Uzma has announced the acquisition of Premier Enterprise Corporation (M) Sdn Bhd (PEC), for RM18.6m cash consideration.The Group entered into an agreement with Abdul Shuhaimi Bin Abdul Karim and Rafiah Binti Ibrahim (vendor) yesterday, for the acquisition of the entire issue and paid up share capital of PEC. In addition to the purchase consideration, the vendor will be entitled to an additional purchase price of RM2.0m from Uzma, upon receipt of award for the extension of current contracts for chemical supplies, expiring in October 2015 and January 2016. As Uzma is currently providing similar services to the O&G segment, we believe PEC would strengthen the Group‟s activities in the oilfield chemical area, coupled with a wider clientele base. By combining both PEC‟s expertise together with the Group, could also enhance operational efficiencies through lower costs of operations via economies of scale. In line with Uzma‟s strategy to build-up as an integrated O&G service provider, PEC would enhance its earnings, considering the steady performance it has delivered thus far. The completion of the acquisition is expected within one month.
The Acquistion. PEC is principally engaged in the business of O&G services, specialising in the trading of chemical and other commodities in oil refinery. The company‟s market share in the oilfield production and refinery specialty chemicals and supplies are for spare parts of O&G upstream business. Uzma believes that PEC‟s activities can be further improved with active participation of its complementing products and services offered.
Funding. The acquisition is expected to be funded by internally generated funds. With Uzma‟s low gearing of 0.2x coupled with c.30m cash levels, should see no issue in generating funds.
Financial effects. There will be no material effect on the Group‟s net assets per share, gearing, share capital and substantial shareholders
shareholding in the company. We can only expect higher EPS for the Group FY14 onwards from PEC‟s positive contribution.
Maintain Outperform. We have not accounted for PEC‟s estimates in our valuations, as we await further details of its financials. That aside, we continue to anticipate for further „special projects‟, in activities such as brownfield rejuvenation and RSC works going forward. To-date, Uzma‟s secured orderbook is about RM1.8bn, to last until 2017, and its bid book is estimated to be about RM2.8bn.
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