KENANGA RESEARCH

03 September 2012

Results Note

Uzma Bhd
1H12 within expectations
Period Actual vs. Expectations

OUTPERFORM
Price: Target Price:
Share Price Performance
1.60

RM1.54 RM2.04

2Q12/1H12 Uzma Bhds (UZMA) 2Q12 net profit of RM5.3m brought its 1H12 net earnings to RM10.3m. This is the 8th consecutive quarter of profits since its turnaround in 3Q10. The commendable set of 1H12 net earnings were within expectations and made up 45% and 44% of the streets estimate and our forecast of RM22.3m and RM22.8m respectively. No dividend was declared as expected. QoQ, the 2Q12 net profit rose by 10% from RM4.8m in 1Q12, on the back of revenue growth of 26% to RM69.9m, from RM55.3m previously, and also operating profits of RM6.9m (+23% QoQ) posted by all its business segments. Net margin was marginally lower QoQ by 1%, which we believe this may due to the kicked-started of the RM350m 5-year Petronas Drilling Programme in 2Q12. YoY, the 2Q12 net profit surged by 85% from RM2.9m in 2Q11, led by a 75% growth in revenue (from RM40.0m in 2Q11). The growth in business was mainly due to UZMA having secured a few sizable long term contracts from oil majors with a total of RM720m since 2Q11. YTD, the 1H12 net income doubled to RM10.1m from RM4.9m registered in 1H11. This was on the back of a 57% hike in revenue to RM125.2m from RM75.2m in 1H11, including the positive contribution from its new JCE Setagap Venture Petroleum (SVP). Out of the RM10.1m, SVP contributed RM1.6m of the 1H12 earnings. We believe that UZMA is set to deliver a stronger 2H12 as two additions of UzmAPRES (7th and 8th units) are scheduled to be deployed in the near term. The 7th unit is remobilized to be an alternative platform as the initial platform faced technical challenges. Additionally, SVPs 1H12 earnings contribution is well on track as its annualised earnings contribution is expected at RM3.6m for FY12. Maintaining our FY12-14E RM22.3m-RM34.0m MAINTAIN OUTPERFORM net incomes of

1.40

1.20

1.00 Aug11

Oct11

Dec11

Feb12

Apr 12

Jun12

Aug12

Dividends Key Results Highlights

KLCI YTD KLCI chg YTD stock price chg

1,646.11 7.5% 36.7%

Stock Information
Bloomberg Ticker Market Cap (RM m) Issued shares 52-week range (H) 52-week range (L) 3-mth avg daily vol: Free Float Beta UZMA MK Equity 203.3 132.0 1.59 1.01 116,068 38% 0.8

Major Shareholders
MUHAMED KAMARUL REDZ SHAH ROZITA MAT LEMBAGA TABUNG HAJI 44.9% 9.6% 7.7%

Summary Earnings Table

FYE Dec (RM m) Turnover EBIT PBT Net Profit (NP) Core Net Profit Consensus (NP) Earnings Revision Core EPS (sen) Core EPS growth (%) GDPS (sen) NTA/Share (RM) Core PER Price/NTA (x) Gearing (x) Dividend Yield (%) 2012E 293.0 32.0 31.0 22.3 22.3 22.8 16.9 85.1 0.0 0.93 7.88 2.15 0.32 0.0 2013E 339.0 36.0 41.0 30.0 30.0 30.0 22.7 22.0 0.0 1.27 5.88 1.57 0.00 0.0 2014E 344.0 36.0 44.0 34.0 34.0 32.2 26.2 14.9 0.0 1.66 5.11 1.20 N.Cash 0.0

Outlook

Change to Forecasts Rating Valuation

We are upgrading our target price to RM2.04 (RM1.70 previously) based on 9.0x PER on our FY13E EPS estimate of 22.7 sen. The higher implied PER (vs. 7.5 previously) is supported by the groups sustainable profits recovery trend. Delays in the deployment of its upcoming UzmAPRES units due to clients requests. Declining global crude oil price trend that will discourage O&G activities.

The Research Team research@kenanga.com.my Tel: 603-2713 2292

Risks

PP7004/02/2013(031762)

KENANGA RESEARCH

Uzma Berhad
Income Statement Y/E : Dec (RMm) Turnover Gross Profit EBIT Interest expense JCE Exceptional items Pretax profit Taxation Proft after tax Minority interest Net profit EPS (sen) EBIT margin Pretax margin Net Margin Effective tax rate 2Q FY12 69.9 13.9 6.9 (0.3) 0.6 0.0 7.2 (1.6) 8.8 (0.3) 5.3 4.0 10% 10% 8% 22% 1Q FY12 55.3 12.3 5.6 (0.5) 1.0 0.0 6.1 (1.3) 7.4 0.0 4.8 3.6 10% 11% 9% 21% Q-o-Q Change 26% 12% 23% -32% -35% N.M. 18% 24% 19% N.M. 10% 10% 2Q FY11 40.0 8.7 3.1 (0.3) (0.0) 0.0 2.8 0.3 2.5 (0.2) 2.9 2.2 8% 7% 7% 10% Y-o-Y Change 75% 59% 123% 14% N.M. N.M. 156% -659% 250% 24% 85% 85% 6M FY12 125.2 26.2 12.5 (0.8) 1.6 0.0 13.3 (2.9) 16.3 (0.3) 10.1 7.7 10% 11% 8% -22%

03 September 2012

6M FY11 75.2 17.5 6.0 (0.5) 0.0 0.0 5.5 (0.3) 5.9 (0.3) 4.9 3.7 8% 7% 6% -6%

Y-o-Y Change 67% 50% 108% 64% N.M. N.M. 141% 815% 178% -19% 108% 108%

Source: Company
Segment Breakdown Y/E : Dec (RMm) Services Trading Group revenue Services Trading Group EBIT Services Trading Group EBIT margin 2Q FY12 65.0 4.9 69.9 6.1 0.8 7.0 9% 17% 10% 1Q FY12 50.3 5.0 55.3 5.2 0.5 5.7 10% 10% 10% Q-o-Q Change 29% -2% 26% 19% 68% 23% 2Q FY11 33.1 7.0 40.0 2.5 0.7 3.2 8% 10% 8% Y-o-Y Change 97% -30% 75% 145% 25% 119% 6M FY12 115.3 9.8 125.2 11.3 1.4 12.6 10% 14% 10% 6M FY11 61.8 13.3 75.2 5.2 0.9 6.1 8% 7% 8% Y-o-Y Change 87% -26% 67% 117% 50% 107%

Source: Company

Malaysian Oil & Gas Sector Comparisons

Company Price (RM) CY11 Alam Maritim Coastal Contract Dialog KNM MMHE Petronas Chemicals SapuraKencana Petroleum Seremban Engineering Wah Seong Uzma Yinson Simple Average 0.54 1.82 2.36 0.69 4.83 6.50 2.37 0.49 1.83 1.56 2.00 32.9 4.6 34.5 -10.5 23.1 14.6 28.5 9.7 11.5 10.7 15.0 18.5 PER(x) CY12 6.8 5.9 28.0 12.5 22.1 13.8 20.2 6.9 11.9 6.2 14.5 13.5 CY13 4.7 5.4 24.1 8.4 18.7 12.6 16.2 5.8 11.4 4.6 8.7 11.0 Est. Div. Yld. (%) 0.9 3.4 1.5 0.7 2.8 4.4 4.7 3.1 2.7 2.4 0.9 His. ROE (%) 5.9 27.8 28.7 -3.5 8.7 14.1 25.7 6.0 11.4 22.4 19.6 His. P/BV (x) 1.2 1.3 8.4 5.6 3.5 3.0 4.3 0.6 1.7 2.8 1.3 NP Growth (%) CY12 380.1 -22.3 22.9 184.1 4.6 6.3 40.8 40.0 -3.6 72.1 3.5 CY13 44.8 9.8 16.5 48.1 18.2 9.0 24.5 19.6 4.4 36.4 66.5 1.14 2.53 2.79 0.73 4.22 7.46 2.79 0.59 2.23 2.04 2.68 OP OP OP MP UP OP OP OP OP OP OP Target Price (RM) Rating

Source: Kenanga Research

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KENANGA RESEARCH

Uzma Berhad
Income Statement
FY Dec (RM m) Revenue EBITDA Depreciation Operating Profit Other Income Interest Exp Associate Exceptional Items PBT Taxation Minority Interest Net Profit Core Net Profit 2010A 116.1 0.0 -1.6 -1.6 -0.5 0.0 0.0 0.0 -2.1 0.9 -0.8 -2.0 -2.0 2011A 192.3 19.4 -1.8 17.5 -0.9 0.0 0.0 0.0 16.7 -3.9 -0.7 12.1 12.1 2012E 293.4 33.8 -2.1 31.7 -0.9 0.0 0.0 0.0 30.8 -7.7 -0.7 22.3 22.3 2013E 339.2 39.9 -4.0 35.9 -0.9 0.0 6.0 0.0 41.0 -10.2 -0.8 30.0 30.0 2014E 344.0 40.5 -4.3 36.2 0.0 0.0 8.0 0.0 44.1 -8.8 -0.8 34.5 34.5

03 September 2012
Financial Data & Ratios
FY Dec (RM m) Growth Turnover (%) EBITDA (%) Operating Profit (%) PBT (%) Core Net Profit (%) Profitability (%) EBITDA Margin Operating Margin PBT Margin Core Net Margin Effective Tax Rate ROA ROE DuPont Analysis Net Margin (%) Assets Turnover (x) Leverage Factor (x) ROE (%) Leverage Debt/Asset (x) Debt/Equity (x) Net Cash/(Debt) Net Debt/Equity (x) Valuations EPS (sen) GDPS (sen) NTA (RM) PER (x) Gross Div. Yield (%) P/NTA (x) EV/EBITDA (x) 2010A 17.5 -101.2 -86.2 -83.1 -83.3 0.1 -1.4 -1.8 -1.7 44.4 -2.2 -4.2 -1.7 1.30 1.86 -4.2 0.13 0.11 0.3 -0.01 -1.5 0.0 0.35 N.M. 0.0 4.39 N.M. 2011A 65.6 15780.8 -1183.5 -888.8 -705.0 10.1 9.1 8.7 6.3 23.3 8.7 20.1 6.3 1.38 2.32 20.1 0.21 0.20 -3.2 0.05 9.1 0.0 0.50 16.86 0.0 3.07 10.7 2012E 52.6 79.4 80.7 84.7 85.1 11.8 10.8 10.5 7.6 25.0 14.2 25.9 7.6 1.86 1.83 25.9 0.10 0.07 -27.4 0.32 16.9 0.0 0.78 8.87 0.0 1.97 5.9 2013E 15.6 20.2 13.3 33.2 34.2 12.3 10.6 12.1 8.8 25.0 15.0 25.8 8.8 1.70 1.72 25.8 0.09 0.09 0.6 0.00 22.7 0.0 1.01 6.61 0.0 1.53 3.9 2014E 1.4 1.4 0.3 7.4 14.9 12.3 10.5 12.8 10.0 20.0 13.9 22.8 10.0 1.39 1.64 22.8 0.07 0.07 47.6 -0.32 26.2 0.0 1.49 5.74 0.0 1.01 4.9

Balance Sheet
FY Dec (RM m) Fixed Assets Intangible Assets Other FA Inventories Receivables Other CA Cash Total Assets Payables ST Borrowings Other ST Liability LT Borrowings Other LT Liability Minorities Int. Net Assets Share Capital Reserves Equity 2010A 19.2 5.5 2.0 5.3 28.3 17.2 11.6 89.2 12.1 3.1 11.4 8.3 2.2 4.3 47.9 40.0 7.9 47.9 2011A 28.7 5.5 0.1 5.4 60.5 13.2 25.3 138.7 8.6 15.4 36.8 13.2 0.5 4.2 60.0 40.0 20.0 60.0 2012E 53.4 5.5 0.1 12.1 68.3 34.1 -13.2 160.3 30.0 5.6 25.2 9.6 0.5 3.1 86.3 66.0 20.3 86.3 2013E 54.4 5.5 0.1 13.9 74.4 39.2 14.9 202.4 34.9 7.6 27.9 9.6 2.3 3.9 116.2 66.0 50.2 116.2 2014E 55.1 5.5 0.1 14.1 75.4 39.7 60.0 249.9 42.2 7.6 33.7 9.6 2.3 3.7 150.8 66.0 106.8 150.8

Cashflow Statement
FY Dec (RM m) Operating CF Investing CF Financing CF Change In Cash Free CF Capex 2010A -11.7 -7.1 6.3 -12.5 -18.9 0.0 2011A 35.0 -3.3 4.9 36.5 31.7 -7.5 2012E 33.8 5.7 11.9 51.4 39.5 -12.0 2013E 33.9 12.0 6.0 51.9 45.9 -10.0 2014E 33.9 8.9 8.9 51.7 42.7 -11.0

Source: Kenanga Research

Forward PER
3.00 RM
PRICE (RM) 8.0 x 10.0 x 12.0 x 14.0 x 16.0 x

Forward PBV
4
PRICE (RM) 1.5 x 2.0 x 2.5 x 3.0 x 3.5 x

2.50

3
2.00

2
1.50

RM 2 1 1
Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12

1.00

0.50

0.00 Aug-10

0 Aug-08

Feb-09

Aug-09

Feb-10

Aug-10

Feb-11

Aug-11

Feb-12

Aug-12

Source: Kenanga Research

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KENANGA RESEARCH

Stock Ratings are defined as follows: Stock Recommendations OUTPERFORM : A particular stocks Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). A particular stocks Expected Total Return is WITHIN the range of 3% to 10%. A particular stocks Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate).

MARKET PERFORM : UNDERPERFORM :

Sector Recommendations*** OVERWEIGHT NEUTRAL UNDERWEIGHT : : : A particular stocks Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). A particular stocks Expected Total Return is WITHIN the range of 3% to 10%. A particular stocks Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate).

***Sector recommendations are defined based on market capitalisation weighted average expected total return for stocks under our coverage.

This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees. Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies. Published and printed by: KENANGA INVESTMENT BANK BERHAD (15678-H) 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Telephone: (603) 2166 6822 Facsimile: (603) 2166 6823 Website: www.kenangaresearch.com Chan Ken Yew Associate Director

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KENANGA RESEARCH