UZMA (7250) - Growing amid uncertainty
Target RM2.65 (Stock Rating: HOLD)
UMW’s FY14 core net earnings came in below expectations, accounting for 80% of our full-year forecast and 86% of consensus. As expected, an interim dividend of 16 sen per share was declared. The compression of profit margins at the group’s auto division due to intense competition and the weakening RM against the US$ as well as the higher-than-expected losses at its ‘others’ segment were the main culprits. Nonetheless, we make no changes to our FY15-16 EPS forecasts given the improving outlook at its equipment division and its associate Perodua. We also introduce our FY17 EPS forecast. We maintain our RNAV-based target price and Hold call. Switch to Berjaya Auto, which is our top pick for the sector.
Full-year results well in line
Amid the uncertainty in the oil & gas industry, Uzma continued to deliver a strong performance in 2014. It grew its core net profit 22.5% yoy to RM40.5m, which was well in line with what we had expected. Its revenue grew 16.7% yoy to RM473.6m, mainly contributed by the long-term contracts secured.
2014 has been a busy year for the group
Uzma continued its rapid growth in 2014. It undertook its biggest acquisition yet by purchasing MMSVS Group Holdings Limited, a provider of services in relation to the repair and maintenance of exploratory and production wells utilising hydraulic work-over units, thus further broadening the group's service offerings. It then acquired Premier Enterprise Corporation, which allows Uzma to strengthen its market share in the oil & gas chemical business in the country. To cap it off, Uzma increased its stake in its associate Setegap Ventures Petroleum (SVP), tapping on the exciting growth prospects of SVP.
2015 to be another exciting year
We believe that Uzma’s outstanding growth will continue in 2015. It has already secured two substantial contracts from Petronas Carigali for the provision of through-tubing downhole tools and services, and cased-hole electric-line logging perforation and other services. It has also already secured contracts for another two of its UzmaPres units, which are set to commence operations in 2Q15 and 3Q15, bringing its number of UzmaPres units to 10 overall. Most interestingly, its Tanjung Baram marginal oilfield RSC is on schedule to produce its first oil in 2Q15.
Source: CIMB Daybreak - 27 February 2015
Target RM2.65 (Stock Rating: HOLD)
UMW’s FY14 core net earnings came in below expectations, accounting for 80% of our full-year forecast and 86% of consensus. As expected, an interim dividend of 16 sen per share was declared. The compression of profit margins at the group’s auto division due to intense competition and the weakening RM against the US$ as well as the higher-than-expected losses at its ‘others’ segment were the main culprits. Nonetheless, we make no changes to our FY15-16 EPS forecasts given the improving outlook at its equipment division and its associate Perodua. We also introduce our FY17 EPS forecast. We maintain our RNAV-based target price and Hold call. Switch to Berjaya Auto, which is our top pick for the sector.
Full-year results well in line
Amid the uncertainty in the oil & gas industry, Uzma continued to deliver a strong performance in 2014. It grew its core net profit 22.5% yoy to RM40.5m, which was well in line with what we had expected. Its revenue grew 16.7% yoy to RM473.6m, mainly contributed by the long-term contracts secured.
2014 has been a busy year for the group
Uzma continued its rapid growth in 2014. It undertook its biggest acquisition yet by purchasing MMSVS Group Holdings Limited, a provider of services in relation to the repair and maintenance of exploratory and production wells utilising hydraulic work-over units, thus further broadening the group's service offerings. It then acquired Premier Enterprise Corporation, which allows Uzma to strengthen its market share in the oil & gas chemical business in the country. To cap it off, Uzma increased its stake in its associate Setegap Ventures Petroleum (SVP), tapping on the exciting growth prospects of SVP.
2015 to be another exciting year
We believe that Uzma’s outstanding growth will continue in 2015. It has already secured two substantial contracts from Petronas Carigali for the provision of through-tubing downhole tools and services, and cased-hole electric-line logging perforation and other services. It has also already secured contracts for another two of its UzmaPres units, which are set to commence operations in 2Q15 and 3Q15, bringing its number of UzmaPres units to 10 overall. Most interestingly, its Tanjung Baram marginal oilfield RSC is on schedule to produce its first oil in 2Q15.
Source: CIMB Daybreak - 27 February 2015
