Hot Stock UMW gains 1% on Petronas job extension

by **Cals** Wed 24 Apr 2013, 13:48

Hot Stock UMW gains 1% on Petronas job extension
Business & Markets 2013
Written by Chong Jin Hun of theedgemalaysia.com
Wednesday, 24 April 2013 10:39

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KUALA LUMPUR (April 24): UMW HOLDINGS BHD [] rose as much as 1% after Petronas Carigali Sdn Bhd extended its oil and gas support-services contract with the former.

At 10.29am, UMW changed hands at RM13.52 with some 181,000 shares done after rising as much as 14 sen to RM13.54 earlier. The stock was the seventh-largest gainer across the bourse.

UMW said yesterday Petronas Carigali had extended the former's five-year contract involving a semi-submersible drilling rig known as “NAGA 1” to support Petronas Carigali's upstream operations. The contract is valued at some US$130 million (RM397 million).

The original contract had started on November 13, 2010 and ends on November 12, 2015. Petronas Carigali which has extended the current contract expiry date to August 19, 2016, will subsequently prolong the deal for another two years.

In a note today, Maybank Investment Bank Bhd analyst Liaw Thong Jung believes the contract extension indicates the quality and reliability of UMW's rig.

This takes into consideration that the extension was done three years before the existing contract expires.

"NAGA 1 should contribute RM58 million p.a. (per annum) to group earnings when the extension period kicks in (currently RM45 million).

"Our forecasts are unchanged, for the impact will only be realised in 2016," Liaw said. Maybank is maintaining its "hold" call for UMW with a target price of RM13.26.