PublicInvest maintains Neutral on Wah Seong, lowers TP to 74 sen

KUALA LUMPUR: Wah Seong Corp Bhd's 1QFY19 revenue and core profit of RM683.8mil and RM19.1mil respectively came in within full-year expectations, said PublicInvest research.

Moving forward, it expects earnings to deteriorate due to the Nord Stream 2 project coming to its tail-end.

"The Group’s major oil and gas project - NS2 which was valued at EUR600m is currently progressing at >80% completion, on track to complete in 2Q and 3Q this year as it involves 2
different locations," it said.

PublicInvest also noted a depleting order book, which is enough to sustain the company for the current financial year. 

The research house added that the tenderbook of about RM6bil might only yield contract awards in 2H of this year, which means contribution would come in next year 

"Earnings visibility may be at risk.While we are maintaining our forecasts at this juncture in anticipation of replenishments, our TP is lowered to RM0.74 as we reduce our earnings multiple to 8x over its FY20F EPS of 9.2sen," said PublicInvest, while maintaining its neutral call on the stock.
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