UZMA: Earnings Outperform on Stronger Margins, Analyst Raises Target Price
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.89 (+114.5%) |
| Last Traded | RM0.415 |
| Recommendation |
Core net profit significantly exceeded both internal and consensus expectations for FY25, largely driven by stronger-than-anticipated operating margins. The company reported a core net profit of RM50 million, achieving 115% and 116% of the investment bank’s and consensus full-year forecasts, respectively.
FY25 revenue increased 21% year-on-year to RM725 million. This growth was primarily fueled by enhanced EPCC recognition from the new energy segment and expanded shipments of gasoil and urea within the trading segment. While the overall EBITDA margin saw a slight decline to 20.4% (-0.9 percentage points) due to softer margins in O&G services, the fourth quarter showed robust sequential improvement.
Stronger Sequential Performance
The fourth quarter of FY25 witnessed a 26% quarter-on-quarter revenue increase, reaching RM213 million. Contributions from the new energy, trading, and O&G segments were strong, offsetting weaker performance in the O&G service business. This boosted the EBITDA margin by 1.5 percentage points sequentially to 23%, lifting core net profit for the quarter to RM17 million, a 67% increase quarter-on-quarter. The strong overall performance was primarily attributed to these improved margins.
Future Outlook and Raised Target Price
PhillipCapital has maintained its “BUY” recommendation and raised the 12-month target price to RM0.89 from RM0.76. This upward revision follows a 17-22% increase in FY26-27E EPS forecasts, factoring in higher revenue contributions from O&G services and new energy segments, alongside better operating margins. A new two-year seismic vessel contract is anticipated to contribute an additional RM10 million to profit in FY26. The investment bank also introduced an FY28 earnings forecast of RM86 million, representing a 15% year-on-year increase.
The analyst views the stock’s year-to-date decline of 29% as unwarranted, noting it currently trades at just 4x FY26 PER. New growth drivers, including the seismic vessel contract, LSS4, WIF2.0, and a new satellite venture, are expected to drive 30% EPS growth in FY26E. However, key risks to the “BUY” call include potential lower-than-expected work orders, unforeseen project delays, and cost overruns.
