PETALING JAYA: Kenanga Research is upbeat about the prospects of local oil and gas service and equipment firm Uzma Bhd
after concluding a two-day visit to the group’s Labuan yards.
The yards are under 70%-owned Malaysia Energy Chemical and Services (Mecas) and 86%-owned Setegap Ventures Petroleum (SVP), with Mecas specialising in production-related and oilfield chemicals.
The research house said the stringent technical requirements from its clients was a reason for a high entry barrier to Mecas’ field of industry, at least for local players.
“Mecas is servicing three out of the total four deepwater projects in Malaysia, which speaks for its proven ability in producing reliable chemical blends to be used in deepwater upstream projects,” it said.
It reported that the company – with a backlog of deepwater projects currently standing at RM30mil – is on track to achieve a RM60mil revenue for the financial year ending June 30, 2024 (FY24), and to gradually work its way back to RM100mil a year top line achieved before the lockdowns.
Kenanga Research said Mecas had registered a significant drop in revenue from 2020 to 2022 as its competitors had undercut prices.
“The demand for oilfield chemicals is recovering and Uzma expects its earnings margin before interest and tax margin to improve from FY24 onwards,” said the research house in a note.
Uzma said its hydraulic workover units (HWU) and coiled tubing equipment are in high demand in the current fiscal year.
The research house said Uzma has an edge over its competitors given that its units are fully designed and assembled in-house.
“Uzma is pitching light-weight HWU units to its clients providing a cheaper solution for projects utilising smaller platforms.
“Typically, small platforms are serviced by jack-up rigs, which are very costly,” the research house added.
