KUALA LUMPUR: The recent contract win by Uzma Bhd with Sarawak Shell Bhd Sabah Shell Petroleum Company Ltd (SSPC) highlights the company's encouraging future as a major participant in the growing chemical supply sector.
Uzma's position in the industry is further cemented by this deal, which it acquired through its subsidiary Malaysian Energy Chemical & Services SB (MECAS). The contract involves integrated production and integrity chemical supply.
Although no contract value was disclosed, Public Investment Bank Bhd (PublicInvest) projected that, based on the previous contract awarded, the deal might be valued around RM70 million over a five-year period ending in April 2029.
"This is the second contract announced for MECAS in FY24 and the third contract secured from Shell since FY23.
"We are positive with this development as it shows the growing demand for chemical supply from MECAS and the confidence in its products from recurring clients," it said in a note.
On another note, Uzma recently announced a proposed private placement of up to 15 per cent of its current share base, equivalent to RM68.4 million, mainly to finance the development of the Water Injection Facility (WIF) secured in February 2024.
PublicInvest believed that this could partially offset the increase in its net gearing level after it was recently granted a RM300 million financing facility.
"We maintain our outperform call. However, our target price of RM1.70 could be potentially reduced to RM1.48 after taking into consideration the dilution arising from full subscription to the private placement exercise," it added.