Uzma, via its subsidiary MMSVS, secured a contract from PTTEP International Ltd for the provision of standard and special application of coiled tubing and pumping services for Zawtika Operations (Backup Contract). The contract is worth RM43.9m with duration of 2 years and 1 month until 30th June 2026. This is the sixth contract and the second regional one announced for FY24. We are positive on this development as it showcases Uzma’s capability in securing contracts in the region, particularly in Thailand, through MMSVS. Revenue contribution from regional operations was about 20% of the total Group revenue in FY23. Moving forward, Uzma aims to increase revenue diversification within the region, mainly from Indonesia and Thailand, which could be achieved by pioneering Electrical Submersible Pump (ESP) solutions. We maintain our Outperform call and TP RM1.70 (though potentially reducing to RM1.48 after full subscription of the private placement exercise).

• MMSVS secures second contract in Thailand for FY24. The firstcontract was awarded in March 2024 for the provision of hydraulic workoverunit (HWU) services for Bualuang. Assuming equal revenue recognition ofRM22m a year, the mew contract will contribute c.4% to its annual revenuein FY25F-26F.

• Aiming to increase regional diversification. As for FY23, revenuecontribution from outside Malaysia was about 20% of its total Grouprevenue. The Group aims to increase the revenue diversification in theregion particularly from Thailand and Indonesia, up to 50% of the totalrevenue. This could be achieved by pioneering ESP solutions in the regionto replace the conventional artificial gas lift solution. The ESP is nowundergoing a pilot test for a few wells in Malaysia. Upon the successful ofpilot test, Uzma foresees a significant increase in revenue contribution withthe adoption of ESP throughout the region.

Source: PublicInvest Research - 14 May 2024