Maybank Investment Bank Berhad’s (Maybank IB) assessment of Wasco Berhad’s overall ESG score, under their proprietary ESG scoring methodology, is 48 (out of 100), making its ESG rating slightly below average.
Maybank IB thinks that while Wasco has decent ESG targets and qualitative parameters, more needs to be done with regards to its emission disclosures.
Maybank IB maintains their BUY recommendation on Wasco with an unchanged TP of MYR1.55 – based on 12x FY24E PER.
Room for improvement in quantitative parameters
Wasco does not have data on its: i) Scope 3 emissions; ii) SOx emissions; and iii) VOC emissions. We think that Wasco can improve in the following aspects: i) implementing ways to introduce renewable energy into its source of energy mix; ii) energy consumption; iii) GHG emission intensity; and iv) including more females into its workforce mix.
Maybank IB noted, in a note today (Mac 13), that Wasco’s improvements in: i) total waste recycled; and ii) reduction in water intensity in FY22.
Decent qualitative scoring and targets
Wasco has yet to follow the Task Force on Climate-Related Financial Disclosures (TCFD) framework for ESG reporting.
However, there is an ESG policy in place which is formulated by the Risk Committee.
Wasco does not currently have a mechanism to capture Scope 3 emissions
Maybank IB applauds Wasco’s initiative where it planted 160,000 trees as part of its carbon sequestration programme which will help it offset residual emissions.
The group aims to be Net Zero (Scope 1 and Scope 2 emissions) by 2026.
Expecting a strong FY24E
Maybank IB has incorporated MYR3.8b/MYR3.5b/MYR3.5b job wins in FY24-26E respectively.
Wasco’s mid-term outlook shows good promise: i) healthy orderbook (pipe-coating loaded) @ MYR3.1b as at end-Dec 2023; and ii) a robust tender book of MYR7.0b.
Maybank IB is forecasting a 31% net profit growth in FY24E as Maybank IB understands that the bulk of the accelerated progress billings for the MYR1.1b EACOP and MYR558m Yinson projects will be recognised this year.
Current completion rate for both projects stand at 40% and 50% respectively.
