Wednesday, September 21, 2011

Wah Seong may benefit from North Malay Basin project

KUALA LUMPUR: Shares of Wah Seong Corp Bhd advanced on Wednesday, Sept 21, in line with the broader market while sentiment was also underpinned by a positive outlook from analysts.

At 3.31pm, the pipe manufacturer and oil and gas player, saw its shares climb six sen to RM2.03. There were 53,200 shares transacted.

Hwang DBS Vickers Research (HDBSVR) said Wah Seong's RM1.3 billion order book would drive the earnings.

'Wah Seong will continue with its strong earnings recovery in 2H11, after impressive 1H11 earnings (61% of our FY11 forecast) due to faster progress at Gorgon LNG project. It is 55% complete and scheduled to be completed by 1Q12.

'Order replenishment remains strong with RM1.3 billion outstanding order book as at June 2011. Its more notable recent major contract wins are the RM137 million APLNG contract (starts in 4Q11) and RM85m Kebabangan contract (starts in 3Q11), which will contribute positively in 2H11 and FY12,' it said.

HDBSVR also said it expected Wah Seong to be a prime beneficiary from the North Malay Basin project which Petronas and its production sharing contract partners will develop, including a new 200km pipeline to transport gas from the fields to Kerteh, Terengganu.

'The tight timeline - extracting first gas by 2013 - could see Wah Seong securing a major coating job as soon as 1H12. Petronas might call for bids as early as end-2011 to meet the tight timeline,' it said.

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