UZMA: New Energy Drives Earnings Beat, Outlook Positive, Rating Upgraded

The company’s strategic pivot towards its New Energy (NE) segment has successfully delivered exceptional financial performance, leading to an upgraded rating and target price by PublicInvest Research.

Performance Review

For the fourth quarter of FY25, the company recorded a robust core PATAMI (Profit After Tax and Minority Interest) of RM16.5 million, marking a significant increase of 133.8% year-on-year and 57.2% quarter-on-quarter. This strong showing was primarily driven by enhanced contributions from the NE segment, fueled by accelerated billing progress from ongoing EPCC (Engineering, Procurement, Construction, and Commissioning) contracts and stable recurring income from its Large Scale Solar 4 (LSS4) asset in Kuala Muda.

Cumulatively, the full-year FY25 core PATAMI reached RM50.0 million, vastly exceeding both PublicInvest Research’s and consensus expectations by 117% and 115.6% respectively. The NE segment’s revenue saw a sharp increase, tripling to RM54.5 million in 4QFY25 from RM18.5 million in the preceding quarter, largely due to accelerated billing for a 13.42MWac solar PV plant project.

Challenges and Strategic Diversification

Despite the strong NE performance, earnings from the Oil & Gas (O&G) segment are expected to remain volatile in the near term, particularly for call-out contracts, due to potential delays linked to ongoing negotiations with PETRONAS and PETROS. However, the company’s strategy to diversify its earnings base towards more stable, recurring income streams, moving away from its historically cyclical O&G segment, is proving effective.

Successful execution of solar EPCC projects strengthens the company’s capabilities for securing future order book wins, with LSS4 providing a foundational recurring earnings base.

Future Outlook and Investment Recommendation

The future outlook is positive, underpinned by a stronger recurring base. This will be further driven by the upcoming Water Injection Facility (WIF 2.0), potential market expansion for artificial lift solutions, and continued bidding for NE EPCC jobs, along with the execution of a new satellite project. The finalization of the concession agreement for the national remote sensing satellite project (PSPJN), an 8-year contract (3 years development, 5 years operational), is also set to reinforce non-O&G earnings.

In view of the robust performance and positive outlook, PublicInvest Research has raised its FY26F/27F earnings forecasts upwards by 23.1% and 33.1% respectively. Consequently, the firm has upgraded its recommendation to Outperform (from Neutral) and increased its target price to RM0.56 (from RM0.45), based on a 6x PER applied to a 12-month forward rolling EPS.