Wah Seong earnings likely to improve by 12%

“We raise our FY23-24 earnings estimates by 13% and 12% respectively to reflect this new job win from Yinson,” says HLIB Research.

PETALING JAYA: Wah Seong Corp Bhd (Wasco) remains a “buy” with analysts due to the RM558mil contract clinched on Wednesday as it will provide earnings visibility and growth into financial year 2023 (FY23).

The floating production, storage and offloading (FPSO) topside modules related contract award by Yinson Azalea Production Pte Ltd, a unit of Yinson Holdings Bhd, takes Wasco’s existing order book value to RM3.5bil. Works on the project are scheduled to be completed within 24 months.

“Assuming a rough 10% net margin for the job (engineering and fabrication jobs typically fall within this range) implies an average net earnings impact per year of roughly RM27mil,” Kenanga Research noted in a report on the oil and gas support services company.

The contract would be one of Wasco’s largest FPSO-related jobs secured to-date and the second largest single-job currently in their order book – just behind the east African crude oil pipeline project worth US$254mil (RM1.1bil) that was secured earlier in the year.It raised Wasco’s FY23 earnings by 12% to account for the stronger job replenishment and set a higher target price (TP) of 89 sen (from 80 sen previously) for Wasco.

The valuation is pegged to unchanged valuations of nine times its price to earnings multiple.

HLIB Research, meanwhile, maintained its “buy” call on Wasco with a higher TP of 96 sen a share (based on 10 times FY23 earnings per share) as it also penciled-in a 7% to 10% profit margin for the FPSO job over the 24 months duration.

“We raise our FY23-24 earnings estimates by 13% and 12% respectively to reflect this new job win from Yinson,” HLIB said in a report yesterday.

Article type: free
User access status:
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

WahSeong , earnings , FPSO , orderbook


Next In Business News

Digi.Com proposes change of name to CelcomDigi Bhd
PETRONAS, ExxonMobil to jointly develop carbon capture projects
AirAsia X posts 324% rise in passengers to 337k
Measat inks MoU with Parcel365 and M2B Services on Digital Village365 initiative
HeiTech Padu bags RM38.6mil contract from MOHE
FBM KLCI continues losing streak, down for third day
Oil prices advance on US growth, Chinese recovery hope
Akio Toyoda set to remain a force at Toyota, even as he bows out
Asian FX, stocks rise as strong U.S. GDP data aids risk sentiment
Asian equities hit 9-month high as recession fears wane

Others Also Read