PETALING JAYA: Uzma Bhd
’s latest contract extension would generate RM15mil to RM20mil of revenue in total for the two-year contract, going by past job wins in the hydraulic workover unit (HWU) space.
According to Kenanga Research, this will boost Uzma’s financial year 2024 (FY24)cumulative wins to RM715mil versus the research firm’s full-year job win assumption of RM1bil.
“We anticipate this job to achieve a net margin of 7% to 8%, consistent with the group’s overall net margins. Therefore, we consider this job win to align with our expectations,” the research firm said.
Uzma has secured an extension for the provision of an HWU for the Bualuang project for two years.
The scope of works comprises the provision of HWU and associated equipment service required for workover and well services activities offshore Thailand, effective from March 2024.
Kenanga Research said it is maintaining the earnings forecast and target price of RM1.45 a share, which is pegged to a price-earnings of 10 times for 2025.
This is consistent with the average valuation for small to mid-cap upstream services players. It has an “outperform” recommendation on the stock.
Meanwhile, Phillip Research said that assuming a 17% operating profit margin, it estimates that this contract could contribute RM3mil to RM4mil over the two-year contract period. This translates to an annual RM1.5mil operating profit contribution to its FY25 to FY26 forecasts.
It reiterates its “buy” rating with an unchanged target price of RM2 a share, based on a 12-times price earnings ratio multiple on FY25 earnings per share.
It said potential rerating catalysts include strong earnings delivery and more sizeable contract wins.
