KUALA LUMPUR: Public Investment Bank Research reaffirmed its Outperform call on Wah Seong Corp Bhd as it expects the group’s performance to be boosted by higher oil price levels, coupled by its RM3.6bil orderbook.
The research house said it continued to recommend Wah Seong with a target price of RM1.00 pegged to 8x PE and FY17F earnings per share of 12.5sen.
“The stock has limited downside as the group’s performance should be boosted by the higher, stable oil price levels which are expected to encourage new projects, coupled with its execution capabilities supported by its current RM3.6bil orderbook as at 3QFY16,” it said in a note on Thursday.
Wah Seong recently announced that its indirect unit Wasco Coatings Germany GmbH (WS Germany) had on February 14, 2017 entered into a Share Purchase Agreement (SPA) with mutares AG for the acquisition of a 100% equity interest in mutares Holding-16 AG for EUR19.5mil to facilitate in the Nord Stream 2 Project.
“We are confident of the prospects of the Group, having had concerns that this major project could be subject to funding issues.
“We understand that the project, as per the requirements of the Nord Stream 2 contract, will be funded through project financing by the customer, Nord Stream, with this particular acquisition further reinforcing views that progress is well underway,” it noted.
Nord Stream 2 is a planned pipeline through the Baltic Sea, which will transport natural gas over 1,200km from the world’s largest gas reserves in Russia via the most efficient route to consumers in Europe.
It involves two parallel 48 inch lines, each starting from southwest of St Petersburg (a Russian port city on Baltic Sea) and ending at German coast, Greifswald.
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