Uzma bags RM166m Petronas aviation job



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KUALA LUMPUR (May 25): Uzma Bhd today announced that it has secured two contracts from Petronas Carigali Sdn Bhd for the provision of aviation services, collectively worth RM166.5 million.

In its filing on Bursa Malaysia today, Uzma said its 40% associate company Sazma Aviation Sdn Bhd secured the two contracts from Petronas Carigali.

The first, worth RM12.5 million, is a six-month job to provide helicopter services for Petroliam Nasional Bhd’s (Petronas) well drilling campaign at the east coast of Sabah. Effective from May 15, the contract is expected to complete on Nov 14.

The second contract, valued at RM154 million, is for the provision of aviation services for five years to Petronas Sabah Operations. The contract, which will commence from March 23 this year and end in March 22, 2020, carries a one-year extension option.

Uzma said the contracts are expected to contribute positively to the earnings of the group for the financial year ending December 31, 2015 and in the future.

“The contract is expected to enhance net assets per share of the group for the financial year ending December 31, 2014 and future years,” it said.

However, Uzma (fundamental: 1.30; valuation: 1.50) cited project delays and low oil prices as its risk factors.

“The execution of the contract is depending on work orders to be issued by Carigali from time to time. It is the prerogative of Carigali to decide the timing on the requirement of the equipment and services. Hence, any delay in issuing work orders will lead to delay in revenue recognition.

“The key determinant factor for viability of offshore operations, of which aviation services is part of, is oil price. The project could become sub-economic if crude oil dipped below US$25 to US$30 per barrel,” it noted.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)