Uzma reported topline of RM93.4m in its 3QFY21 results, down from RM123.0m reported in 3QFY20. Consequently, it recorded core net profit of RM8.1m (- 21.8% YoY) on the back of slower activities due to the disruptions from the Covid-19 pandemic. For the cumulative 9MFY21 period, net profit was down 25.7% YoY, in tandem with lower revenue by 29.8% YoY. Gross profit margin remained stable at above 40%. The results are deemed in line with expectations, meeting 81.4% of our full year forecast ande 86.6% of consensus. We leave estimates unchanged as we err on the side of conservatism given the stricter adherence to SOPs following the reimplementation of stricter movement, which will limit its operational efficiency. That said, we see improvements in the Group’s earnings from FY22 onwards, underpinned by its outstanding order book of RM2.4bn, and stability in profit margins in tandem with progressive recovery in the sector dynamics. Oil prices are currently stable at above USD60/bbl. Our TP is maintained at RM0.95, based on 10x PER CY22 EPS. Uzma remains our sector pick for this year in light of its improved outlook and strengthening orderbook. Our Outperform stance is affirmed.

Results highlight. Uzma reported a 46.7% QoQ increase in 3QFY21 core net profit though revenue was relatively flat at RM93.4m (2QFY21: RM92.3m. This is mainly due to the reversal of overprovision of tax expense. Overall, performance is supported by the Group’s upstream O&G segment on slightly higher integrated well services’ revenue contribution.
Work order increasing. With oil prices currently stable at above USD60/bbl, we foresee the availability of work orders in the market increasing accordingly. Uzma recently secured its fifth contract for FY21 with value collectively at c.RM580m. Outstanding order book remains healthy at RM2.4bn, providing earnings visibility over the next three years at least.
Optimistic outlook. We deem the current results as in line as we err on the side of conservatism given the stricter adherence to SOPs including the requirement of 14-day quarantine periods for workforce movement to/from offshore following the reimplementation of stricter movement. This will limit its near-term operational efficiency.
Source:public invest research 1 jun