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OSK DOWNGRADES CALL ON WAH SEONG TO NEUTRAL |
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KUALA LUMPUR, Aug 26 (Bernama) -- OSK Research has downgraded its call on Wah Seong Corporation Bhd to neutral, although it expects a better second half this year for the company.
Wah Seong is a global oil and gas service infrastructure conglomerate.
OSK Research also downgraded its financial year 2011 forecast for the company by 11 per cent and hence the target price is reduced to RM2.40 from RM2.71 previously.
"Since financial year 2011 is still five months away, we will be prudent and reduce our earnings forecast until we see a turnaround of the oil and gas industry in the later part of the second half of this year," it said in its research note Thursday.
OSK Research said it expects the second half of 2010 to be more exciting for Wah Seong than the first, due mainly to its pipe coating division as well as engineering division to some extent.
Wah Seong's first half financial year 2010 was below expectations due to the slower revenue generation across all its divisions and the delay in the commencement of some of the pipe coating jobs.
To date, the company is still being supported, by its orderbook of RM1.2 billion.
Meanwhile, MIDF Research said future earnings growth for the company would come from Australian liquefied natural gas (LNG).
"However, we revise downwards our earning per share 2010 by -3.5 per cent imputing delays in the oil and gas division, assuming slower awards of Australian LNG contracts," MIDF said.
It also decreased the target price to RM2.35, from RM2.75, besides downgrading its call to neutral.
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