Date: July 6, 2022
Even after spending more than two decades of his career in the agri-commodities sector, Henry Yong Khai Weng continues to be fascinated by vegetable oils and their wide-ranging impact on daily life.
After graduating with a first-class honours degree in Chemical Engineering from the University of Malaya in 1997, Yong serendipitously decided to enter the vegetable oil industry.
“Many university graduates believe whatever they learn at university or college will have limited application in their subsequent careers. My experience, however, was very different,” recalled the Executive Director and Chief Executive Officer of SGX-listed Oiltek International Ltd.
“I was lucky enough to choose the right industry – the vegetable oil agri-commodities segment is really interesting because it forms an integral part of human life.”
Yong pointed to palm oil, the world’s largest vegetable oil type and a key contributor to the Malaysian and Indonesian economies, as a prime example.
“Palm oil has a broad market and comprehensive supply chain,” he added. “It covers not only agriculture and basic necessities, such as edible oils and cooking fats, but also numerous downstream consumer food products and derivatives, including high-value edible niche products, healthcare and nutraceuticals, as well as renewable energy.”
Listed on SGX Catalist in March this year, Oiltek International, a subsidiary of SGX-listed Koh Brothers Eco Engineering, is an integrated process technology and renewable energy solutions provider in the vegetable oils industry.
Established in 1980, the Group offers an innovative and diversified range of process and engineering solutions across the global industry value chain. Oiltek caters to all types of vegetable oils, including palm oil, soybean oil and rapeseed oil, serving some of the world’s largest agricultural commodities markets with its technological know-how. Its key business segments include Edible & Non-Edible Oil Refinery, Renewable Energy as well as Product Sales and Trading.
Expanding Indonesian Footprint
In April, the Group announced that its wholly owned subsidiary – Oiltek Sdn Bhd – had been awarded a new contract by a leading and reputable palm oil processor and exporter in Indonesia. The contract involves designing, fabricating, supplying and commissioning a crude palm kernel oil refinery plant and a lauric refinery plant.
Including this award, Oiltek has secured new contracts amounting to RM49.2 million in the current financial year ending 31 December 2022. The Group’s order book has also reached a new record of approximately RM198.1 million, and these orders are expected to be fulfilled over the next 18 to 24 months, barring unforeseen circumstances.
“This is part of our continued efforts to secure more projects from existing and new customers, with our expanding range of process engineering solutions that leverage on our capabilities, technological know-how, and proven track record,” Yong noted.
“Indonesia, as the world’s leading producer of palm oil, is an important market for us, and we intend to grow our footprint in the country further.”
Oiltek also aims to build recurring income streams from its Product Sales and Trading segment – which supplies engineering components and equipment to customers – through its proprietary expertise.
“We’re targeting to boost the contribution from recurring income streams to between 25% and 35% of the Group’s total income, from current levels of approximately 10% to 15%,” Yong added.
Looking ahead, Yong remains confident of the long-term prospects of the Group’s Edible & Non-Edible Oil Refinery segment, as global consumption of oils and fats gains in tandem with expansion in world population numbers. The latter, in particular, underpins buoyant growth in the food and beverage, oleochemical and biodiesel sectors.
“The rising demand for food also creates a corresponding demand for edible and non-edible oils and fats, specifically, vegetable oils. The Group’s processing solutions cater to all types of vegetable oils, including palm oil, soybean oil and rapeseed oil, which are some of the major agricultural commodities in the world,” he pointed out.
In addition, palm oil is consumed globally in the form of edibles, such as cooking oil, confectioneries, margarine, and chocolates. At the same time, it is used as a raw material for ingredients found in a host of non-edible household and industrial products, including soaps, detergents, cosmetics and pharmaceuticals, he added.
Global inventories of several types of vegetable oils are already at some of their tightest levels in years, which has pushed prices steadily upward, according to an analysis by climate and agriculture technology firm Gro Intelligence. The Russia-Ukraine war has also driven further price gains in some commodities, such as sunflower oil and seeds, which are facing shortages, it added.
Increasingly, vegetable oils are used as a replacement for fossil fuels, a usage that is forecast to grow rapidly as companies expand biofuel production capacity, especially in the US, Gro Intelligence pointed out. In the past decade, biofuel production accounted for nearly 30% of the average annual increase in global vegetable oil consumption.
Accelerated Sustainability Shift
As a result, the outlook for Oiltek’s Renewable Energy segment remains bright, as the accelerated shift towards environmental sustainability gains ground globally. The Group will increase its focus on renewable energy projects, and offer more solutions to boost the sustainability efforts of existing customers and markets.
“With stronger environmental regulations, government initiatives and policies, as well as growing awareness of the importance of Environmental, Social and Governance considerations, we’re optimistic about the continued expansion of the renewable energy sector,” Yong noted.
“Both edible oils, as well as renewable energy, continue to move in a very positive direction, and these have opened up many promising opportunities for us going forward.”
Despite strong growth prospects, trade barriers and a number of geopolitical issues remain as challenges to the palm oil industries in Malaysia and Indonesia.
These include the environmental impact of deforestation, new food safety standards in the European Union limiting 3-MCPD (3-Monochloropropane Diol) and GE (Glycidyl Fatty Acid Esters), as well as the phase-out of palm oil-based biofuels in the EU by 2030.
“Following these new market developments, we’ve developed numerous new processes to address and mitigate these challenges, including our proprietary refining process that can effectively eliminate 3MCPD and GE in refined oil, as well as our proprietary methylation process that can produce high quality biofuels from waste oil instead of edible-based vegetable oil,” Yong noted.
The 49-year-old is usually unfazed by such speed bumps. “I’ve always held the view that challenges will sow the seeds of new opportunities,” he said.
This principle forms the backbone of his management philosophy. “Being a good leader requires you to grow together with the market, by continually learning and adapting to a constantly changing environment,” he pointed out.
Hence, it’s not surprising that Yong’s biggest sources of inspiration stem from the pursuit of excellence and regular interactions with his colleagues.
“My passion is to continue to create and deliver value to all stakeholders,” he said. “At the same time, I always emphasise to my staff the multiplying effect of teamwork, as well as the importance of unity in the face of challenges.”
And when Yong is out of the office, he can be found with his four teenaged children. “I put a lot of priority on the values of honesty, integrity, sincerity and responsibility. I want my kids not only to build a strong foundation, but also develop balanced skillsets to include academic achievements as well as personal growth,” he noted.
“In all aspects of our lives, balance is key. At the end of the day, one should strive to live a life that is well-balanced.”
Oiltek International Ltd
Oiltek is an established integrated process technology and renewable energy solutions provider that specialises in providing a reliable, innovative and comprehensive range of refinery processes and engineering solutions for use across 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 Dec 1980. With over 40 years of track record, Oiltek has successfully designed, built and commercialised plants in more than 30 countries across five continents. The Group operates three key business segments – Edible & Non-Edible Oil Refinery, Renewable Energy, and Product Sales and Trading.
The company website is: www.oiltek.com.my
Click here for the company’s StockFacts page.
For the half year ended 31 December 2021 business update, click here.
First published on SGX website on 10 June 2022
About kopi-C: the Company brew
Text: Jennifer Tan-Stanisic
Photo: Company file
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