Kenanga IB Research maintains Outperform on Uzma, ups target price to RM4.30

by **Cals** Wed 02 Jul 2014, 23:02

Business & Markets 2014

Written by theedgemalaysia.com

Wednesday, 02 July 2014 09:52

KUALA LUMPUR (July 2): Kenanga IB Research has maintained its Outperform rating on Uzma Bhd at RM3.68 with a higher target price (TP) of RM4.30 (from RM3.78) and said Uzma had been keeping busy.

In a note Wednesday, the research house said that within 1H14 Uzma had (i) raised RM99 million through a rights issuance of up to 132 million shares at 75 sen per share in Mar-14, (ii) won the Tanjung Baram Small Field Risk Service Contract (SFRSC) via a consortium in Mar-14, and (iii) proposed the acquisition of Thai-based MMSVS Group Limited (MMSVS) that provides Hydraulic Workover Unit (HWU) services for US$29.7 million (RM96.5 million) in May-14.

The research house said that overall, it was positive on these moves as they strengthened UZMA’s balance sheet, gained UZMA entrance into the RSC space, and enhanced the drilling and well services division.

“Even more interesting is that UZMA is hoping to close two more M&As within the year, pointing to more excitement in 2H14.

“We have raised our FY14-15 net profit estimates by 4.2-17.7%. Our TP is also revised to RM4.30 (from expected ex-rights price of RM3.78 previously) based on an-unchanged 16x CY15 PER.

“Uzma remains a favourite for unconventional production enhancement play and, in our view, is one of the main beneficiaries for upcoming Chemical Enhance Oil Recovery (CEOR) plays which may emerge within end 3Q14-4Q14,” it said.