It said on Tuesday at 25% of its full-year forecast and 24% of consensus, Uzma’s 1Q15 core net profit was in line with expectations.
Uzma is reaping the full benefit of its acquisitions made last year, namely the purchase of MMSVS and Premier Enterprise Corporation (PEC), and its increased equity stake in Setegap Venture Petroleum (SVP).
“We make no changes to our EPS forecasts and target price, based on 10.5 times CY16 P/E – imputing a 30% discount to oil & gas big caps. We maintain our Hold call and recommend switching to Wah Seong,” it said.
CIMB Research said Uzma’s core net profit grew 46.9% on-year to RM13.1mil for 1Q15. The credible performance was achieved on the back of a 52.0% on-year jump in revenue to RM148.5mil, mainly contributed by long-term contracts secured by the group.
However, this was offset by higher administrative and operating expenses, and higher interest costs. The additional expenses were mainly due to higher staff costs following its aggressive business expansion.
“Uzma has also announced that its 40%-associate Sazma Aviation secured two contracts on May 21, 2015 from Petronas Carigali,” it pointed out.
Sazma would be providing aviation services for Petronas’ operation in Sabah for five years for RM155mil. The contract started from March 23 this year and will end in March 22, 2020, with one year extension option.
The other contract is to provide helicopter services for Petronas’ well drilling campaign at the east coast of Sabah for six months for RM12.5mil. The contract is from May 15 to November 14, with an option of a three-month extension until Feb 14 next year.
“We are positive on the news, as it will provide a new stream of income for the group moving forward.
“However, we are maintaining our EPS forecasts as management has indicated that it will aggressively expand this new line of business, and we have factored in the probability of the group securing new contracts for this division under our previous forecasts.
“Amid the current low crude oil price environment, we expect Uzma to continue to register growth as oil producers focus more on opex activities.
“We also expect the commencement of production from its Tanjung Baram RSC oilfield in 2Q15, which should provide Uzma with a recurring source of income,” said CIMB Research.
UZMA (7250) - CIMB Retains Hold call on Uzma
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