Uzma reported higher revenue and core net profit in 4QFY22, surging +17.4% and +74.1% YoY to RM116m and RM8.2m respectively. The strong performance was attributed to higher contribution from energy segment and improved gross profit margin by 11.6ppt YoY to 47%, in absence of restrictive COVID-19 SOPs. For the full year FY22, Uzma reported core net profit of RM13.3m, down 46.3% YoY despite recording flat topline growth at RM385.1m. The decline in core net profit was due to lower share of profit from associates as well as higher tax expense. The results are above our and consensus expectations at 176% and 166% of full year projections, respectively. While we think revenue will improve from FY23 onwards on the back of higher construction progress on its renewable energy (RE) project as well as increased oil and gas sector activities, profit margins could still be tested by inflationary costs as well as higher mobilization costs. We maintain FY23/24 earnings projections of RM15.2m and RM19.5m respectively, though below FY21 core net profit levels. Our TP is maintained at RM0.49, based on 10x PER over CY23 EPS, with Trading Buy call maintained.
- Stronger quarter. Uzma reported even stronger 4QFY22 revenue, surging +26.1% QoQ to RM116m attributed to strong contribution from the Group’s upstream oil and gas (O&G) segment. The segment reported a +64.7% QoQ revenue growth, backed by improvements in sector activities post-pandemic, lessening the impact of lower revenue from new energy segment – solar, which declined 60.6% QoQ. Gross profit margin for the quarter was higher by 12.8 ppt QoQ to 47% due to higher gross profit margin for the upstream O&G services segment (37%, against 34% in the previous quarter which was affected by delays in project deployments with mobilisation and initial costs already incurred).
- Outlook. With crude oil price remaining at the USD90 – USD100/bbl range, and movement restrictions and SOPs for COVID-19 also easing, pick-up in O&G sector activities are expected to continue. We foresee demand for well solution services such as wireline, coil tubing, pumping, and cementing, hydraulic workover unit for plug and abandonment, as well as workover services increasing. This is reflected in our FY23-25 topline growth projections of between of 6% and 15%. We think profit margins could still be tested by higher mobilization and inflationary costs. Our earnings projections of RM15.2m/RM19.5m/RM20.7m for the respective financial years are maintained meanwhile. The Group’s oil and gas orderbook as of 4QFY22 stood at RM2.4bn of which 77% relates to the well solutions division and the balance on production solutions. Orderbook for new energy segment is about RM940m.
Source: PublicInvest Research - 1 Sept 2022