Favorite Links

Tuesday, December 9, 2014

CIMB Research upbeat on Uzma

KUALA LUMPUR: CIMB Equities Research is positive on Uzma’s acquisition of a bigger equity interest in its associate Setegap Ventures Petroleum.
It said on Monday the move will allow it to better participate in a growing and profitable company, and complements its integrated drilling and well services.
“We expect Setegap Ventures’ vendor development programme status for the provision of coiled tubing services for Petronas Carigali’s East Malaysia operations will lead to more contracts and sustainable growth.
“We reiterate our Add recommendation and target price, valuing the stock at 14.8 times CY16 P/E, a 30% discount to the O&G big caps, consistent with our O&G small cap valuations,” it said.
CIMB Research said catalysts are expected from this news. It expects more acquisitions in 2015 as the group continues to grow.  
To recap, Uzma’s unit Tenggara Analisis Sdn Bhd has proposed to acquire an 18.98% equity interest in Setegap Ventures for RM28.5mil in cash and shares.
Setegap Ventures is a 30.02% associate of Uzma, and upon completion of the acquisition, Uzma will hold 49%.
CIMB Research said the RM28.5mil purchase consideration would be via cash payment of RM17mil and issuance of 5.35 million new ordinary shares of Uzma at as issue price of about RM2.1495 per share. The proposed acquisition is expected to be completed by 1Q15.
“We are positive on the news. Based on Setegap Ventures’ 9M15 annualised profit after tax of RM16.5mil, the purchase price implies a purchase valuation of 9.1 times FY14E P/E, which is fair.
Setegap Ventures is a service provider in the oil and gas (O&G) industry, specialising in well pumping, coiled tubing (CTU), and cementing services. These specialised services would complement Uzma’s offerings especially for its drilling and well services business.
“The proposed acquisition represents an opportunity to increase its equity interest in a growing and profitable company in the O&G sector. Since 2011 to 2013,  has managed achieve a31% PAT CAGR,” it said.
In November 2014, Setegap Ventures was awarded a five year vendor development programme status to provide its CTU services for Petronas Carigali Sdn Bhd’s East Malaysia operations.
“We expect this status will enable Setegap Ventures to secure more service contracts in East Malaysia in the next few years.   
“With a comprehensive services offering to cater to the well services offered to the O&G operators for production enhancement, we believe Uzma will be able to achieve a strong growth rate in the next few years,” it said.

No comments:

Post a Comment