Delay in major Uzma project remains a concern
The order book could grow by RM1bil following Uzma's latest win.
PETALING JAYA: The delay in Uzma Bhd 's major project has caused analysts to be concerned about the impact on its earnings despite the substantial new contract wins of the oil and gas (O&G) company.
UOB Kay Kian (UOBKH) Research stated the sailaway of the Sara water injection facility (WIF) to offshore Sabah site would likely be delayed to October this year or February next year instead of the April 2025 target due to various client-requested design changes.
'Uzma can deliver the WIF in October, but it will encounter the monsoon when it arrives at Hibiscus Petroleum's offshore site in Sabah. Under this scenario, Uzma may have to bear the high transportation and installation costs.
'Therefore, from a project cost perspective, it is better to sail away in February 2026 (but also means the startup will miss financial year 2026 (FY26) completely),' the research house stated.
On the positive side, Uzma has grown its order book to RM4.1bil as of April but unfortunately many of the projects are small, UOBKH Research added.
The order book could grow by RM1bil following Uzma's latest win. It has secured a two-year long-term charter contract from PETRONAS Carigali for the seismic vessel WOA, from March 14, 2025 to March 13, 2027.
The contract involved comprehensive seismic data acquisition across Peninsular Malaysia and Sabah, in addition to providing ancillary services such as catering, according to Phillip Capital Research.
It expected the charter to contribute about RM10mil in annual profit to Uzma.
Uzma's order book growth was primarily O&G-driven (with O&G comprising 74% mix), and the bulk of the growth came from the production service segment, which surged from RM1.1bil to RM2bil quarter-on-quarter.
Uzma will miss its five-year internal target of a recurring income mix of 60% due partly to the delay risk of Sara-WIF.
'We believe this downside risk is fully priced in, but recommend a wait-and-see approach for earnings delivery and the (environmental, social and governance) development.
'Retain 'buy' and target price (TP) of 76 sen a share,' UOBKH Research noted in its latest report on the company following a briefing with Uzma's management. The valuation is at an unchanged price earnings (PE) multiple of eight times.
Phillip Capital Research also retained its 'buy' rating on Uzma with a TP of 76 sen a share, based on eight-times PE on FY26 earnings per share.
The stock is currently trading at an attractive four-times forward FY26 PE, with a forward dividend yield of 5% providing additional support to the share price.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
13 hours ago
- The Star
Johor Port invests in new cranes
JOHOR BARU: Johor Port Bhd (Johor Port) has formalised a RM72.3mil purchase of four level luffing cranes with supplier Sany Marine Heavy Industry Co Ltd. In a statement yesterday, Johor Port said the procurement is part of a broader RM1bil enhancement plan to modernise its port facilities and to support future growth. 'The new cranes with their improved lifting performance, improved reach and enhanced durability will improve berth productivity, reduce vessel turnaround time, and deliver a more seamless and efficient cargo handling,' the company said. Johor Port chief executive officer Md Derick Basir and Sany Marine general manager for overseas sales Tony Tang signed the deal yesterday. Johor Port covers 1,000 acres, of which 660 acres are designated as a free trade zone. It is part of utility and infrastructure group MMC Corp Bhd. — Bernama
The Star
a day ago
- The Star
Signature Alliance shares rise 13.71% on ACE Market debut
From left: SAG group chief financial officer Saw Gee Kai, independent director Datuk Boey Chin Gan, independent director Tan Poh Cheok, independent director Lim Sook Yee, promoter and CEO for central region Melvin Ng, executive director and CEO of northern region Mario Foo, executive director and group CEO Darren Chang, promoter Chiau Haw Choon, chairman Datuk Wan Ahmad Satria Wan Hussein, M&A Equity Holdings Bhd Datuk Bill Tan, promoter Datuk Seri Chiau Beng Teik, Chin Hin Group chief financial officer Michael Lim, SAG director Lau Kock Sang and M&A Securities Sdn Bhd head of corporate finance Gary Ting KUALA LUMPUR: Investors gave Signature Alliance Group Bhd (SAG) a warm welcome on its debut on the ACE Market of Bursa Malaysia, ramping up the newly-listed share to a 13.71% premium over its initial public offering (IPO) price. At the time of writing, the interior fit-out solutions provider, which raised RM161.2mil via an IPO fundraising, was trading at an intra-morning high of 70.5 sen a share, an 8.5 sen increase over its public issue price of 62 sen a share. It was the most active stock on the domestic market, with 63.9 million shares changing hands. Executive director and group CEO Darren Chang said post-listing ceremony the company is confident of securing between 15% and 20% of its RM1bil tender book by end-2025. He said the tenders primarily comprise commercial and industrial property projects valued at RM1.1bil as at April 15, 2025. "Based on our historical average tender success rate of around 15% to 20%, we are optimistic about meeting our target,' he added. Chang said the company's earnings visibility for the financial year ended Dec 31, 2025 (FY25) and FY26 will be supported by an unbilled order book of RM388.6mil as at April 16, 2025, in addition to anticipated contract wins. As at 16 April 2025, SAG has 69 ongoing projects with a total contract value of RM902.4mil. 'Our current ongoing projects of RM902.4mil, of which RM388.6mil are unbilled, clearly reflects market demand for our interior fitting-out services and provides earnings visibility for the next one to two financial years,' Chang added. SAG is on an expansion drive, allocating more than half of its IPO proceed to the development of a new corporate headquarters and production facility in Selangor. A sum of RM88mil or 54.6% of the total proceeds will go towards the new corporate and production facility, while an additional RM12mil will be used for establishing and expanding brand offices in Penang and Johor. SAG would also allocate RM30.1mil for working capital requirements and RM4mil for the acquisition of new machinery and equipment. The remaining proceeds would be used for the repayment of bank borrowings at RM20mil and to cover listing-related expenses at RM7.1mil. Pre-IPO, SAG was 50.7%-owned by Signature International Bhd , which is indirectly controlled by construction outfit Chin Hin Group Bhd . Following the IPO, Signature International's stake was diluted to 37.5%
The Star
2 days ago
- The Star
Delay in major Uzma project remains a concern
The order book could grow by RM1bil following Uzma's latest win. PETALING JAYA: The delay in Uzma Bhd 's major project has caused analysts to be concerned about the impact on its earnings despite the substantial new contract wins of the oil and gas (O&G) company. UOB Kay Kian (UOBKH) Research stated the sailaway of the Sara water injection facility (WIF) to offshore Sabah site would likely be delayed to October this year or February next year instead of the April 2025 target due to various client-requested design changes. 'Uzma can deliver the WIF in October, but it will encounter the monsoon when it arrives at Hibiscus Petroleum's offshore site in Sabah. Under this scenario, Uzma may have to bear the high transportation and installation costs. 'Therefore, from a project cost perspective, it is better to sail away in February 2026 (but also means the startup will miss financial year 2026 (FY26) completely),' the research house stated. On the positive side, Uzma has grown its order book to RM4.1bil as of April but unfortunately many of the projects are small, UOBKH Research added. The order book could grow by RM1bil following Uzma's latest win. It has secured a two-year long-term charter contract from PETRONAS Carigali for the seismic vessel WOA, from March 14, 2025 to March 13, 2027. The contract involved comprehensive seismic data acquisition across Peninsular Malaysia and Sabah, in addition to providing ancillary services such as catering, according to Phillip Capital Research. It expected the charter to contribute about RM10mil in annual profit to Uzma. Uzma's order book growth was primarily O&G-driven (with O&G comprising 74% mix), and the bulk of the growth came from the production service segment, which surged from RM1.1bil to RM2bil quarter-on-quarter. Uzma will miss its five-year internal target of a recurring income mix of 60% due partly to the delay risk of Sara-WIF. 'We believe this downside risk is fully priced in, but recommend a wait-and-see approach for earnings delivery and the (environmental, social and governance) development. 'Retain 'buy' and target price (TP) of 76 sen a share,' UOBKH Research noted in its latest report on the company following a briefing with Uzma's management. The valuation is at an unchanged price earnings (PE) multiple of eight times. Phillip Capital Research also retained its 'buy' rating on Uzma with a TP of 76 sen a share, based on eight-times PE on FY26 earnings per share. The stock is currently trading at an attractive four-times forward FY26 PE, with a forward dividend yield of 5% providing additional support to the share price.
