilled over the next 2years) when it did ~60mil of revenue in a full year 2023. That is a lot of revenue (and probably earnings) visibility down the road. No wonder share price has doubled since the start of the year!

I looked at the date of my notes and saw that I reviewed Oiltek back in Aug2024. Back then, I thought it looked expensive because share price had doubled. Of course, I am humiliated again by Mr Market because it has since doubled again.

A couple of things going for this company:

(1) The company is project based (EPCC/turnkey contractor) but actually has negative working capital, thanks to much bigger contract liabilities than contract assets. The negative working capital is ~50% of its equity base and looks much better than even Sheng Siong!

(2) While it only IPO-ed a couple of years, it has a 40year operating track record. And most of its customers are the big palm oil planters we are familiar with. The company has a NPM~10% with ROE~20%. And if we look back at its past decade records (which could be extracted from Koh Bro Eco's segment reporting), it is quite consistent.

(3) Koh Bro and Koh Bro Eco will require funds for their construction projects' working capital. So Oiltek is almost guaranteed to keep paying cash upwards to its parent Koh Bro Eco who owns 68% of it. The 32% OPMIs are nicely positioned.

(4) It seems to have found itself a niche in providing systems to palm oil refineries to churn out more and more biofuels. With Indonesia/Malaysia mandating increasingly higher palm oil content in their biofuel, itself a response to the EU's proposed ban on palm oil, this tailwind looks strong for the company's niche.