- Oiltek’s attractive financial metrics include an ROE of 35% with a net cash balance sheet of RM111.7mil (~S$34). The company operates on an asset-light business model, with fixed assets of RM4mil, that leverages on their intellectual property with manufacturing and construction outsourced.
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- Gross margins expanded almost 13% points to 32.2% from procurement and re-engineering savings. Timing of projects will also impact gross margins. Interim dividend rose 67% y-o-y to 0.5 cents. The company ended 1H25 with net cash of RM111.7mil (1H24: RM103.9mil).
The Positive
Jump in gross margins.
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The Negative
Contraction in the order book.
- The order book contracted by 18% y-o-y to RM332mil or 1 year's visibility. We expect Oiltek's order book to replenish in the coming months, as management has been focused on executing their record order wins.
Outlook
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