Thursday, August 26, 2010

OSK Research: Wah Seong 1H results below expectations

KUALA LUMPUR: OSK Research said Wah Seong Corp'' Bhd's' 1HFY10 results were below expectations due to the slower revenue generation across all its division and the delay in the commencement of some of the pipe coating jobs.

Nevertheless, the research house said on Thursday, Aug 26 that it expected a better 2H10 for the company, coming mainly from its pipe coating division as well as engineering division to some extent.

'Downgrading FY11 earnings by 11%. Since FY11 is still five months away, we will be prudent and reduce our FY11 earnings forecast until we see a turnaround of the O&G industry in the later part of 2H10,' it said.

OSK Research had downgraded the stock to Neutral. Its target price was reduced to RM2.40 (previously RM2.71) based on the existing PER of 14 times FY11 earnings following our FY11 earnings downgrade. To-date, the company is still supported by its orderbook of RM1.2 billion.

No comments:

Post a Comment