BIMB SECURITIES RESEARCH

MARKET INSIGHT
PP16795/03/2012(029624)

Wednesday, 29 February, 2012

Uzma
In Line A Joyful Year
UZMA 156.00 MK 80 Equity 2.35 1.51 0.1 29.6% Y Altman Z-score YTD price chg YTD KLCI chg Beta Major Shareholders Muhamed Kamarul Shah Rozita Mat Redz Lembaga Tabung Haji 4.0 15.4% 1.7% 0.7 50.0% 10.5% 8.2%

Buy
Price: Target Price: RM1.95 RM2.96
Uzma capped an impressive year with its best ever set of results. FY11 earnings came in 1% better than our forecast, attributable to across the board improvement of its divisions. The company for 2011 had managed to secure huge long term contracts worth at least RM500m which provide a strong revenue base over the next 2-3 years. Uzma had recently completed the acquisition of a 30% stake in Setegap Venture entrenching its presence in wellpumping and coil tubing services. We reiterate that the company is in a strong business turnaround mode thanks to its enhanced business portfolio and strong orderbook of about RM1bn, we expect FY12 to be another record year for the company. Continue to be our top pick for small cap play. Maintain our earnings forecast and target price at RM2.96. Consistently higher. Net earnings witnessed strong rebound trend since 3QFY10 (RM0.45m) to latest RM4.9m. Stronger contributions from high margin businesses i.e Wireline and UzmaPres boosted pre-tax margin by 210bps QoQ and 280bps from 1QFY11, we are expecting the trend to continue with further support from its recently secured contract worth of RM350m to provide well testing and equipment for Petronas Drilling Programmes. Maintain forecast. Our forecast for FY12 and FY13 implied record earnings years ahead for the company, for FY12 alone we expect about half of the estimated EBITDA will be recurring in nature. This is a significant move-away from its previous business model which was largely short term contracts driven. Stronger positive aura. We expect Uzma to continue with its momentum in securing new contracts in FY12. Particularly, we expect its participation in the area of chemical supplies for Chemical Enhanced Oil Recovery (CEOR) for both Angsi and St. Joseph projects, for Angsi alone, chemical supply would worth about RM500m. View & Valuation. We continue to like the stock for its strong turnaround story which driven by its success in introducing an enhanced business model. Top pick for small cap, maintain Buy at RM2.96 based on PER of 10x.

Stock Data Bloomberg Ticker Market Cap Issued shares 52-week range (H) 52-week range (L) 3-mth avg daily volume Free Float Shariah Compliant

Share Performance (%) Absolute vs. KLCI Financial Highlights FYE 31 Dec (RMm) Turnover EBIT Pretax profit Core Net Profit EBIT margin Pretax margin Effective tax rate ROE ROA Net Gearing (x) Core EPS (sen) Core EPS growth PER (x) (%) DPS (sen) Div. Yield (%) NTA/share (RM) Growth ratios Turnover EBIT Pretax profit Core Net profit Share Price Chart

1mth 12.1% 9.5%

3mth 0.3% 8.0%

12mth -0.3% -17.3%

2009 98.8 -12.0 -12.5 -12.0 -12.1% -12.6% n.a -23.5% -16.1% 0.0 -14.9 -216.4% -13.0 2.5 1.3% 0.6

2010 116.1 -0.8 -2.2 -2.0 -0.6% -1.9% n.a -2.4% -1.4% NC -2.6 82.9% -76.1 0.0 0.0% 0.6

2011 192.3 17.5 16.7 12.1 9.1% 8.7% -23.3% 19.9% 9.2% 0.0 15.1 688.4% 12.9 0.0 0.0% 0.8

2012E 287.2 33.7 32.3 23.7 11.7% 11.3% -25.0% 28.7% 13.6% NC 29.6 96.5% 6.6 4.4 2.3% 1.0

2013E 366.5 44.9 42.9 31.6 12.3% 11.7% -25.0% 28.9% 14.5% NC 39.5 33.4% 4.9 5.9 3.0% 1.4

-26.6% -188.0% -195.2% -216.4%

17.5% 65.6% 93.7% 2430.5% 82.6% 868.7% 82.9% 688.4%

49.4% 92.2% 94.1% 96.5%

27.6% 33.1% 32.8% 33.4%

Chiong Tong Chai chiongtc@bimbsec.com.my 03-26918887 ext 175

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29 February 2012

Results Review: Uzma 4QFY11

Quarterly figures
FY 31 Dec (RMm) Revenue EBIT Pretax profit Taxation Minority Interest Net Profit Core Net Profit EPS (sen) Net gearing (x) EBIT margin (%) PBT margin (%) Net profit margin (%) Effective tax rate (%) 4QFY10 36.1 0.5 0.3 1.0 0.8 1.2 0.5 0.6 0.0 1.3% 0.8% 3.4% -340.8% 1QFY11 35.1 2.9 2.7 (0.6) 0.1 2.1 2.0 2.5 NC 8.3% 7.7% 6.0% 22.4% 2QFY11 40.0 3.1 2.8 0.3 0.2 3.1 2.9 3.6 NC 7.7% 7.0% 7.8% -10.3% 3QFY11 56.3 4.7 4.7 (1.3) 0.2 3.5 3.3 4.1 NC 8.4% 8.4% 6.1% 26.8% 4QFY11 60.9 6.8 6.4 (2.3) 0.2 4.1 3.9 4.9 0.0 11.1% 10.5% 6.8% 35.8% QoQ 8.2% 43.2% 35.7% 80.9% 31.3% 19.1% 18.5% 18.5% n.m 32.3% 25.4% 10.0% 33.4% YoY 168% 1501% 2278% -239% 28% 332% 833% 833% 891% 1353% 197% -10% 12MFY 11 192.3 17.5 16.7 (3.87) 0.7 12.8 12.1 15.1 n.m 9.1% 8.7% 6.6% 23.3% 12MFY10 116.1 (1.6) (2.2) 0.94 0.8 (1.2) (2.0) -2.6 0.0 -1.4% -1.9% -1.1% 43.3% YTD Chng 66% 1206% 869% 513% -11% 1140% 688% 688% n.m 768% 564% 728% 46%

Source: BIMB Securities

Income Statement
FY 31 Dec (RMm) Revenue Pretax profit Core Net profit Core EPS (sen) EPS growth (%) DPS (sen) NTA/ share (RM) Net gearing (x) PER (x) P/NTA (x) Net div. yield (%) EV/ EBITDA (x) ROE (%) 2009 98.8 -12.5 -12.0 -14.9 -216.4% 2.5 0.63 0.01 -13.0 3.1 1.3% -15.6 -23.5% 2010 116.1 -2.2 -2.0 -2.6 82.9% 0.0 0.63 NC -76.1 3.1 0.0% 196.9 -2.4% 2011 192.3 16.7 12.1 15.1 688.4% 0.0 0.78 0.01 12.9 2.5 0.0% 9.4 19.9% 2012E 287.2 32.3 23.7 29.6 96.5% 4.4 1.04 NC 6.6 1.9 2.3% 5.1 28.7% 2013E 366.5 42.9 31.6 39.5 33.4% 5.9 1.38 NC 4.9 1.4 3.0% 3.9 28.9%

Source: BIMB Securities

Balance Sheet
FY 31 Dec (RMm) Non Current Assets Current Assets Total Assets Current Liabilities Non Current Liabilities Shareholders' Fund Minority Interests Equity & Liabilities 2009 2010 2011 2012E 2013E

19.3 54.7 74.0 17.0 6.4 49.9 0.7 74.0

26.8 62.4 89.2 26.5 10.4 47.9 4.3 89.2

34.3 104.7 139.0 57.2 17.6 60.0 4.2 139.0

42.8 135.0 177.9 69.9 23.3 80.1 4.5 177.9

49.5 172.9 222.3 83.1 27.7 107.0 4.5 222.3

Source: BIMB Securities

www.bimbsec.com.my

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29 February 2012
DEFINITION OF RATINGS BIMB Securities uses the following rating system: STOCK RECOMMENDATION BUY OUTPERFORM TRADING BUY NEUTRAL TRADING SELL SELL

Results Review: Uzma 4QFY11

Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months The stock is expected to perform ahead of the market in the next 12 months The stock is expected to outperform the market in the next 3 months The stock is expected to perform in line with the market in the next 12 months The stock is expected to underperform the market in the next 3 months An expected price depreciation of more than 10% in the next 12 months

SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this and are subject to change without notice. BIMB Securities Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.

Published by

BIMB SECURITIES SDN BHD (290163-X) A Participating Organisation of Bursa Malaysia Securities Berhad Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2691 8887, Fax: 03-2691 1262 http://www.bimbsec.com.my

Kenny Yee Head of Research

www.bimbsec.com.my

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