Uzma’s slew of contracts reaffirms view that O&G sector is recovering
KUALA LUMPUR: Uzma Bhd’s (Uzma) latest new contracts has reaffirmed analysts’ view on a possible gradual but certain recovery in the oil and gas (O&G) sector.
Of note, Uzma has been awarded two more new contracts just days after it was awarded an umbrealla contract for provision of electrical submersible pump (ESP) and services for Petronas Carigali Sdn Bhd (Petronas Carigali).
According to its filing on Bursa Malaysia, Uzma’s latest contracts were both awarded to its whollyowned subsidiary Uzma Engineering Sdn Bhd. These contracts are for the provision of hydraulic workover unit (HWU) – ‘Ghazi 461’ for Petronas Carigali, and an umbrella contract for the provision of 340K and 460K HWU for Petronas Carigali.
“The slew of new contracts awarded to Uzma reaffirms our view that the oil and gas sector is en route for a gradual but certain recovery after a few years of painful adjustments.
“With oil prices keep scaling greater heights, we believe oil major will kick-start it capex spending in a sizeable way which will benefit all major players, Uzma included,” said the research arm of Public Investment Bank Bhd (PublicInvest Research).
It noted, these new contracts, although depend on the work orders from time to time, is within the realm of its orderbook replenishment projection for the group.
“Uzma’s outlook will be supported by circa RM2.6 billion orderbook and tenderbook of circa RM2 billion to last up to 2019,” it added.
Meanwhile, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said, Uzma is still actively tendering new jobs amounting to RM7 billion.
“With the anticipation of oil prices stabilising above US$55 per barrel in 2018, we believe this will provide sufficient comfort for Petronas to execute the contracts that have been awarded lately and thus minimising the risk of delay in work orders,” it opined.
Kenanga Research maintained its ‘outperform’ call on the stock, premised on its ability to innovate multiple solutions to oil majors amidst a challenging environment.