Since the beginning of this year, the oil and gas (O&G) services provider with core expertise in geosciences and reservoir engineering, has bagged several contracts from oil majors Shell and Petronas Carigali Sdn Bhd (PCSB).
On March 22, Sabah Shell awarded Uzma a three-year RM68 million integrated production and integrity chemical services project.
This represents its second win of the year from Shell and will keep the group’s orderbook for the (O&G) segment healthy at RM2 billion.
Previously, on Jan 25, it bagged a contract from Sarawak Shell for the provision of a kinetic hydrate inhibitor, corrosion inhibitor and associated services for the Shell Timi field. The contract is valued at RM40 million over a five-year duration from January to January 2028.
A month later, on Feb 24, Uzma secured a contract worth RM30 million from PCSB for the provision of electrical submersible pump equipment and services for its wells in Malaysia. The duration of the contract will be for three years, running from January to January 2026.
PCSB also awarded the company a further two-year extension for the provision of coiled tubing and services contract, which has an estimated value of RM230 million.
In a note yesterday, Rakuten affirmed a “buy” call on the stock, with a target price of RM1 by ascribing a price-earnings ratio of nine times on the group’s forecasted FY2024 earnings per share of 11.1 sen.
“We forecast its FY2024 and FY2025 net earnings to grow at 12.3% and 22.6% respectively,” it added.
PublicInvest Research’s note on March 23 maintained an “outperform” call on the stock, with a slightly higher target price of RM1.05.
Renewable energy projects
On top of the oil and gas job flows, Uzma aims to diversify its revenue stream into “new energy” by 2025.
This segment of the business has a RM800 million orderbook with a mixture of owned assets as well as engineering, procurement, construction and commissioning (EPCC).
“Being a LSS4 (large scale solar 4) solar asset owner of 50 MW in Sungai Petani, it will contribute approximately RM20 million cash flow per year for the group over 25 years starting from 2024,” said Rakuten.
Uzma recorded a commendable H1 FY23 profit after tax of RM19.13 million, more than 100% increase compared to H1 FY22 due to improved upstream O&G services post-Covid.
Prospects looking good
Those positive sentiments are also largely echoed by PublicInvest.
“We believe the current Brent Crude oil price volatility is still manageable and will not cause a roll back in these (big) players’ capex plans in 2023.
“We reaffirm our optimistic outlook on Uzma as a key beneficiary of increasing brownfield activities especially on production enhancement and decommissioning activities,” it said.
In a Bursa filing on Feb 23, the company said business activities are seen to recover as countries reopen their economies, contributing to a surge in demand.
Uzma shares, which have risen 18.1% year-to-date, closed at 62 sen yesterday, valuing the group at RM214.69 million.