KUALA LUMPUR: Wasco Group Bhd may see a declining orderbook in the coming quarters if its quarterly wins do not exceed RM600 million, said Kenanga Research.
Wasco’s orderbook declined further to RM2.2 billion in the second quarter (Q2) financial year 2025 (FY25) from RM2.4 billion in Q1 2025, which implied RM581 million win in the quarter.
Kenanga Research expects its orderbook to be in a gradual declining trend in the near-to-medium term due to global upstream capex delays.
“Given the weakening global upstream outlook, we believe that the job win rate will be slower in FY25/FY26 compared to FY23/FY24 as final investment decisions by clients are delayed,” it said.
Kenanga Research said Wasco’s first half of 2025 (1HFY25) core earnings were below the firm’s and consensus expectations due to weaker than expected oil and gas margins.
“Wasco’s 1HFY25 core profit of RM44.8 million came in below ours (46 per cent) and consensus (39 per cent) expectation, largely due to the decline in oil and gas division earnings before interest and taxes (Ebit) margins.
“Aside from weaker pipe coating and engineering margins, its joint venture and associate losses also widened due to weaker upstream activities affecting its associate,” it said.
Overall, Kenanga Research cut its earnings forecast on Wasco for FY25/FY26 to reflect weaker orderbook assumptions.
It downgraded the stock to “Market Perform” from “Outperform” and cut its target price to 95 sen from RM1.08.
“While its proposed initial public offering of bioenergy business is a valuation rerating catalyst, its oil and gas division faces near term earnings uncertainty,” Kenanga Research said.
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