Uzma Bhd's recent contract win from Sarawak Shell reaffirms its positive outlook, says PublicInvest

KUALA LUMPUR: Uzma Bhd's recent contract win from Sarawak Shell reaffirms its positive outlook as a key beneficiary of increasing brownfield activities, Public Investment Bank Bhd (PublicInvest) said.

Uzma has secured a contract from Sarawak Shell for supplying kinetic hydrate inhibitor, corrosion inhibitor, and associated services for the Shell Timi Field via its 70 per cent-owned subsidiary, Malaysian Energy Chemical & Services Sdn Bbhd (MECAS).

The contract is worth RM40 million for a duration of five years.

PublicInvest said this would keep its oil and gas (O&G) upstream segment outstanding orderbook healthy at about RM2 billion.

"Although earnings contribution from this contract is minimal on an annual basis, this contract reaffirms our positive outlook in tandem with increased spending by major oil producers on the back of stable oil prices at or above US$80 per barrel," the bank-backed research firm said in a note.

PublicInvest said Uzma would continue to secure more contracts for the O&G upstream segment going forward amid a sizeable tenderbook of RM1.3 billion, as guided in October 2022.

PublicInvest also noted that oil prices above US$80 per barrel would encourage major oil producers to spend on upstream services to boost oil production.

"To add, we also believe Uzma is a key beneficiary from the uptick in well-decommissioning activities over the next three years as guided by the Petroliam Nasional Bhd (Petronas) Activity Outlook 2023-2025," it added.

PublicInvest has maintained Uzma's earnings forecast and keeps its 'Outperform' rating on the company, with an unchanged target price of 71 sen.

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