Uzma has secured a contract for supply of chemicals and related services for PM3 from Hibiscus Oil and Gas Malaysia, via its 70%-owned subsidiary, Malaysian Energy Chemical & Services SB (MECAS). Taking cue from previous contracts, we estimate the contract value to be worth about RM70m for the duration of 5 years until November 2028. This validates management guidance on the resurgence of MECAS in providing full suite of production chemicals for production enhancement. On another note, Uzma has just mobilised its 460K hydraulic workover unit (HWU) in early January after 2 months in its yard for maintenance, following a year of utilisation of the unit. Looking ahead, the demand for HWU remains strong on the back of accelerated plug and abandonment (P&A) activities and workover well services for CY2024-2026. We believe Uzma has a competitive advantage due to the limited supply of locallyflagged HWUs. All in, we maintain Uzma as our top pick for the sector with Outperform call retained though with a higher TP of RM1.40 (from RM1.20) as we peg a higher ~9x PER to FY25F EPS, considering the promising outlook for local oil and gas services equipment (OGSE) providers.
Source: PublicInvest Research - 31 Jan 2024
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Created by PublicInvest | Nov 22, 2024