Oiltek International Limited announced today that its net profit after income tax for 1H2023 recorded stellar growth of 44.5% to RM6.9 million.
Revenue decreased marginally by 5.7% to RM76.7 million in 1H2023 due to a decrease in revenue for the Edible & Non-Edible Oil Refinery segment, which was partially offset by an increase in revenue for the Renewable Energy segment and the Product Sales and Trading segment.
Revenue from the Edible & Non-Edible Oil Refinery segment decreased by 20.6% to RM56.9 million in 1H2023, mainly attributed to a decrease in revenue contribution from certain projects in Indonesia, Pakistan and Philippines where performance obligations had been substantially satisfied in 1H2022. On the other hand, revenue from the Renewable Energy segment increased by 439.3% to RM10.9 million in 1H2023 mainly due to an increase in revenue contribution from an ongoing project in Indonesia which achieved a higher percentage of completion in 1H2023 compared to 1H2022. Revenue from the Product Sales and Trading segment also increased by 16.8% to RM9.0 million in 1H2023 mainly due to an increase in demand for the supply of parts and engineering components from customers in Indonesia.
Overall, the Group’s profit after income tax increased by 44.5% to RM6.9 million in 1H2023. As at 30 June 2023, the Group has maintained its strong and resilient financial position with a net asset position of RM55.3 million and cash and bank balances amounting to RM86.9 million.
Mr Henry Yong Khai Weng, Executive Director and CEO of Oiltek, commented, “Oiltek has continued its strong growth momentum into 1H2023, even as the global macroeconomic environment continues to remain uncertain and challenging. Our resilient business model, strong fundamentals, and effective management allows us to remain optimistic about the overall business outlook because of the growth potential of the industries that we serve. As the emphasis on sustainability continues to grow, we will focus on continuing to offer our proprietary renewable energy solutions to support the sustainability efforts of our customers. Looking ahead for the rest of the year, we will strive to acquire new orders and build on our record order book and recurring income base to drive our growth and further enhance shareholder value.”
Business Outlook
The Group remains confident about the long-term outlook of the Edible & Non-Edible Oil Refinery segment as the global consumption of oils and fats grows in tandem with population growth, as seen by the strong growth in the food and beverage, renewable energy and biodiesel sectors. Capitalising on this, the Group will continue to leverage on its capabilities, integrated technology know-how, and proven track record to secure more projects and projects of a larger scale in existing and new markets, and to expand its geographical reach to other markets with emerging prospects.
The Group sees the acceleration of the global trend towards environmental sustainability benefitting its Renewable Energy segment as Indonesia, the world’s biggest palm oil producing country, continues to implement the raising of mandatory blending of biodiesel from 30% to 35% in the country and will raise it to 40% in the next few years. Malaysia, the world’s second largest palm oil producing country, is similarly committed to the implementation of its biodiesel programme to progressively increase biodiesel blending ratios from the current 20%. This expansion will be done in phases based on the readiness of biodiesel blending facilities in Malaysia. The Group will increase its focus on this sector, and will continue to develop new and innovative processes, and provide more support and solutions to the sustainability efforts of its existing customers and markets.
With the aviation industry’s commitment to decarbonize and achieve net zero emissions by 2050, the market is now aligned and moving towards decarbonization with sustainable aviation fuel. The Group’s processes are capable of treating and cleansing palm oil mill effluent (“POME”), a non-edible type of vegetable oil, as well as any other vegetable oil-based raw materials in compliance with the International Sustainability & Carbon Certification (“ISCC”), for use as feedstock in the production and manufacture of hydrogenated vegetable oil (“HVO”) or aviation fuels.
Barring any unforeseen circumstances and notwithstanding the uncertainties and volatility of the global economy affected by current geopolitical tensions, the Group expects its businesses to be driven primarily by the corresponding growth in the industries that it serves, with the overall outlook expected to remain positive. The Group has started 2023 strongly, with new contract wins from Indonesia, Malaysia and Africa. The Group’s current order book remains high at RM368.5 million, with new orders amounting to RM219.9 million secured in the current year, and is expected to be fulfilled over the next 18 to 24 months, barring any unforeseen circumstances.
Oiltek’s share price as of 31 July 2023 after market close was S$0.240.
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About Oiltek International Limited
Oiltek International Limited, an established integrated process technology and renewable energy solutions provider, specialises in the provision of reliable, innovative, diversified, and comprehensive range of refinery processes and engineering solutions for use across all different sectors of the vegetable oils industry value chain globally. The history of the Group can be traced back to its principal operating subsidiary, Oiltek Sdn. Bhd., which was incorporated in Malaysia on 1 December 1980. With over 42 years of track record, Oiltek has successfully designed, built and commercialised plants in more than 33 countries across 5 continents.
Oiltek operates three key businesses – Edible & Non-Edible Oil Refinery, Renewable Energy, and Product Sales and Trading.
For its Edible & Non-Edible Oil Refinery segment, the Group provides engineering, procurement, designing, construction and commissioning (“EPCC”) services for edible and non-edible oil refining plants, downstream specialty products and processing plants; upgrading and retrofitting of existing facilities; and turnkey outside-battery-limits (“OSBL”) infrastructure engineering.
For the Group’s Renewable Energy segment, Oiltek provides services for renewable energy industries including EPCC of multi-feedstock biodiesel, enzymatic biodiesel, winter fuel, and palm oil mill effluent (“POME”) biogas methane recovery plants; upgrading and retrofitting of existing facilities; and turnkey OSBL infrastructure engineering which includes the environmental solutions and integration into steam and power generation.
Oiltek’s Product Sales and Trading segment generates recurring income for the Group, and its services include engineering component sales, agency and distributorship, and specialty chemical product trading.