KUALA LUMPUR (Nov 26): Hong Leong IB Research (HLIB) has downgraded Uzma Bhd to Hold (from Buy ) with a lower target price of RM2.75 (from RM3.66) and said the company’s 3Q financial results were below expectation mainly due to lower activities for oilfield services coupled with drilling campaign for RSC to commence only in 1Q15.

In a note Wednesday, the research house said Uzma’s 3Q quarter-on-quarter PATAMI margin improve from 8% to 10% mainly due to the tax incentive given by MIDA for acquisition of MMSVS.

“FY14 and FY15 earnings are reduced by 18% and 12% respectively.

“Although we still like the company in the long run, we are cautious on the near term outlook amidst lower oil price and lack of contract newsflow in next 3-6 months. 

“Thus, we downgraded our call from Buy to Hold with target price reduced from RM3.66 to RM2.75, based on lower P/E of 12 x (versus 14 previously) post earnings adjustment,” it said.