KUALA LUMPUR: Public Investment Bank (PublicInvest) Research said it remains concern on the fast depleting order book of Wah Seong Corporation Bhd (WSC) which can only sustain the company for the next one to two financial years.
This is despite WSC’s recent RM135.2 million contract win secured by its indirect wholly owned subsidiary from Iraq’s Basrah Gas Company.
PublicInvest said WSC’s orderbook is currently at RM2.8 billion, comprising job scope across all activities, led by the oil and gas portion (89 per cent).
It said WSC’s orderbook replenishment could however be supported by sizeable tenderbook value of RM4.2 billion.
On Friday, WSC’s indirect subsidiary, PT Wasco Engineering Indonesia, has been awarded the contract, for the design, packaging and sale of gas compressor packages and associated plant and site facilities.
The contract is expected to commence in March 2018 and is to be completed by end of 2018.
PublicInvest said it made no adjustment to WSC’s earnings projections as the value of this new contract is within its orderbook replenishment assumption.
“We remain concern on the slow orderbook replenishment of Wah Seong as this contract would be its first since July 2017.
“It could reflect the risk adverse stance of oil majors especially when oil prices have remained sticky,” it said.
PublicInvest has maintained its “neutral” call on WSC with target price of RM1.57.