UMW (BUY) - O&G to turnaround in 2012!

UMW (BUY)

O&G to turnaround in 2012!

• UMW Oil & Gas division (O&G) has received a Letter of Amendment and Extension from Petronas Carigali (PCSB) for a 2-year extension of the Provision of Naga 3 Jack-up Drilling Rig, worth US$105m (RM315m).
• The contract value of US$52.5m pa (US$105m/2) is higher than our expectations of US$41.5m pa, indicating potential higher margins (higher earnings contribution) from Naga 3 in 2012-14.
• The contract extension has reaffirmed our view on the turnaround of Oil & Gas division and lead UMW’s growth in 2012.
• Maintain Buy on UMW with Target Price of RM8.25.

HLIB Research - 2 April 2012