WASCO: Orderbook Surge Drives Revised Earnings Forecasts, Rating Maintained
| Investment Bank | PUBLIC INVESTMENT BANK |
|---|---|
| TP (Target Price) | RM1.03 (+0.0%) |
| Last Traded | RM1.03 |
| Recommendation |
A recent substantial contract award has significantly bolstered the orderbook of a prominent pipe-coating specialist, leading to an upward revision of its earnings forecasts. The new contract, valued between RM619.4 million and RM825.8 million, was secured from Technip Energies Italy S.p.A. for the engineering, procurement, and fabrication of pre-assembled process modules for a large-scale facility. This marks the first major win of the year for the company.
The contract scope encompasses complete procurement and construction of pre-assembled modules on a remeasurement basis. Expected to be completed within 37 months by December 2028, it is understood to be linked to the BluePoint Number One ATR project in Louisiana. This joint venture aims to establish the world’s largest low-carbon ammonia plant, highlighting the specialist’s strategic shift towards low-carbon energy infrastructure.
Robust Orderbook Growth and Revised Outlook
With this latest award, the company’s total year-to-date FY25 contract wins have reached an impressive RM2.6 billion to RM2.9 billion. Consequently, its outstanding orderbook has surpassed the RM3 billion mark, now ranging from RM3.2 billion to RM3.4 billion – a level not seen since the third quarter of FY24. This substantial increase in the orderbook, representing a 23.1% to 30.8% jump, translates to approximately 1.2x-1.3x of its FY25F revenue.
In response to this stronger-than-expected orderbook replenishment, analysts have revised their FY25-27F earnings forecasts upwards by 6%. The previous annual orderbook replenishment assumption was RM2.6 billion, now updated to RM2.8 billion, signalling a clear recovery.
Market Context and Analyst Stance
The latest contract signals a rebound in the specialist’s orderbook following four consecutive quarters of weak replenishment, which averaged RM370 million. This slowdown was previously attributed to escalating trade tensions, market volatility, and delayed investment decisions by major customers. However, these concerns have now reportedly eased, paving the way for a more stable resumption of project commitments.
Despite the positive developments, PUBLIC INVESTMENT BANK maintains its “Neutral” call on the company. The target price remains unchanged at RM1.03, based on an unchanged 8.1x PER, with the earnings still sensitive to margin and project execution mix.
