The group&rsquo s cumulative new contracts secured in the financial year ending Dec 31 stands at about RM152.3 million

 

OILTEK International : HQU +5.43%has won new contracts worth RM19.5 million (S$5.9 million) from Africa, Central America and Malaysia, through its subsidiary in Selangor.

 

This will take the group&rsquo s current order book, which is expected to be fulfilled over the next 18 to 24 months, to about RM378.3 million.

 

On Thursday (Sep 19), the renewable energy solutions provider said the new contracts are expected to have a positive impact in the financial year ending December 2025.

 

They are, however, not expected to have a material impact on the group&rsquo s fiscal performance in FY2024.

 

Works covered under the new contracts include designing, fabricating, delivering, testing and commissioning of a new refinery plant, a neutralisation plant, as well as dry fractionation plants.

 

They further involve the upgrading and retrofitting of a chemetator refrigerant control system of a texturising plant.

 

To date, Oiltek&rsquo s cumulative new contracts secured in the financial year ending Dec 31 stands at about RM152.3 million.

 

The group in July also won a new contract consisting of two new plants, taking its order book to a record high of about RM430.9 million. Oiltek had said the contract is expected to have a positive impact on its performance for FY2024.

 

Under that contract, works include designing, fabricating, delivering, testing and commissioning two dry fractionation plants, which have a capacity of 550 tonnes a day and 350 tonnes a day, respectively.

 

It expects to fulfil its current order book over the next 18 to 24 months

 

OILTEK International&rsquo s wholly owned subsidiary won a new contract consisting of two new plants, taking the group&rsquo s current order book to a record high of about RM430.9 million (S$123.9 million).

 

On Tuesday (Jul 2), the renewable energy solutions provider said its new contract is expected to have a positive impact on its performance for the current financial year.

 

The company also noted that it expects to fulfil its current order book over the next 18 to 24 months.

 

Works covered under the new contract include designing, fabricating, delivering, testing and commissioning two dry fractionation plants, which have a capacity of 550 tonnes per day and 350 tonnes per day, respectively.

 

The plant with 550 tonnes per day capacity will be used to produce refined, bleached and deodorised liquid fraction of palm oil at an iodine value of 56. The other plant will be used to produce palm mid fraction at an iodine value of 45.

Dividends forecast to grow by 13 per cent in the current financial year

 

PHILLIP Capital initiated coverage on Oiltek International with a &ldquo buy&rdquo call on the company&rsquo s growing book orders and its belief that the company is currently riding multiple capital expenditure (capex) cycles. 

 

The research house set a price target of S$0.70 for Oiltek, which works out to a price-to-earnings ratio estimate of 15 times. This implies a discount when pegged to the engineering sector, which trades at a forward ratio of 24 times.

 

In a report on Monday (Jun 10), analyst Paul Chew said the valuation was made against the engineering sector as there were &ldquo no direct comparables&rdquo to renewable energy solutions provider.

 

Looking ahead, Chew expects dividends to grow by 13 per cent in the current financial year due to Oiltek&rsquo s asset-light business model that minimises the company&rsquo s capex needs.

 

He noted Oiltek&rsquo s capex to be &ldquo only RM300,000 to RM400,000 (S$85,114 to S$114,818) per year&rdquo .

 

The analyst also expects Oiltek&rsquo s order book for FY2024 to mark a fifth straight year of record orders. In his view, the largest growth opportunity for Oiltek will come from the rising use of sustainable aviation fuel oil made with palm oil effluents in South-east Asia.

 

&ldquo Hydrogenated vegetable oil, also known as hydroprocessed esters and fatty acids, is one of the frontrunner technical pathways for sustainable aviation fuel output in the near term,&rdquo said Chew.

 

Sustainable aviation fuel is a liquid fuel currently used in commercial aviation with the potential of reducing carbon emissions by up to 80 per cent.

 

In view of this, and the international aviation industry&rsquo s targets to achieve net zero emissions by 2050, Chew believes that the company will receive more order wins for hydrogenated vegetable oil feedstock treatment plants.

In his report dated June 10, Chew notes Oiltek&rsquo s &ldquo enviable&rdquo business has a return on equity (ROE) of 31%, is asset-light and backed by net cash of RM132 million ($37.9 million), which is around 70% of its market capitalisation.

&ldquo Its high returns stem from selling proprietary know-how and successfully designing, operating, and commissioning customer plants with a 45-year track record of project completions,&rdquo the analyst writes.

The new contracts include the design and fabrication of a new alkaline closed-loop vacuum system

 

OILTEK International : HQU +7.35% has won new contracts worth RM94.8 million (S$27.2 million) from Malaysia, Indonesia and Kenya through its subsidiary in Selangor.

 

This will take the group&rsquo s current order book, which is expected to be fulfilled over the next 18 to 24 months, to a record high of RM400.5 million.

 

On Monday (Jun 3), the renewable energy solutions provider said its new contracts are expected to have a positive impact on its performance for the financial year ending December 2024.

 

Oiltek chief executive Henry Yong added that the group aims to continue its momentum of contract acquisitions from the prior year to grow its project pipeline.

 

&ldquo These latest contract wins will help to build up our growth momentum, and once again highlight the market&rsquo s recognition of the attractiveness of our reliable, innovative, diversified and comprehensive range of process and engineering solutions,&rdquo said Yong.

 

Works covered under the new contracts include constructing, fabricating and installing equipment and infrastructure for new crude palm oil pre-treatment as well as biodiesel plants.

 

They further involve one new downstream premium specialty animal feed product processing plant and implementing crystalliser loops for a dry fractionation plant from design through to commissioning.

 

Under the new contracts, Oiltek will also design, fabricate, deliver, test and commission a new 500 metric tonnes-per-day alkaline closed-loop vacuum system.