Uzma Bhd (Uzma, 7250) is an integrated regional Oil and Gas (O&G) Service and Equipment provider having niche expertise with innovative solutions technology, cater to the needs of exploration, development and other solutions along the production value chain. According to Petronas Activity Outlook 2023 to 2025, it remains positive for drilling rigs, well services and underwater services due to the repair and maintenance required to maintain the integrity of offshore facilities. With Uzma’s ongoing job wins and estimated current RM2.29bn O&G orderbook, we forecasted its FY24 and FY25 net earnings to grow at 12.3% and 22.6% respectively. BUY with a TP of RM1.00 by ascribing a PER of 9x on FY24 EPS of 11.1sen, which is a slight discount to its peers based on its smaller market capitalisation.

Over the years, Uzma managed to transform itself with expertise in subsurface, integrated well and production solutions provider; and owned technology innovative O&G assets such as hydraulic workover unit, portable water injection module, water injection facilities, coiled tubing unit, well pumping and cementing, of which these assets are still utilised even during the O&G crisis.

On 22 March 2023, Uzma was awarded an Integrated production and integrity chemical services project from Sabah Shell with a value of RM68.1m. Prior to that it had won a RM30m Provision of Electrical Submersible Pump Equipment and Services from Petronas Carigali. Its job wins have affirmed Uzma’s solid position within the sector, and we believe it will continue to clinch more contracts in line with the recovering O&G activities.

On top of the solid O&G job flows, Uzma aims to diversify its revenue stream into New Energy with target ratio to 60:40 by 2025. This segment currently has approx. RM800m orderbook with a mixture of asset owner and EPCC. Being a LSS4 solar asset owner of 50 MW in Sungai Petani, it will contribute approx. RM20m cash flow per year for the group over 25 years starting from 2024.

Uzma’s recorded a commendable 1HFY23 PAT of RM19.13m, more than 100% increase compared to 1HFY22. This is on the back of revenue growth of 47.4% y-o-y driven by new income contribution in commodities trading and improved upstream O&G services post Covid restriction.

Source: Rakuten Research - 30 Mar 2023

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