UZMA: Resilient Performance and Stronger Outlook Propel Reaffirmed Buy Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The company reported a 16% year-on-year growth in core net profit for the first half of FY26, which aligned with both internal and consensus expectations. This performance was primarily driven by robust contributions from the Oil & Gas (O&G) services segment, which more than offset a softer trading segment. Overall revenue for the six-month period climbed 16% YoY to RM28 million.
Performance Review
Key operational highlights included the seismic vessel contract, which commenced in August 2025 and maintained a high utilisation rate of 95%, alongside the successful deployment of wireline contracts starting March 2025. Despite these positive drivers, the EBITDA margin for 6MFY26 eased by 1.7 percentage points to 16%, attributed to a less favorable project mix.
On a sequential basis, the second quarter of FY26 saw revenue increase by 41% quarter-on-quarter, thanks to a full-quarter contribution from the seismic vessel and a ramp-up in wireline and slickline activities, with all eight units fully operational. However, core earnings remained largely flat at RM14 million (a marginal 0.3% QoQ decline). This flattish performance was primarily due to the higher proportion of revenue from the lower-margin seismic vessel contract, which pressured the EBITDA margin to 13.7% (-6ppts QoQ), coupled with increased administrative and interest expenses. Weaker contributions from trading and new energy segments, resulting from lower gas oil shipments and the absence of EPCC projects, also contributed to the sequential trend.
Future Outlook
Analysts anticipate a stronger second half of FY26 earnings, which is expected to underpin a robust year-on-year earnings uplift. The company’s growth trajectory is projected to be robust, supported by the continued commencement of new seismic vessel contracts, increased contributions from new wireline contracts, and the full-year recognition of its LSS4 asset.
The current valuation, trading at approximately 3 times FY27E price-to-earnings (PER), is considered unwarranted given the strong earnings momentum and positive catalysts on the horizon. Key risks that could impact the optimistic outlook include lower-than-expected work orders from customers, unforeseen project delays, and potential escalation in project execution costs.
Investment Recommendation
The investment bank maintains its BUY recommendation with a 12-month target price of RM0.25. This target price represents a significant upside potential of 25.0% from the last traded price of RM0.20, reflecting confidence in the company’s growth prospects and operational execution.
