Recently, Roth Capital initiated a research report on OMS Energy Technologies (NASDAQ: OMSE), a Singapore-based company focusing on the R&D and production of surface wellhead systems (SWS) and oil country tubular goods (OCTG). Roth Capital initiated the company "Buy" rating with a 12-month target price of US$10. On 24 July, OMSE announced its 2025 fiscal year earnings results, and its stock price surged by more than 8% after the results was announced, closing at US$7.18, which still has nearly 40% upside potential compared to its target price.

OMSE's business mainly involves the exploration and production infrastructure for the oil and natural gas industry, namely SWS and OCTG. Its products are widely used in onshore and offshore oilfield exploration and production (E&P) activities in the Asia-Pacific region, the Middle East, and North Africa. Currently, the company has 11 manufacturing facilities strategically located in oil and gas service hubs across 6 jurisdictions. It also has finishing facilities near some of its top end-users' E&P operations, including in Saudi Arabia where its largest client Saudi ARAMCO Oil is located.

On 24 July, OMSE announced its full year earnings results ended March 31, 2025. The company recorded revenue of approximately US$204 million with operating profit of approximately US$60 million. Both marked a year-on-year significant growth. Besides, the company has ample cash on hand, reaching US$75.8 million as of March 31, 2025.

Notably, due to a restructuring carried out before 2023, where the management team conducted a buyout from major shareholder, the company booked a NAV premium of US$49.4 million according to international accounting standards in 2024FY, resulting in operating profit of over $80 million recorded for the 2023/2024 fiscal year. Excluding the one-off NAV premium, operating profit in fiscal year 2024/2025 is US$59.9, showing a significant year-on-year increase from US$43.4 million in fiscal year 2023/2024.

Saudi Aramco Oil orders provide 10-year revenue stream

According to Roth Capital's forecast, OMSE will maintain a remarkable growth in the next few years. This is mainly due to the company's acquisition of new orders in Angola and Thailand, marking significant progress in expanding its global business. An even greater growth driver comes from the 10-year supply agreement signed by OMSE with Saudi ARAMCO Oil (TADAWUL: 2222) at the beginning of 2024, which is expected to generate US$120 million to US$200 million in annual income. In the future, there is a good chance to further expand its business coverage or market share through mergers and acquisitions, continuously enhancing profitability. The company has invested $1.1 million in R&D for metal seals used in high-pressure and high-temperature gate valves, and has completed the first phase of the project. This is expected to become a new stream of income in the future.

In summary, the company has strong fundamentals. Additionally, with the United States, which accounted for over 15.6% of global fossil energy demand in 2023, returning to the era of conventional energy, it is expected not only to drive the balance between supply and demand, support international oil prices, but also to boost oil production, benefiting many oilfield E&P infrastructure providers such as OMSE.

Finally, the United States' attempt to consolidate the dollar's dominant position in the international settlement system by expanding conventional energy transactions is bound to be a long-term trend. Goldman Sachs expects Brent crude oil prices to remain at $76 per barrel in 2025, which further reflects this potential U.S. influence. 

Whether in the short or medium term, the investment value of oilfield E&P infrastructure stocks is steadily increasing. According to Bloomberg data, the average P/E ratio of the global oilfield service and related oilfield equipment industry is 15x, while OMSE's current P/E ratio is only 5x, reflecting a significant lag in valuation. Finally, it is worth mentioning that the company has sufficient cash on hand and a stable business, and it is not ruled out that it will pay dividends in the future, which deserves more attention.