A contract with Thailand to strengthen services upstream of Uzma

by AZALEA AZUAR / photo source: Medco Energi Thailand

UZMA Bhd’s new contract in Thailand would strengthen the group’s core upstream services in national and international markets.

Public Investment Bank Bhd (PublicInvest) analyst Nurzulaikha Azali noted that the $ 3 million (RM12.3 million) job in Thailand is the group’s sixth contract for fiscal year 2021 (FY21) , with a collective value of RM 592 million.

“With this contract, Uzma’s ongoing backlog is expected to remain strong at RM2.4 billion (including the framework contract), or 4.2x FY20 revenue,” said Nurzulaikha in a report yesterday.

Last week, Uzma was awarded a 12.3 million ringgit contract with Medco Energi Thailand (Bualuang) Ltd for the supply of chemicals and services for the Bualuang field in Thailand for a period of three years.

The exceptional order book of the oil and gas services and equipment company could support the group until fiscal year 24, the analyst noted.

“This project is expected to contribute around RM 550,000 to group profits between FY22 and FY24, assuming a combined net profit margin of 4.5%,” she said.

The analyst maintained his profit forecast for Uzma assuming the contract is part of his replenishment assumption.

The investment bank maintained its price target at 95 sen based on a price / earnings ratio 10 times higher than earnings per share for calendar year 2022 of 9.5 sen. He asserted an “outperformance” position for Uzma.

Nurzulaikha expects oil prices to now be stable at over US $ 60 per barrel and predicts an increase in the availability of labor orders in the market after a difficult year.

However, she added that Uzma’s operational efficiency may be limited due to more stringent Covid-19 standard operating procedures, which include 14-day quarantine periods for labor movements to or from it. foreign due to the order of complete control of movements.

“Malaysian operations still contribute 90% of overall revenue. Having said that, we have charged this downside in our profit forecast, ”added Nurzulaikha.

Uzma shares rose 5.11% to 72 sen yesterday, valuing the company at RM 228.8 million.

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