Uzma headed for better times, says research houses

by AKMAR ANNUAR / graphic by TMR

OIL and gas (O&G) service and equipment provider Uzma Bhd, whose stock hit a 52-week high yesterday, has an ‘Outperform’ call from two research houses and a ‘Buy’ from another.

“We returned from an analyst briefing feeling positive about Uzma’s prospects. The group is poised to continue benefiting from the increase in local activity levels and is expected to post stronger earnings ahead. Meanwhile, the group is also actively expanding its solar business, and currently is in bids for several government-driven solar programmes,” according to Kenanga Research.

“In tandem with the gradual recovery of local oil and gas activity levels, the group foresees that upcoming quarters will continue growing from strength to strength. Petroliam Nasional Bhd has indicated increased decommissioning and brownfield activities, as stated in its activity outlook, which will benefit Uzma,” it said.

It has maintained its target price of the stock of 67 sen with an ‘Outperform’ call, which means the stock’s expected total return is more than 10%.

For the first quarter ended Sept 30, 2022, Umza posted a net profit of RM8.83 million, more than 25 times from the same period last year, on revenue of RM121.80 million. The jump in profit was mainly due to an increase in the upstream O&G services segment due to higher costs in the previous year’s quarter from compliance to pandemic standard operating procedure costs.

Public Invest Research, which has an ‘Outperform’ call on the stock, said that Uzma’s O&G outstanding orderbook of RM2 billion is decent while replenishment has been encouraging amid the current crude oil price remaining attractive at above US$80 (RM352.00)/bbl.

On the new energy front, it said the company’s orderbook is relatively healthy though it was cautious on work and billings progression as the current work scope is only limited to portions specified in the limited notice to proceed.

PublicInvest has a target price of 71 sen.

In its research report, UOB Kay Hian Malaysia has a ‘Buy’ on Uzma with a target price of 67 sen.

At 11am, Uzma was trading at 55 sen, giving it a market capitalisation of RM193.6 million.


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