Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

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Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

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Oiltek International is an established integrated process technology and renewable energy solutions provider in the vegetable oils (palm oil, soybean oil and rapeseed oil) industry. Its key businesses include engineering, procurement, designing, construction and commissioning (EPCC) of edible and non-edible oil refineries and renewable energy, as well as product sales and trading. 
	 </li>
	<li>
It has plans to capitalise on their established track record to secure more projects and projects of a larger scale in both existing and new markets, with a particular focus on the renewable energy sector, further advancing their process technology and renewable energy capabilities. 
	 </li>
	<li>Intends to recommend and distribute dividends of not less than 40% of net profit attributable to owners of the company for FY2022 and FY2023. </li>
</ul>
 

The history of the Group can be traced back to 1980 when Oiltek was incorporated in Malaysia and started out as a home-grown vegetable and edible oil process engineering company. Since then, the Group has a track record of over 40 years in the vegetable oils industry has expanded internationally with customers in more than 30 countries across 5 continents to provide an integrated and comprehensive range of vegetable oils process and engineering solutions. Highlights of the IPO based on Offer Document (click <a href="https://api2.sgx.com/sites/default/files/2022-02/Final%20Offer%20Document.pdf">here</a>)

1. Oiltek’s 3 Key Businesses

<ul>
<li>
Edible and Non-Edible Oil Refinery

	<ul>
<li>Engineering, procurement, designing, construction and commissioning (EPCC) of edible and non-edible oil refining plants, downstream specialty products and processing plants</li>
		<li>Upgrading and retrofitting of existing facilities</li>
		<li>Turnkey outside-battery-limits (OSBL) infrastructure engineering</li>
	</ul>
</li>
	<li>
Renewable Energy
	<ul>
<li>EPCC of multi-feedstock biodiesel, enzymatic biodiesel, winter fuel and palm oil mill effluent biogas methane recovery plants</li>
		<li>Upgrading and retrofitting of existing facilities</li>
		<li>Turnkey OSBL infrastructure engineering which includes environmental solutions and integration into steam and power generation</li>
	</ul>
</li>
	<li>
Product Sales and Trading
	<ul>
<li>Engineering component sales, agency and distributorship</li>
		<li>Specialty chemical product trading 
		 </li>
	</ul>
</li>
</ul>
2. Competitive Strengths

<ul>
<li>
Established track record and reputation of over 40 years – with over 570 plants in &gt;30 countries across 5 continents, long-standing reputation and track record in providing innovative processing solutions.</li>
	<li>
Integrated and diversified solutions range serving global markets – proprietary technology and know-how serving customers in the vegetable oils value chain; renewable energy segment is well-positioned to benefit from secular growth trends such as stricter emission standards for combustion engines and increasing environmental regulation; and distribution and agency of component and chemical trading provides recurring income stream for the Group.</li>
	<li>
Process innovator in technology excellence – its proprietary technologies are developed in-house and the Group has 1 patent granted and in force in Malaysia, Thailand and Indonesia, 3 patents granted and in force in Malaysia, and 6 pending patent applications in various territories. The Group seeks to constantly innovate through research and development of new process technologies, to achieve long-term and sustainable growth.</li>
	<li>
Track record of profitability and asset-light business model – resilient and asset-light business model; its current order book is approximately RM173.06 million (as at 17 Dec 2021) and is expected to be fulfilled over the next 18 months.</li>
	<li>
Committed and highly experienced management team – helmed by Executive Director and CEO, Mr. Yong Khai Weng whom has more than 24 years of experience in the industry.</li>
</ul>
 

3. Business Strategies and Future Plans

<ul>
<li>To capitalize their established track record to secure more projects and projects of a larger scale in existing and new markets, with a particular focus on the renewable energy sector.</li>
	<li>Further advancement of process technologies and renewable energy capabilities through research and development, joint ventures and/or strategic alliances.</li>
	<li>Expansion of the business through investments, mergers and acquisitions, joint ventures and/or strategic alliances to, among others, generate recurring income.</li>
</ul>
 4. Industry Prospects 

<ul>
<li>
Global Oils &amp; Fats Industry – palm oil, soybean oil, rapeseed oil and sunflower seed oil contributed to about 76% of global oils and fats production, driven by strong growth in the food and beverage, oleochemical and biodiesel sectors, and rising world population. Global vegetable oils market expected to reach 258.4 million metric tons by 2026, growing at a compound annual growth rate (“CAGR”) of 4.4% from 2020 to 2026.</li>
	<li>
Global Palm Oil Industry – palm oil is one of the major ingredients in up to 50% of all daily-use products with an expected CAGR growth of 11.6% from US$54.8 billion in 2020 to US$106.0 billion by 2026.</li>
	<li>
Global Sustainable and Renewable Energy Industry – expected to increase up to 25% between 2017 and 2040. To meet the United Nations Framework Convention on Climate Change’s 1.5°C climate ambition by 2050, it is estimated that 90% of total electricity needs would be supplied by renewables, followed by 6% from natural gas and the remaining from nuclear.</li>
</ul>
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2022-03/project%20value.PNG' alt='Projected value of global palm oil market' />
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 <div class='content-caption'>Projected value of global palm oil market</div>
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5. Key Risks Factors (refer to Page 45 of the offer document for a complete list of risk factors)

<ul>
<li>The Group’s financial performance is dependent on the Group’s ability to secure new projects and to ensure non-cancellation of secured projects.</li>
	<li>Its continued success and growth depend substantially on the efforts of the Group’s key management personnel.</li>
	<li>The Group faces competition in the industries which it operates in.</li>
	<li>The Group may be adversely affected by any cost overruns, increase in costs and/or project delays.</li>
</ul>
 

Financials &amp; Valuation

<ul>
<li>According to the Group’s Offer Document, its total revenue grew approximately RM5.51 million or 13.2% from approximately RM41.71 million in 1H2020 to approximately RM47.22 million in 1H2021 due to an increase in the Renewable Energy segment (new project secured in Indonesia in FY2020 that was substantially performed in 1H2021) and the Product Sales and Trading segment (contribution from the trading of specialty chemical projects commenced in 1H2021), and partially offset by decrease in the Edible &amp; Non-Edible Oil Refinery segment (decrease in revenue contribution from projects secured in Africa that was substantially performed in 1H2020).</li>
</ul>
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2022-03/Capture_2.PNG' alt='Revenue breakdown' />
 </figure>
 <div class='content-caption'>Revenue breakdown</div>
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<ul>
<li>The Group’s historical EPS based on the audited combined statements of comprehensive income for FY2020 and the post-invitation share capital of 143.0 million shares, assuming that the service agreement had been in place since the beginning of FY2020 is 2.73 cents. Based on this and the invitation price of S$0.23, the price-to-earnings ratio is 8.42x.</li>
	<li>Its Board intends to recommend and distribute dividends of not less than 40% of net profit attributable to owners of the company for FY2022 and FY2023.</li>
</ul>
 

Additional Information from Offer Document (click <a href="https://api2.sgx.com/sites/default/files/2022-02/Final%20Offer%20Document.pdf">here</a>)

IPO Details

<ul>
<li>Invitation price at S$0.23 per Invitation Share</li>
	<li>Invitation of 22.5 million Invitation Shares
	<ul>
<li>0.5 million Invitation Shares by way of public offer; and</li>
		<li>22.0 million Invitation Shares by way of placement (including 5.0 million Reserved Shares reserved for subscription by management and employees)</li>
	</ul>
</li>
	<li>Estimated IPO Market Capitalisation of S$32.89 million based on post-invitation share capital of 143.0 million Shares</li>
	<li>Use of net proceeds (approximately S$3.63 million):
	<ul>
<li>S$2.63 million – Working capital to expand business operations through securing more projects and projects of a larger scale.</li>
		<li>S$1.0 million – Expansion of the business through investments, mergers and acquisitions, joint ventures and/or strategic alliances</li>
	</ul>
</li>
</ul>
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Oiltek International is an established integrated process technology and renewable energy solutions provider in the vegetable oils (palm oil, soybean oil and rapeseed oil) industry. Its key businesses include engineering, procurement, designing, construction and commissioning (EPCC) of edible and non-edible oil refineries and renewable energy, as well as product sales and trading. 
	 
	
It has plans to capitalise on their established track record to secure more projects and projects of a larger scale in both existing and new markets, with a particular focus on the renewable energy sector, further advancing their process technology and renewable energy capabilities. 
	 
	Intends to recommend and distribute dividends of not less than 40% of net profit attributable to owners of the company for FY2022 and FY2023. 

 

The history of the Group can be traced back to 1980 when Oiltek was incorporated in Malaysia and started out as a home-grown vegetable and edible oil process engineering company. Since then, the Group has a track record of over 40 years in the vegetable oils industry has expanded internationally with customers in more than 30 countries across 5 continents to provide an integrated and comprehensive range of vegetable oils process and engineering solutions.  Highlights of the IPO based on Offer Document (click here)

1. Oiltek’s 3 Key Businesses



Edible and Non-Edible Oil Refinery

	
Engineering, procurement, designing, construction and commissioning (EPCC) of edible and non-edible oil refining plants, downstream specialty products and processing plants
		Upgrading and retrofitting of existing facilities
		Turnkey outside-battery-limits (OSBL) infrastructure engineering
	

	
Renewable Energy
	
EPCC of multi-feedstock biodiesel, enzymatic biodiesel, winter fuel and palm oil mill effluent biogas methane recovery plants
		Upgrading and retrofitting of existing facilities
		Turnkey OSBL infrastructure engineering which includes environmental solutions and integration into steam and power generation
	

	
Product Sales and Trading
	
Engineering component sales, agency and distributorship
		Specialty chemical product trading 
		 
	


2. Competitive Strengths



Established track record and reputation of over 40 years – with over 570 plants in &gt;30 countries across 5 continents, long-standing reputation and track record in providing innovative processing solutions.
	
Integrated and diversified solutions range serving global markets – proprietary technology and know-how serving customers in the vegetable oils value chain; renewable energy segment is well-positioned to benefit from secular growth trends such as stricter emission standards for combustion engines and increasing environmental regulation; and distribution and agency of component and chemical trading provides recurring income stream for the Group.
	
Process innovator in technology excellence – its proprietary technologies are developed in-house and the Group has 1 patent granted and in force in Malaysia, Thailand and Indonesia, 3 patents granted and in force in Malaysia, and 6 pending patent applications in various territories. The Group seeks to constantly innovate through research and development of new process technologies, to achieve long-term and sustainable growth.
	
Track record of profitability and asset-light business model – resilient and asset-light business model; its current order book is approximately RM173.06 million (as at 17 Dec 2021) and is expected to be fulfilled over the next 18 months.
	
Committed and highly experienced management team – helmed by Executive Director and CEO, Mr. Yong Khai Weng whom has more than 24 years of experience in the industry.

 

3. Business Strategies and Future Plans


To capitalize their established track record to secure more projects and projects of a larger scale in existing and new markets, with a particular focus on the renewable energy sector.
	Further advancement of process technologies and renewable energy capabilities through research and development, joint ventures and/or strategic alliances.
	Expansion of the business through investments, mergers and acquisitions, joint ventures and/or strategic alliances to, among others, generate recurring income.

 4. Industry Prospects 



Global Oils &amp; Fats Industry – palm oil, soybean oil, rapeseed oil and sunflower seed oil contributed to about 76% of global oils and fats production, driven by strong growth in the food and beverage, oleochemical and biodiesel sectors, and rising world population. Global vegetable oils market expected to reach 258.4 million metric tons by 2026, growing at a compound annual growth rate (“CAGR”) of 4.4% from 2020 to 2026.
	
Global Palm Oil Industry – palm oil is one of the major ingredients in up to 50% of all daily-use products with an expected CAGR growth of 11.6% from US$54.8 billion in 2020 to US$106.0 billion by 2026.
	
Global Sustainable and Renewable Energy Industry – expected to increase up to 25% between 2017 and 2040. To meet the United Nations Framework Convention on Climate Change’s 1.5°C climate ambition by 2050, it is estimated that 90% of total electricity needs would be supplied by renewables, followed by 6% from natural gas and the remaining from nuclear.




      
    
    Projected value of global palm oil market


5. Key Risks Factors (refer to Page 45 of the offer document for a complete list of risk factors)


The Group’s financial performance is dependent on the Group’s ability to secure new projects and to ensure non-cancellation of secured projects.
	Its continued success and growth depend substantially on the efforts of the Group’s key management personnel.
	The Group faces competition in the industries which it operates in.
	The Group may be adversely affected by any cost overruns, increase in costs and/or project delays.

 

Financials &amp; Valuation


According to the Group’s Offer Document, its total revenue grew approximately RM5.51 million or 13.2% from approximately RM41.71 million in 1H2020 to approximately RM47.22 million in 1H2021 due to an increase in the Renewable Energy segment (new project secured in Indonesia in FY2020 that was substantially performed in 1H2021) and the Product Sales and Trading segment (contribution from the trading of specialty chemical projects commenced in 1H2021), and partially offset by decrease in the Edible &amp; Non-Edible Oil Refinery segment (decrease in revenue contribution from projects secured in Africa that was substantially performed in 1H2020).




      
    
    Revenue breakdown



The Group’s historical EPS based on the audited combined statements of comprehensive income for FY2020 and the post-invitation share capital of 143.0 million shares, assuming that the service agreement had been in place since the beginning of FY2020 is 2.73 cents. Based on this and the invitation price of S$0.23, the price-to-earnings ratio is 8.42x.
	Its Board intends to recommend and distribute dividends of not less than 40% of net profit attributable to owners of the company for FY2022 and FY2023.

 

Additional Information from Offer Document (click here)

IPO Details


Invitation price at S$0.23 per Invitation Share
	Invitation of 22.5 million Invitation Shares
	
0.5 million Invitation Shares by way of public offer; and
		22.0 million Invitation Shares by way of placement (including 5.0 million Reserved Shares reserved for subscription by management and employees)
	

	Estimated IPO Market Capitalisation of S$32.89 million based on post-invitation share capital of 143.0 million Shares
	Use of net proceeds (approximately S$3.63 million):
	
S$2.63 million – Working capital to expand business operations through securing more projects and projects of a larger scale.
		S$1.0 million – Expansion of the business through investments, mergers and acquisitions, joint ventures and/or strategic alliances
	





Oiltek International – Integrated Process Tech & Renewable Energy Solutions Provider – Lists on SGX

Koh Brothers

Oiltek International – Integrated Process Tech & Renewable Energy Solutions Provider – Lists on SGX