KUALA LUMPUR (June 4): Hong Leong IB Research has maintained its “Sell” rating on Uzma Bhd at 71 sen with a lower target price (TP) of 63 sen (from 70 sen) and said that Uzma’s management remains upbeat about its outlook especially on rising work orders from its existing businesses as well as potential win from new projects.

In a note today, the research house however said it was still cautious on Uzma’s operating cost and stretched finances (net gearing of 0.96x as of 3QFY19) upon aggressive expansion.

“The choice of partner for the new solar projects, in our view, would be a key determinant factor given that Uzma is new in the business.

“All in, we reduced our FY20/21 earnings estimates by 11%/10% on higher cost base and reiterated Sell rating with lower TP of 63 sen (from 70 sen previously), pegged to 9x FY20 P/E,” it said.