Uzma Berhad (KLSE:UZMA): A Masterclass in Compounding Returns and Strategic Growth in Malaysia's Energy Sector

Uzma Berhad (KLSE:UZMA) has emerged as a standout performer in Malaysia's energy sector, delivering compounding returns that defy conventional expectations. Over the past five years, the company has achieved an average annual earnings growth rate of 63.4%, far outpacing the industry's 35.8%, according to Simply Wall St. This exceptional trajectory is not a product of luck but a result of deliberate strategic positioning and operational discipline.

Compounding Returns: A Formula for Sustained Growth

The mathematics of compounding is simple, yet its execution is rare. Uzma's ability to consistently reinvest capital into high-return projects has been pivotal. For FY2024, the company reported a 27% revenue increase to RM600.7 million and a 49% surge in net income to RM50.1 million, according to StockAnalysis. By FY2025, its earnings per share (EPS) had climbed to RM0.12, a 42.9% year-over-year jump per Simply Wall St. This momentum is further underscored by a rising return on equity (ROE), which climbed from 7.1% in FY2023 to 8.4% in FY2025, according to StockAnalysis, signaling improved capital efficiency.

The compounding effect is amplified by Uzma's focus on high-growth segments. For instance, the energization of the Large Scale Solar 4 (LSS4) project in its New Energy division during Q3 2025 drove a 58.1% year-over-year revenue surge in that quarter, as reported by StockAnalysis. Such projects not only diversify revenue streams but also align with global decarbonization trends, ensuring long-term relevance.

Strategic Positioning: Dual-Engine Growth in O&G and Renewables

Uzma's strategic duality-balancing its traditional Oil & Gas (O&G) operations with aggressive expansion in renewable energy-has been a masterstroke. In FY2024, the O&G segment benefited from higher commodity prices and increased exploration activities, while the New Energy division capitalized on Malaysia's push for clean energy, according to Chenpak. This dual-engine model mitigates cyclical risks and creates a floor for earnings even during downturns.

The LSS4 project, a 50 MW solar farm, exemplifies this forward-thinking approach. By Q3 2025, it had contributed to a 215.7% increase in Profit Before Tax, demonstrating the scalability of renewable assets, per StockAnalysis. Such initiatives position Uzma to capture Malaysia's target of generating 23% of its electricity from renewables by 2035, a market expected to grow at a CAGR of 12% over the next decade, as noted by Chenpak.

Operational Efficiency: The Unsung Driver

While top-line growth is impressive, Uzma's bottom-line performance is equally compelling. Its net profit margin expanded to 8.3% in FY2024 from 7.1% in FY2023, according to StockAnalysis, reflecting cost optimization and pricing power. This efficiency is critical for compounding returns, as every incremental percentage of margin directly boosts retained earnings.

The company's quarterly results further validate this trend. Despite a slight dip in Q2 2025 EPS (RM0.028 vs. RM0.033 in Q2 2024) per Simply Wall St, the annualized growth rate remains robust at 6.82%, according to StockAnalysis. This resilience underscores Uzma's ability to navigate short-term volatility while maintaining long-term momentum.

Future Outlook: A High-Conviction Play

Looking ahead, Uzma's growth trajectory appears well-supported. Its ROE of 8.37% in Q1 2025, per StockAnalysis, suggests continued capital allocation discipline, while its strategic alignment with Malaysia's energy transition offers a tailwind. Analysts at Chenpak note that the company's "operational leverage and project pipeline position it to outperform peers in both volume and margin expansion."

For investors, the key question is not whether Uzma can grow-but how much. With a compounding engine fueled by dual-sector exposure, disciplined capital deployment, and a clear vision for sustainability, Uzma Berhad is not just surviving in Malaysia's competitive energy landscape-it is redefining the rules of the game.