KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) remains positive on Wasco Bhd's outlook due to its strong order backlog, tender pipeline and margins.
Maybank IB said Wasco's fourth quarter ended Dec 31, 2023 (4Q23) results came in within its expectations, and as such, it made no changes to its financial year 2024 to 2025 (FY24-25) estimated earnings forecasts.
"We deem Wasco's FY23 core net profit to be within our expectations but above consensus at 104 per cent, 106 per cent of ours and consensus full-year forecasts respectively.
"Valuations are undemanding as Wasco is poised for multi-year growth," it said in a note.
Maybank IB maintained a "Buy" call on Wasco, with an unchanged target price of RM1.55.
Wasco's mid-term outlook shows promising signs, including a healthy order book of RM3.1 billion as of the end of December 2023, primarily attributed to pipe-coating projects, along with a robust tender book valued at RM7 billion.
"We opine that Wasco should consider the sale of its non-core assets if the offer is compelling," it added.
For 4Q23, Wasco returned to the black with a net profit of RM35.22 million against a net loss of RM48.24 million a year ago, on the back of higher revenue as a result of a higher number of projects executed.
The synergy of these factors, coupled with a project mix boasting better margins, played a crucial role in achieving higher profitability, the company said in a statement.
Wasco registered a higher revenue of RM800.97 million compared to RM707.48 million previously. Earnings per share came in at 4.55 sen against a loss per share of 6.23 sen.
For the full year (FY23), Wasco registered a net profit of RM108.4 million against a net loss of RM6.3 million a year ago, while revenue rose to RM2.61 billion from RM2.37 billion.
Wasco said it concluded the year with a robust order book across all business divisions, maintaining a work-in-hand of RM3 billion as of the end of FY23.
The company has an order backlog of RM203 million in energy transitioning projects which includes the coating of pipelines for the carbon capture and storage sector.
Wasco recently upgraded its UK pipe coating facility at the Port of Hartlepool to offer additional coating services from the buoyant demand from this sector.
"This upgrade is set to conclude in March 2024, followed by a testing phase, with full-scale production commencing in April 2024," the company said.
Wasco also recently secured the first carbon capture and storage pipeline project in the UK last year to supply coating services for the Porthos Project.
