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| Uzma expects double-digit growth in net profit |
| Written by Yantoultra Ngui Yichen | |||
| Monday, 11 May 2009 10:37 | |||
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Its chief executive Datuk Kamarul Muhamed said the Second Board-listed company was confident of securing a major portion of the RM1.2 billion worth of contracts it was currently bidding for, both locally and overseas. “We are confident based on the successful applications of our new service package - uzmAPRES - in pilot studies and we are currently patenting the technology,” he told The Edge Financial Daily. “Hopefully by August this year, we will know the outcome of a major portion of our bidding process.” UzmAPRES, which is a total solution service package aimed at enhancing clients’ field production within a short time cycle, was basically a technology for “idle” wells, Kamarul said. It was launched in July 2008. “More than 50% of oil production in Malaysia comes from the fields which are about 15 years old or older (as of 2006), a lot of opportunities are left down there.” Kamarul said this was Uzma’s new area for growth and the potential would easily double the size of the company.  Uzma came up with the idea of developing uzmaAPRES in November 2007 via a short-term production enhancement project and successfully completed the first pilot study in December 2008. He added that among the contracts Uzma was bidding for were the installation of up to 10 units of uzmAPRES. He said oil and gas companies had started to look into producing more oils in anticipation of stronger crude prices. The company currently had RM200 million worth of order books, which would keep the company busy until 2011, Kamarul said. Local jobs contributed 75% of its total revenue in FY08, which was a 10 percentage point increase from FY07. Its major clients include Petroliam Nasional Bhd’s unit Petronas Carigali Sdn Bhd and Talisman Malaysia Ltd, which collectively contribute some 50% of the group’s revenue currently. Its clients number 49 at present. Kamarul said Uzma had just extended its three-year contract with Talisman for another three years. The previous contract was worth RM120 million. It was awarded more jobs from Petronas Carigali this year. He declined to say how much the new contracts were worth. Uzma also has impending jobs in Mongolia. In September last year, its subsidiiary Uzma Engineering Sdn Bhd acquired a 35% stake in Hong Kong’s Oriental Motors Co Ltd, which is the master project manager for the Baiyin Chagan, Inner Mongolia, petroleum block under a 14-year concession. Kamarul said Uzma’s initial invesment was RM4 million, which included the acquisition of the 35% stake in Oriental as well as in drilling services and reservoir studies. “This is not part of our forecast but if anything goes well, it will be a bonus for us,” he said. “We will drill seven wells (this month), which will take about one-and-a-half month, we will be able to evaluate whether it is successful or not then.” Also, Kamarul expected Uzma’s new geological laboratory in Shah Alam, which handles core samples for clients in the oil and gas industry, to start operations next month. He said the laboratory, which has a current order book of some RM23 million that will last more than a year, was aimed at creating a recurring stream of revenue through storage fees charged to clients for periodic core sample analysis and examination. For FY08, Uzma posted a net profit of RM10.78 million, which was a shortfall of RM3.48 million or 24.42% from its prospectus forecast made last year pursuant to its listing in July 2008. Its revenue, at RM135.83 million, was a shortfall of RM54.61 million or 28.67%. The company attributed the shortfalls to the slowdown in exploration activities in the second half of 2008, which was due to the sharp fall of oil prices and the bleak global economic outlook. “As exploration activities slow down, customers have requested us to delay some of the projects with higher margin historically,” said Kamarul. “But things have started to pick up since oil prices are stronger.” Shares of Uzma, currently trading at a price-to-earnings ratio of 10.64 times, closed unchanged at RM1.40 last Friday in thin trade, versus its IPO price of RM1.90. This article appeared in The Edge Financial Daily, May 11, 2009.
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