Uzma’s outlook maintained after extension for HWU work in Thailand
Analysts maintain their call on Uzma Bhd (Uzma) after it has secured an extension for the provision of hydraulic workover unit for the Bualuang project for two years.
This brings its year-to-date job wins to RM715 million based on Kenanga Investment Bank Bhd’s (Kenanga Research) estimates, which is still within its assumption.
To note, Uzma has been awarded a contract extension by Medco Energi Thailand (Bualuang) Ltd (Medco) for the provision of hydraulic workover unit (HWU) services for the Bualuang project.
The scope of works comprises of the provision of HWU and associated equipment service required for workover and well services activities at offshore Thailand with contract tenure of two years effective from 20 March 20, 2024.
“Based on historical wins, HWU jobs usually generate RM15 million to RM20 million of revenue in total for two-year contracts.
“This latest win has boosted its FY24 cumulative wins to RM715 million versus our fullyear job win assumption of RM1 billion,” Kenanga Research said in its analysis.
“We anticipate this job to achieve a net margin of seven to eight per cent, consistent with the group’s overall net margins.
“Therefore, we consider this job win to align with our expectations.”
The research house maintained its outperform call as well as its target price at RM1.45 per share for Uzma.
It continued to like Uzma due to it being a beneficiary of the current up-cycle in upstream activities leading to increased O&G contract flows; its active thrust into sustainable businesses via its new energy segment which enhances Uzma’s ESG appeal and help future proof its earnings; and the looming launch of its largescale solar plant that will boost its recurring income.