KUALA LUMPUR: Uzma Bhd
’s earnings prospects remain solid and could grow by up to 30% in the financial year 2024 (FY24), says Phillip Capital Research.
Uzma is seeing increased oil and gas (O&G) activity project movements, as reflected by healthy new order flows and rising tender prospects.
Its well services segment has been particularly active, with a rise in plug and abandonment (P&A) work both locally and internationally, the research house said.
“This trend aligns with the 2024–2026 Petroliam Nasional Bhd’s (PETRONAS) Activity Outlook and is expected to benefit Uzma, which holds around 60% market share in the P&A market.
“Furthermore, discussions with PETRONAS are underway to potentially install three additional electrical submersible pumps (ESPs) following the positive results from the ones currently installed in the Dulang field,” it said.
Phillip Capital Research expects Uzma to deliver stronger fourth-quarter FY24 (4Q24) results (ending June 30), from 3Q24 and 4Q23. It has a core net profit forecast of RM12mil to RM15mil.
The expected earnings growth can be attributed to increased demand for production enhancement chemicals and higher activity in well services: for well workover, production solution, coiled tubing and the wireline business, it said.
Uzma’s key earnings growth projects are progressing well, it noted. This includes the construction of WIF2.0 which is on schedule, with a target completion by March 2025 and operations set to commence by mid-2025.
Its 50MW large-scale solar four (LSS4) project is currently undergoing testing by Tenaga Nasional Bhd and is on track for its commercial operation date by the end of this month.
The commencement of the LSS4 project is expected to see the solar segment make up 13% of anticipated FY25 revenue of Uzma from 9% in FY24, Phillip Capital forecast.
“We maintain our ‘buy’ rating and 12-month target price of RM1.78 a share, based on a 12 times price-to-earnings multiple on FY25 forecast earnings. Note the risks to our call include lower-than-expected work orders, unforeseen project delays, and higher-than-expected operating costs,” the research house said.
