Uzma poised for earnings uplift

PETALING JAYA: Uzma Bhd’s latest portable water injection module (PWIM) contract win is viewed positively as it reinforces the group’s strong execution track record in production solutions.

Earlier this week, Uzma announced that it has secured a contract from PETRONAS Carigali Sdn Bhd, via its wholly-owned subsidiary, Uzma Engineering Sdn Bhd, for the leasing, operation and maintenance of a PWIM for the Bayan Redevelopment Phase 3 project, located in offshore Sarawak.

The scope of work includes design, engineering, procurement, construction, and transportation of one PWIM unit, followed by installation, commissioning, operation and maintenance.

The contract is scheduled to commence on March 27, 2026, for an initial period of eight years, with an option to extend for up to two years.

Phillip Capital Research noted that the new contract marks its second award from Petroliam Nasional Bhd or PETRONAS as the group had previously secured a PWIM contract with PETRONAS Carigali in financial year 2021 (FY21), which signals sustained client confidence.

“This also represents Uzma’s third contract win in the past three months, bringing cumulative year-to-date new wins to RM740mil and lifting its outstanding order book to RM4.1bil, thereby strengthening earnings visibility and underpinning a more robust medium-term growth outlook.”

The research house said while the contract value was not disclosed, it estimated that the total contract value is RM80mil over the eight-year period.

“Assuming a 7% net profit margin, the firm contract is expected to contribute about RM1mil profit after tax over its duration, representing about 1% of its FY27 earning forecast,” it added.

Phillip Capital Research reiterated its “buy” call for Uzma with an unchanged target price of RM1.10, based on a price-to-earnings ratio (PER) of eight times FY27 earnings per share.

It said the group is trading at three times FY27 PER, which it views as undemanding given its strengthening earnings outlook, supported by new contract wins and leverage to upstream activity recovery.

Key risks to Phillip Capital Research’s call include lower-than-expected work orders from customers, unforeseen project delays, and an escalation in project execution cost.

Meanwhile, Kenanga Research deemed Uzma’s contract win as “within its expectations” as work orders might take time to ramp up in the first year of execution (work recognised based on work order).

Kenanga Research said the profit after tax contribution is expected to be modest at RM1.2mil per annum once the PWIM is up and running, 2% of FY26 earnings.

“Nevertheless, this is an early positive sign for the company as the Bayan field is 80 km north-west of Bintulu, Sarawak, which indicates that PETRONAS is still looking to at least boost production at its producing fields despite the ongoing dispute with Petroleum Sarawak Bhd.”

It maintained its “outperform” call for Uzma with a target price of 70 sen pegged to unchanged FY27 PER of seven times, pricing in near-term uncertainties in the upstream segment and reflective of its highly geared balance sheet.

“We like Uzma due to the resilient oil & gas division business outlook as its forte remains in brownfield jobs which are severely discounted by the market presently despite seeing near-term positive momentum,” Kenanga Research said.

“It is also because of its active thrust into sustainable businesses via its new energy segment, which enhances Uzma’s environmental, social, and governance appeal and helps future-proof its earnings.

“Also, Uzma’s new digitisation segment provides long-term upside from geospatial solutions provision but remains insignificant for the time being.”