Koh Brothers unit, Oiltek, lodges prospectus for Catalist IPO

OILTEK International, a subsidiary of Koh Brothers Eco Engineering 5HV : 5HV 0% , has on Friday (Dec 31) lodged its preliminary offer document for an initial public offering (IPO) on the Catalist-board of the Singapore Exchange (SGX).

Koh Brothers Group and Penta-Ocean Construction are the controlling shareholders of Koh Brothers Eco Engineering with stakes of 54.3 per cent and 28.8, respectively.

Oiltek International, a solutions provider in the oils and fats industry, has key businesses split into its edible and non-edible oil refinery segment, the renewable energy segment and the product sales and trading segment. It has also designed, built and commercialised over 570 plants in more than 30 countries across 5 continents. (see clarification note)

The company wants to raise funds to push further into new and existing geographical markets. While it foresees that Malaysia and Indonesia will remain its key markets, it would like to further strengthen and expand its geographic reach in other palm oil markets within the South Asia, Africa and Latin America regions. (see clarification note)

It will also increase its focus on the renewable energy sector. One way it plans to do so is by supporting sustainable palm oil cultivation with producers who are compliant with standards set by the Roundtable on Sustainable Palm Oil (RSPO).

The company will also look to further advance its process technology and renewable energy capabilities through research development, joint ventures and strategic alliances.

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Oiltek International said it will seek to generate recurring income by expanding its business through investments, mergers and acquisitions, joint ventures and strategic alliances in synergistic capabilities, skills, technology and operational processes. It does not currently have any agreements relating to such corporate moves.

For the half-year ended Jun 30, 2021, the company saw its revenue rise by 13.2 per cent to RM47.2 million (S$15.3 million) from RM41.7 million a year earlier. Net profit, however fell 11.2 per cent to RM4.4 million, from RM4.9 million a year ago.

Oiltek International attributed this to increased cost of sales, which rose by 15.2 per cent to RM37.2 million in the same period -- in line with the increase in revenue.

The company's total equity stood at RM33.5 million as at Jun 30, 2021.

Subject to different factors, the directors have also said that they intend to recommend and distribute dividends not less than 40 per cent of the company's net profits in FY2022 and FY2023.

Koh Brothers Eco Engineering had earlier said in January 2020 that it was exploring the spinning-off of Oiltek International.

Shares of Koh Brothers Eco Engineering closed at S$0.05, up S$0.001 or 2 per cent on Friday, before the announcement was made.

Clarification note: The article has been edited for clarity. 

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