Oiltek International, a subsidiary of Koh Brothers Eco Engineering, has launched its Catalist initial public offering (IPO) to raise gross proceeds of some $5.2 million.
The issue consists of 22.5 million new shares priced at 23 cents each. Out of which, 22 million shares are set aside for the placement tranche, with the remaining 500,000 shares allocated for retail investors.
KBEE will remain in control of Oiltek following the IPO, with a stake of 67.4%.
The offer will close on March 1 and trading will start on March 3.
The net proceeds of some $3.6 million will help the company, which helps its customers build plants to process their products, take on more projects and projects on a larger scale.
“This IPO presents a platform for Oiltek to advance into our next growth chapter,” says Henry Yong Khai Weng (picture), the company’s executive director and CEO.
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The company can divide its businesses into a few key segments: edible and non-edible oil refinery segment; renewable energy segment, and the product sales and trading segment.
Over the years, it has designed, built and commercialised over 570 plants in more than 30 countries across 5 continents.
KBEE, on its part, is involved in the provision of engineering, procurement and construction services, specialising in building and civil engineering construction, infrastructure works, water and wastewater treatment as well as hydroengineering.
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For the 1HFY2021 ended June 30 2021, Oiltek generated revenue of RM47.2 million, up 13.2% y-o-y.
However, due to lower margins, earnings for the same period dropped from RM4.9 million for 1HFY2020 to RM4.35 million for 1HFY2021.
For the full year FY2020, earnings increased by 44.1% y-o-y to RM12.1 million, from RM8.37 million reported for FY2019. Revenue in the same period increased from RM80.2 million to RM87.5 million.
At the IPO price of 23 cents, Oiltek will have a market value of $32.9 million and the issue is priced at around 8.5 times historical FY2020 earnings of 8.43 sen per share. This IPO is managed by SAC Capital.
For now, the company does not have a formal dividend policy. However, the company plans to pay at least 40% of its earnings for FY2022 and FY2023.
KBEE first announced its intention to spin off Oiltek back in Jan 2020. Oiltek was first controlled by Metax Engineering Corp, which was then listed on the SGX.
Koh Brothers Group, which is the controlling shareholder of KBEE, subsequently took control of Metax and renamed it as KBEE, where the shareholding structure was further streamlined before Oiltek’s own listing.
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“Following this listing, we will see that Oiltek will be more independent in raising funds for themselves, especially since they are in an expansion mode now,” says Francis Koh, non-independent chairman of KBEE, who is also managing director and group CEO of Koh Brothers Group.
Oiltek now has an order book of around RM 173 million to be fulfilled over the next 18 months or so. Over the years, its customers include the likes of Wilmar International; Sarawak Oil Palms; Bunge Loders Croklaan; FGV Holdings; Sime Darby Plantation; and PT Sinar Mas Agro Resources and Technology.
At this time, Oiltek has around 60 to 70 employees, and the company may be increasing their headcount to 80 after the IPO, according to Yong.
With an acceleration of global trends shifting towards sustainability, coupled with stronger environmental regulations and focus on environmental, social and governance, Oiltek is optimistic about the continued growth prospects of the renewable energy sector.
“Both edible oil, as well as renewable energy, are moving in a very positive direction in recent times, giving Oiltek many good opportunities moving forward,” says Yong.
“We do see increased traction in renewable energy in recent years amongst consumers as well, and intends to increase its focus on the renewable energy sector to provide more support and solutions to the sustainability efforts of existing customers and markets,” he adds.
“Our total solutions create value to customers’ processes, and meet increasingly strict environmental and regulatory requirements. We will continue to leverage on our capabilities and technological know-how to secure larger contracts and to acquire new customers across both existing, and new markets globally,” Yong says.
Photo: Oiltek
