KUALA LUMPUR: Uzma Bhd's five-year contract for D18 water will injection is expected to lift its order book to an estimated RM2 billion, said Kenanga Research.
The research house is positive on the contract win, with this being one of Uzma's more prominent jobs within its portfolio.
The contract also reflects the client's satisfaction with Uzma's job execution capabilities thus far.
"We expect this job to lift its order book to an estimated RM2 billion, of which RM1 billion is expected to be from umbrella contracts," it said.
Kenanga Resrarch said the new contract was effectively an extension of an existing contract, continuing the operations of the D18 water injection facility at the same location since July 2016.
It said while no contract values were disclosed, based on the job scope, the firm estimated the contract to be worth RM300 million.
"We expect the contract to fetch 40 per cent gross margins (in line with its historical average), which implies an average gross profit contribution per year of RM24 million," the firm said.
All in, Kenanga Research has made no changes to its financial year 2023 (FY23) and FY24 earnings forecast.
"This is because we have already assumed a continuation of the existing job in our numbers.
"We maintain Outperform, with a higher target price of RM0.64 on Uzma," it added.