KUALA LUMPUR: Wah Seong Corp Bhd may see some positives in the medium term that should help bolster its performance.
This include jobs that are being executed in the next two to three years and potentially new job wins, including those in the new energy segments.
Hong Leong Investment Bank (HLIB) Research stated Wah Seong will be bidding for three major tenders in its energy solutions division and four major tenders in its renewable energy (RE) division, which may lead to more contract job win announcements in the second half of this year.
“We are convinced that financial year 2023 (FY23) and FY24 will be strong bumper years for Wah Seong,” the research house said in a report yesterday.
Wah Seong’s performance will be driven by the East African Crude Oil Pipeline (EACOP) thermal insulation job which has a contract value of some RM1.1bil, and remains its single largest job win since the Nord Stream 2 project in 2016.
There may be an accelerated recognition from this African job win moving forward, the research house said.
It also has the RM558mil engineering, procurement and construction of the Agogo floating production system. “We expect Wah Seong to register better profits in the upcoming quarters,” HLIB Research said.
“Despite its first quarter (1Q) net profit only coming in at 18% of both its and consensus full-year estimates, respectively, we deem the results to be broadly within expectations,” it added.
HLIB Research noted Wah Seong’s core net profit more than doubled year-on-year on improved results from its energy solutions division.
“We believe this is due to a ramp-up in construction revenue for its RM1.1bil EACOP project and the coating plant project in Qatar and the stronger performance from its RE division – as the group had a higher number of projects executed and increased equipment/after-sales services,” it said.
HLIB Research said Wah Seong’s current order book was at RM3.5bil at the end of 4Q of 2022, while its tender book was at some RM5bil. It has maintained its “buy” call on Wah Seong with an unchanged target price of 96 sen a share or a 10 times FY23 forecast earnings per share.
