Hot Stock Uzma rises 5.9% on resilient earnings growth outlook

by **Cals** Tue 01 Sep 2015, 19:00

Hot Stock
Uzma rises 5.9% on resilient earnings growth outlook

KUALA LUMPUR (Sept 1): Shares of Uzma Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) rose as much as 5.85% to RM1.82 this morning, after the digitaledge Weekly reported the company is confident of resilient earnings growth.
At 11.41 am, Uzma (fundamental: 1.1; valuation: 1.8) pared down some gains to trade at RM1.79, up 8 sen or 4.68% with 196,300 shares changing hands, for a market capitalisation of RM520.77 million.
In an interview with digitaledge Weekly, Uzma's CEO Datuk Kamarul Redzuan Muhamed said the group is in “safe spot”, as it mainly involves in a business that caters for fields in production.
The Weekly reported his confidence stems from the group’s RM2.7 billion order book, which will keep the group busy till 2021 and its ability to provide services which enable oil companies to produce economically.
Kamarul said Uzma is doing well and is still looking at 30% to 40% revenue growth in the next three years, although the current market is challenging.
He pointed out that its Tanjung Baram risk service contract (RSC) in Sarawak, which saw its first production flowed in June, will start contributing to the group’s earnings by end of the year.
Uzma reported a 7.05% year-on-year increase in net profit to RM9.26 million or 3.44 sen per share in its second quarter ended June 30, 2015 (2QFY15). Revenue rose 31.45% to RM140.09 million.
For the first half of FY15 (1HFY15), the group posted a 1.35% increase in net profit to RM17.31 million. Revenue rose 41.28% to RM288.62 million.
Kenanga Research upgraded its rating to “outperform” in a note dated Aug 25, as the research house believed the risk-reward ratio of the company has improved significantly, post its share price plunge, in line with resumption of oil price decline.
“Selling of the stock is deemed overdone, given its relatively niche and stable oilfield services business, which are still be needed by its clients to maintain their field conditions and production rates,” it added.
Its target price is cut to RM1.85, from RM2.58 previously, post a downgrade in target CY16 PER to 8x, from 11x previously, in view of the weakness in oil process and bearish market sentiment.