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.

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