WSC Wins $35M Contract in Basra

PublicInvest Research is concerned about Wah Seong Corporation’s fast depleting order book which can only sustain the company for the next one to two financial years, despite the recent US$34.5mil (RM135.2mil) contract by Basrah Gas Company.

It said the order book is currently at RM2.8bil, comprising job scope across all activities, led by the oil and gas portion (89%).

“This can last the group for the next one to two financial years. Its order book replenishment could however be supported by sizeable tender book value of RM4.2bil,” it said.

Last Friday, Wah Seong’s indirect subsidiary, PT. Wasco Engineering Indonesia (PTWEI) secured a US$34.5mil contract from Basrah Gas. This is for the design, packaging and sale of gas compressor packages and associated plant and site facilities.

The contract is expected to start in March 2018 and is to be completed by end of 2018. This will be Wah Seong’s first contract win in 2018. The last contract it won was in July 2017.

“We, therefore, maintain our Neutral recommendation on Wah Seong with target price of RM1.57 pegged to price-to-earnings ratio of 12 times to FY18 EPS of 13.1 sen,” it said.