• Uzma accepted a RM44m sub-contract work from Samaiden for a 13MW CGPP solar plant at Sungai Petani, Kedah
   
• Given the contract duration is for 8 months, we estimate it to contribute c.5% of our FY25E earnings
   
• Maintain BUY rating with RM1.45 target price

Secures RM44m Contract From Samaiden

Uzma announced that its wholly-owned subsidiary, Uzma Environergy Sdn Bhd, has accepted and signed a letter of award amounting to RM44m from Samaiden Sdn Bhd concerning the sub-contract works for a 13MW solar photovoltaic (PV) plant under the Corporate Green Power Programme (CGPP) in Sungai Petani, Kedah. The scope of work involves the engineering, procurement, construction, and commissioning (EPCC) of the solar PV plant, including developing GENCO’s interconnection facility and interconnector. The contract duration is for 8 months, with commercial operation date (COD) expected to be on 30 Aug 2025.

Expect More Positive Contract Flow

Assuming a PAT margin of 6-8% (consistent with CGPP margins of other solar EPCC players), we estimate this contract will contribute c.RM3m to FY25 earnings, representing c.5% of our earnings forecast. Following this contract win, the order book for its New Energy segment increases to RM833m, making up c.28% of the total RM3bn order book. Given its strong tender book of RM5bn, of which 19% is attributed to New Energy, we expect further positive contract flow for this segment.

Reiterate BUY With RM1.45 Target Price

We make no changes our earnings forecast as this contract falls under our annual replenishment assumption. We expect Uzma’s strong earnings momentum to sustain into FY25, driven by the commencement of its LSS4 project, pick-up in O&G activities, and its sizeable RM3bn order book. We reiterate our BUY rating and RM1.45 target price based on 10x PE on FY26E EPS. Uzma is trading at an attractive 5x forward FY26 PE. Key risks include lower-than-expected work orders from customers, unforeseen project delays, and escalation in project execution costs.

Source: Phillip Capital Research - 20 Dec 2024