PETALING JAYA: Wasco Bhd
is ripe for a re-rating given its improving growth outlook, says CGS International (CGSI) Research, as the group benefits from three strengthening structural growth themes spanning energy security, Middle East opportunities and the energy transition.
The research firm said Wasco stands to benefit from the renewed global focus on energy security, which continues to support demand for its core engineering, procurement and construction (EPC) businesses, including process modules, gas compressors and pipe coating services.
It added that the group’s assets in the Middle East place it in a strong position to participate in potential infrastructure rebuilding activities across the region.
“Wasco’s strategically located assets in Qatar and Dubai positions the group well to participate in eventual infrastructure rebuilding activities across the Middle East once geopolitics normalise,” the research house noted.
Former investment banker-turned high-net-worth investor Ian Yoong Kah Yin said Wasco could benefit from rising global pipeline investments, noting that the group is among the world’s largest pipe coating companies.
“With all the oil and gas pipelines needed to bypass the Strait of Hormuz, there should be greater demand,” Yoong told StarBiz, adding that the business is highly specialised, where reliability and leak prevention are critical.
He described the stock as still undervalued, estimating a fair value of around RM1.25 over a 12-month horizon.
Beyond its core EPC services, CGSI Research also highlighted that Wasco’s exposure to energy transition-related projects is scaling up meaningfully, with these jobs accounting for 51% of its order book in the fourth quarter ended Dec 31, 2025 (4Q25), compared with 15% in 4Q23.
This is underpinned by its track record in renewable energy, carbon capture and storage, and modular infrastructure projects globally.
“Collectively, we expect these themes to drive strong order book replenishment opportunities, supported by its tender book of about RM12bil as at 4Q25,” it noted.
CGSI Research also pointed to new growth opportunities in the Middle East data centre (DC) space following the group’s memorandum of understanding, signed on May 6, with NMDC Energy, a subsidiary of the United Arab Emirates’ largest EPC group.
“This partnership will provide the group access to NMDC’s project pipeline and client network across the Gulf region,” it said.
The research house added that Wasco’s new fabrication yard in Dubai further strengthens its ability to meet local content requirements and positions the group to capture opportunities in the fast-growing Middle East DC buildout.
Looking ahead, CGSI Research maintained its positive longer-term outlook on the group, despite trimming its financial year 2026 (FY26) earnings forecast by 23% due to geopolitics-related project execution delays and margin compression caused by cost inflation.
The research house kept its FY27 earnings forecast largely unchanged and raised its FY28 earnings estimate by 17% on expectations of stronger order book replenishment and improving growth prospects.
Following the revisions, CGSI Research raised its target price on Wasco by 10 sen to RM1.75 per share.
