UZMA: O&G Segment Drives Strong Performance, Future Growth Strategies Underway
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent investment bank research report indicates a robust financial performance, with core earnings for the second quarter of fiscal year 2026 (2QFY26) surpassing expectations. The company reported a core PATAMI (Profit After Tax and Minority Interests) of RM13.9 million, marking a 9.4% year-on-year increase. Revenue more than doubled year-on-year, reaching RM289.7 million, primarily due to strong execution momentum in its oil and gas (O&G) segment.
Performance Review
The O&G segment recorded a new quarterly revenue high of RM277.1 million in 2QFY26, surging 170.2% year-on-year and 45.8% quarter-on-quarter. This impressive growth was predominantly fueled by the 2D and 3D/4D seismic data acquisition contract, which is currently operating at full capacity. However, on a quarter-on-quarter basis, core earnings saw a 7.2% decline, attributed to higher administrative expenses and finance costs. Segmental operating profit also experienced a slight 2.9% quarter-on-quarter slip, reflecting margin dilution from a back-to-back charter arrangement for a seismic vessel. Despite these factors, the company’s strong topline performance, supported by full seismic contract utilization, helped to mitigate intermittent call-out delays and an ongoing negotiation overhang with PETRONAS-PETROS.
Cumulatively, first half fiscal year 2026 (1HFY26) core earnings stood at RM28.9 million, representing 53.5% of the full-year forecast and 48.6% of consensus estimates, indicating a solid performance trajectory.
Future Outlook and Strategic Initiatives
The company is actively pursuing strategies to build a more stable and recurring income base. Under its Trading segment, a new industrial customer has been secured through the Third-Party Access (TPA) pipeline gas supply framework and Reserved Firm Capacity approval, enhancing volume visibility and supporting earnings stability away from project-driven upstream business volatility.
Furthermore, the company is strategically positioning itself for New Energy (NE) expansion. Plans include active participation in upcoming Large-Scale Solar (LSS) bidding rounds and leveraging opportunities under the Solar ATAP programme to strengthen its NE portfolio. Management believes these initiatives will gradually reduce reliance on the more cyclical upstream O&G business, thereby improving long-term earnings visibility and fostering a more resilient earnings profile.
Analyst’s Recommendation
The investment bank maintains a BUY recommendation for the company’s shares, with a target price (TP) of RM0.25, representing a potential upside of 25.0% from the last traded price of RM0.20. This recommendation is based on the company’s strong operational performance and strategic moves to diversify its income streams.
