Better outlook for Uzma after challenging year

PETALING JAYA: After a tough year, stable oil prices and a fresh contract is keeping local oil and gas service provider Uzma Bhd on the radar although the current movement control order remains a hindrance to it achieving a higher level of efficiency.

In its report on Uzma for clients, Public Investment Bank’s research unit said it viewed the Rm12mil contract the company recently secured from Medco Energi Thailand (Bualuang) Limited “positively” despite its small value.

“It is a strategic win for Uzma in strengthening its core upstream services not only in the local market, but also internationally,” it said.

This contract, the research house noted, represents the group’s sixth contract for financial year 2021 (FY21) with value collectively at around Rm592mil.

With the contract, Uzma’s outstanding orderbook is expected to remain healthy at Rm2.4bil translating to 4.2 times of its FY20 revenue,” it added.

Public Investment said it expects the availability of work orders in the market to increase accordingly after a painful year.

Nevertheless, given the stricter adherence to SOPS including the requirement for 14-day quarantine periods for workforce movement to and from offshore, operational efficiency will be limited, it said.

That said, it is maintaining its target price at 95 sen for Uzma and its “outperform” call on the stock.

At its last traded price of 72 sen, the Uzma group was valued at around Rm220mil.

Uzma last week said it had bagged its first overseas chemical supply contract in Thailand where the scope of work will include the provision and supply of production chemicals and oilfield chemicals, including technical services for the Chemical Management Programme for the Bualuang field in the Gulf of Thailand.

The company, whose fortunes hinge on crude oil price, is in a good position now as oil prices remain stable at above US$60 (RM247) per barrel.

Crude oil prices rose yesterday, extending three weeks of gains that have been buoyed by an improved outlook for fuel demand even as Covid-19 vaccinations globally gain pace, giving hope that some form of normalcy will return.

According to a Reuters report, Brent crude was up 33 cents, or 0.5%, at US$73.02 (RM297) per barrel while earlier in the day it rose to US$73.12 (RM301), the highest since May 2019.

US West Texas Intermediate meanwhile gained 31 cents, or 0.4%, reaching US$71.22 (RM293) a barrel.