HLIB maintained its BUY call on Wasco Bhd with a lower target price of RM1.14 from RM1.33, citing continued Middle East project disruptions despite the group retaining a healthy orderbook and long-term exposure to energy infrastructure spending.
HLIB said Wasco’s 2QFY26 core net profit fell 65.2% year-on-year to RM9.7 million, bringing 1HFY26 core earnings to RM19.9 million, down 65.5%. The results were below expectations, mainly due to weaker contributions from its Energy Services division.
Revenue, however, rose 8% quarter-on-quarter as stronger pipeline project recognition in Terengganu and Sabah and higher deliveries of steam turbines provided some support. The group also recognised revenue from the NFPS COMP3 Saipem pipeline project in Qatar after operations resumed using available raw materials.
Another Qatar pipeline coating project remains halted due to iron ore shortages, with the timing of its resumption uncertain. HLIB said the two affected projects account for about 20% of group revenue, although the impacted orderbook has been delayed rather than cancelled.
Wasco’s orderbook stood at RM2.5 billion as of 2QFY26, alongside a RM11 billion tenderbook split evenly between engineering and pipeline opportunities.
HLIB cut its FY26 and FY27 earnings forecasts by 21.6% and 13.9% respectively, while retaining its FY28 forecast. It said the group remains positioned to benefit from energy security-driven spending, including pipeline coating, FPSO developments and broader energy infrastructure projects.
As of 3.32 pm, the stock price is flat at RM0.755.
