Wasco optimistic about its pipe-coating business

Wasco managing director and group chief executive officer Gian Carlo Maccagno.

PETALING JAYA: Wasco Bhd is confident about the outlook for its pipe coating, engineering and fabrication and biomass energy segments.

Chief strategy officer Ariesza Noor said the group’s outlook is underpinned by its strong order book of RM3.2bil.

To date, Wasco also has a tender book of RM7.25bil, as well as a potential market size of RM13bil.

“Potentially, if all of that translates into our future revenue, we are looking at very strong years ahead of us in the next 12 to 26 months.

“We are very bullish for the next three to five years, now that the demand for our product and services is growing,” she said during a media briefing at Wasco’s Investor Day at Kuala Lumpur yesterday.

To date, revenue contribution to the group’s pipe coating, engineering and fabrication, as well as bioenergy segments stands at 40%, 40% and 20%, respectively.

According to Ariesza, there are opportunities for its pipe coating business as demand continues to be driven by the traditional oil and gas market.

Citing the Global CCS Institute, she said the increasing growth in demand in the area of carbon capture and hydrogen is underpinned by the 200,000km worth of pipelines needed to support the 70 to 100 carbon capture and storage (CCS) facilities globally, to reach climate targets.

“It is the most common and economical way for you to transport carbon via pipelines. So, for this particular market, we are looking at 200km of pipelines,” she said.

Ariesza said the development of CCS by Petroliam Nasional Bhd (PETRONAS) as well as the demand in the carbon capture, utilisation and storage (CCUS) market, in line with the global energy transition, is an opportunity that Wasco intends to capture.

It should be noted that PETRONAS plans to operate three CCS hubs in Malaysia, namely in Kerteh, Terengganu; Kuantan, Pahang; and Bintulu, Sarawak.

On Wasco’s engineering and fabrication front, Ariesza said the potential market scope is close to US$14bil, adding that sustained growth is expected for the next two decades.

“In the short term, in the three to five-year window, we are looking at a huge opportunity for our engineering and fabrication division as demand for the traditional oil and gas sector continues to grow over the next two decades and more,” she said.

The National Energy Transition Roadmap outlines several targets, including increasing bio refinery capacity to 3.5 billion litres and increasing biomass power generation capacity to 1.4GW by 2050.

That said, Ariesza said there is a big potential for Wasco, especially in its biomass energy segment, as Malaysia continues to look into reducing carbon emissions and increasing renewable energy.

“Biomass waste is a huge potential for Malaysia that is untapped. We believe that with our solid track record, remarkable growth and bioenergy services are setting new standards for the industry,” she added.

On its financials, Wasco posted a significant growth in net profit to RM57mil for its first quarter ended March 31, 2024 (1Q24), which reflected a basic earnings per share of 7.36 sen.

Meanwhile, revenue increased to RM643.94mil, a 21.14% year-on-year hike from RM531.57mil in the same period last year.

The increase was attributable to the higher revenue from all business segments, especially from the energy services business, which contributed RM473.6mil during the quarter.

Wasco share price recently hit a four-year high on May 29, rising 47.74% year-to-date to RM1.57.

When asked to comment on its share price, Wasco managing director and group chief executive officer Gian Carlo Maccagno said he would continue to drive profitability for the company, environmental, social and governance initiatives, which would have an effect on the share price.

“I think we should not be distracted by the share price at any particular point in time. We will keep concentrating on efficiency, driving the business, increasing earnings and eventually the share price will follow,” he told StarBiz.

The stock closed at RM1.47 yesterday.

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