Friday, June 4, 2010

OSK Research lowers target price for Wah Seong to RM2.85

KUALA LUMPUR: OSK Research has maintained its buy call on Wah Seong Corp at RM2.21 but lowered its target price to RM2.85 (from RM3.35).

It said Wah Seong's 1QFY10 results were below expectations, mainly due to the lower revenue generated in the engineering, renewable energy and E&P services divisions, although this was offset by higher revenue from the pipe coating, pipe manufacturing and trading divisions.

"Hence, we are downgrading our FY10-11 earnings by 19%-26%.

"We believe that the stock's potential upside lies with the management's review of a new three- to five-year strategy going forward since the JV with Socotherm is no longer in its plans," it said.

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