Wah Seong gets to increase order book with African job

Wah Seong pipes coating (File picture)

PETALING JAYA: The recent win of a contract worth over RM1bil by Wah Seong Corp Bhd for pipeline thermal insulation services in Africa has increased its order book to over RM2.7bil.

It is not clear how the new project will impact the group’s earnings this year and going forward but it is a positive development for Wah Seong as it needs more contracts for sustainability of future profits.

More guidance and information are needed from the group before analysts can make any drastic changes to their earnings estimates and recommendations.

For now, HLIB Research said it is maintaining its “hold’’ recommendation for Wah Seong with an unchanged target price of 80 sen per share.

This is based on 0.8 time financial year (FY) 2022 price-to-book value (P/B), in line with its five-year historical pre-pandemic mean P/B.

The research house also maintained its earnings estimates pending the group’s fourth quarter FY21 results and analyst briefing to be held today.

Wah Seong’s indirect subsidiaries secured a provision of line pipe thermal insulation job worth US$254.1mil (RM1.06bil) for the East African Crude Oil Pipeline (EACOP) Project recently.

This project is located between the town of Kabaale in Uganda and the port of Tanga in Tanzania.

The research house said the work and services are expected to be completed within 30 months.

The EACOP is a 1,443km crude oil export pipeline that will transport Uganda’s crude oil from Kabaale – Hoima in Uganda to the Chongoleani peninsula near Tanga port in Tanzania. This would be used for the commercialisation of the discovered petroleum resources in Uganda via the least cost route for transporting Uganda’s crude oil to the coast.