Positive on Uzma’s contract extension offshore East M’sia

KUCHING (Jan 14): Analysts are positive as Uzma Bhd’s (Uzma) subsidiary, Setegap Ventures Petroleum Sdn Bhd (SVP), has secured a RM100 million contract extension from Petronas Carigali Sdn Bhd (PCSB) for coiled tubing equipment and services offshore East Malaysia.

According to a research report from Philip Capital Sdn Bhd (Philip Capital), the one-year extension will run until November 30, 2025 from December 1, 2024.

This marks the third extension of the contract initially awarded in November 2015 with a five-year tenure. It was subsequently extended in November 2020 and December 2022 for two years each.

Philip Capital the added that the service rates for this latest extension are comparable to the previous two-year extension valued at RM230 million.

The contract is projected to add RM8-9 million to Uzma’s earnings, contributing 9 per cent and 5 per cent of the FY25 and FY26 forecasts, respectively, assuming a group blended PATAMI margin.

“We view this contract positively as it underscores PCSB’s confidence in Uzma’s ability to deliver coiled tubing services reliably. This contract win also brings Uzma’s latest order book to RM3.1 billion,” it added.

Uzma, in a Bursa Malaysia filing on January 10 stated that the contract will not affect its share capital or shareholding structure as it does not involve the issuance of ordinary shares.

“It is expected to contribute positively towards the earnings and net assets per share of the company for the financial year ending June 30, 2025 and onwards until the end of the contract,” it said.

Additionally, Philip Capital maintained its buy call for Uzma with a target price of RM1.45 based on 10 times FY26E earnings per share.

-Agency