KUALA LUMPUR (May 29): Phillip Capital has maintained its 'buy' rating of Uzma Bhd (KL:UZMA) at RM1.12, with an unchanged target price of RM2, and said the company is set to deliver stronger earnings for the fourth quarter ending June 30, 2024 (4QFY2024), on the back of rising oil and gas activities post monsoon season, and a stronger performance of the wireline business.

In a note on Wednesday, the research house said Uzma recorded a weaker 3QFY2024 profit before tax of RM5 million (-41% year-on-year), despite recording a higher revenue of RM106 million (+23%), due to an increase in staff hiring cost and a higher revenue mix from the lower-margin trading division, particularly in urea and liquefied natural gas.

“Nevertheless, we expect 4QFY2024 to see a strong earnings rebound,” it said.

Phillip Capital said that for the new energy business, Uzma had completed the construction of its Large-Scale Solar 4 (LSS4) project, which is undergoing testing and commissioning, pending approval from Tenaga Nasional Bhd (KL:TENAGA).

“The commercial operation date is still on track for end-June, providing another stable income stream from FY2025 onwards.

“Uzma will be working on 48MW of Net Energy Metering (NEM) and Corporate Green Power Programme (CGPP) projects, after the LSS4 [project] is completed.

“With the completion of the NEM and CGPP projects (estimated to be by April 2025), Uzma will be operating about 100MW of solar asset projects. It is also looking to participate in the upcoming LSS5 tenders (with a quota of up to 2GW and potential total contract value of about RM7 billion), as both an asset owner and engineering, procurement, construction and commissioning (EPCC) contractor,” the research house said.