Uzma upgraded to ‘buy’, target price unchanged at RM1.51

PETALING JAYA: HLIB Research has upgraded its call on Uzma Bhd’s shares to a “buy” at an unchanged price target of RM1.51, despite weaker earnings for the first half ended June 30, citing the recent plunge in the company’s share price as a reason.

This is further supported by the yet to be recognised earnings from projects that are being undertaken.

Uzma’s shares closed unchanged at RM1.30 last Wednesday.

The group’s first half net profit stood at RM11.54 million, which is 46.41% lower than the RM21.54 million recorded last year.

Revenue on the other hand dropped by RM21.18% to RM166.02 million from RM210.66 million.

Meanwhile, its net profit for the second quarter ended June 30, increased by more than eight folds to RM5.60 million from the mere RM563,000 recorded last year. Revenue for the period saw a decline by 21.86% to RM71.52 million from RM91.53 million.

“Key reason behind weak 2Q17 results is non-recognition of revenue from Kinabalu contract. Total outstanding work for the contract is worth circa RM75 million to be recognised in the second half,” the research house said.

The Kinabalu project entails fabrication, hook-up and commissioning works for the KNPG-B Topside PH II located in Sabah.

Its hydraulic workover unit is expected to breakeven in the second half of the year against a RM1 million loss recorded in first half as the Lundin and Murphy contract is being ramped up.