News

• PETRONAS Carigali Sdn Bhd has awarded Uzma Berhad’s subsidiary, UZMA ENGINEERING SDN BHD (UESB), a contract for the Provision of Fishing Equipment and Services.

• This contract will run for duration of two (2) years, commencing from February 2017 to February 2019, with an extension option of one (1) year for fishing services across PETRONAS Carigali’s area of operations.

• To note, fishing services involve extracting of faulty parts or pipes in brownfield wells, a necessary maintenance job required for oilfield operation.

Financial Impact

• This is a relatively small contract compared to its previous contract (wireline umbrella contract) won in Feb 2017 as this contract only involves a single customer compared to Umbrella contract which involves multiple clients.

• Exact financial impact is difficult to ascertain as it is based on work order basis but we believe it would hinge on stability and movement in oil prices in the future.

• Notwithstanding, it is still a positive sign for the company as it indicates that oil producers are getting ready to invest again in the oil production market in anticipation of stabilisation of oil prices this year.

Forecast

• Maintained

Rating

HOLD ( ↔ )

• 2017 would be a better year for UZMA but the improvement is more or less priced in at current share price level with forward FY17 PER of 12.6x, relatively high as compared to industry average of 10x.

Valuation

• We maintain our TP at RM1.70 based on 12x FY17 PER with HOLD call. We prefer to hold out for 1 or 2 more quarters of financial results to better gauge the positive impact of the umbrella contract.

Source: Hong Leong Investment Bank Research - 23 Mar 2017