Thailand contract to boost Uzma’s upstream services

by AZALEA AZUAR / pic source: Medco Energi Thailand

UZMA Bhd’s new contract in Thailand would strengthen the group’s core upstream services in the domestic and international markets.

Public Investment Bank Bhd (PublicInvest) analyst Nurzulaikha Azali noted that the US$3 million (RM12.3 million) Thailand job is the group’s sixth contract for the financial year 2021 (FY21), with value collectively at RM592 million.

“With this contract, Uzma’s outstanding orderbook is expected to remain healthy at RM2.4 billion (including umbrella contract), translating to 4.2 times FY20 revenue,” Nurzulaikha stated in a report yesterday.

Last week, Uzma won a RM12.3 million contract from Medco Energi Thailand (Bualuang) Ltd for the provision of chemical supply and services for the Bualuang field in Thailand for a period of three years.

The oil and gas services and equipment company’s outstanding orderbook could sustain the group up to FY24, the analyst noted.

“This project is expected to contribute about RM550,000 to the group’s earnings from FY22-FY24, assuming a blended net profit margin of 4.5%,” she said.

The analyst maintained her earnings forecast for Uzma on the assumption the contract is part of its replenishment assumption.

The investment bank kept its target price at 95 sen based on a 10 times price-to-earnings ratio over calendar year 2022 earnings per share of 9.5 sen. It affirmed an ‘Outperform’ stance for Uzma.

Nurzulaikha expects oil prices are now stable at above US$60 per barrel and predicts an increase of work orders availability in the market after a rough year.

However, she added that Uzma’s operational efficiency may be limited due to stricter Covid-19 standard operating procedures, which include 14-day quarantine periods for workforce movement to or from offshore due to the Full Movement Control Order.

“The Malaysian operations still contribute 90% of overall revenue. That said, we have imputed this drawback into our earnings forecast,” Nurzulaikha added.

Uzma’s shares rose 5.11% to 72 sen yesterday, valuing the company at RM228.8 million.