Highlights

PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 22 Jun 2021, 9:57 AM

 

Wah Seong Corporation Berhad - Better Numbers in 2H

Author:   |    Publish date:


Wah Seong reported core net loss of RM33.5m in 2QFY20, widening its core net loss for 1HFY20 to RM77.3m as compared to the 1HFY19 core net profit of RM33.2m reported. The weak performance was mainly due to global lockdowns, attributed to the Covid-19 pandemic which slowed project executions as well as deferred some projects. While losses in 2QFY20 are largely anticipated, we are of the view that recovery may take some time, considering the level of oil prices currently as well as the new operating environment after the pandemic. We cut our FY20F estimates to a loss of RM37.9m from a profit of RM35.3m. Meanwhile, we also slash FY22F/23F earnings projections by 37.7% and 3.2% respectively. The Group’s outstanding orderbook of RM870.2m is relatively unchanged, likely be executed mostly in 2HFY20. Tenderbook remains at RM4.5bn though timing of the awards remain a question given the planned capex reduction by oil majors globally. We maintain our Neutral rating for Wah Seong with a lower TP of RM0.50 (10x FY21 EPS) due to the earnings cut.

  • Full impact from lockdown. While 2QFY20 revenue slipped 25.6% QoQ to RM243.1m, core net loss of RM33.5m reported in the quarter was lower than core net loss of RM43.8m in 1QFY20. This is mainly due to the Group’s initiative in implementing cost reduction measures during the quarter. Lower revenue recognition in 2QFY20 is not a surprise given the full impact of movement lockdowns globally, hence slower project executions. This is further exacerbated by completion of the Group’s major project, Nord Stream 2 in 3QFY19 and lack of major projects currently.
  • Gradual recovery in 2HFY20 onwards. While the Group’s earnings are expected to be better in 2HFY20 as lockdowns begin to ease, we foresee recovery taking some time, considering the level of oil prices currently as well as the new operating environment after the pandemic. As the Group’s core business is mostly related to greenfield oil and gas projects, contract awards from the Group’s RM4.5bn tenderbook remains a question given the planned capex reduction by oil majors globally by 20% - 30%. Nevertheless, it is expected that the Group will continue to undertake multiple small-scale contracts that are worth

Source: PublicInvest Research - 28 Aug 2020

Share this
Labels: WASEONG

Related Stocks

Chart Stock Name Last Change Volume 
WASEONG 0.755 +0.01 (1.34%) 553,500 

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View candlestick stock charts with Technical indicators
MQ Affiliate
Be rewarded by being an MQ Affiliate
 
 

432  434  611 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 SERBADK 0.625+0.025 
 MMAG 0.16-0.02 
 FINTEC 0.0350.00 
 VSOLAR 0.0150.00 
 SERBADK-WA 0.115+0.01 
 GLOTEC-WA 0.10+0.025 
 PRIVA 0.235+0.005 
 QES 0.89+0.03 
 KANGER 0.06-0.005 
 PICORP 0.21+0.01 

FEATURED POSTS

1. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!

TOP ARTICLES

1. Special Announcement from Serba Dinamik Good Articles to Share
2. THIS GOOD STOCK ALMOST LAGGARD TO SURGE!!! Follow Kim's Stockwatch!
3. Stocks on Radar - Malayan Banking (1155) AmInvest Research Reports
4. RUBBER GLOVES - ASPs Tapering Off PublicInvest Research
5. Mplus Market Pulse - 22 Jun 2021 M+ Online Research Articles
6. Jaks Resources Bhd - Power plant running full steam ahead M+ Online Research Articles
7. SERBADK - Who caused the BLOW UP? Pathetic Fallacy
8. BREAKING: The share price of US-based gaming companies are at record highs [DONT MISS THIS STOCK] A blog to publish and share information
PARTNERS & BROKERS