By KINIBIZ
Analysts have reacted positively to Wah Seong capturing its first ever European contract after it was awarded a RM611 million (US$198 million) pipe coating contract. The contract is for 520km of pipes in the Polarled Development Project located in the Aasta Hansteen Field in the Norwegian Sea by Statoil.
CIMB analyst Norziana Mohd Inon noted that this is a major success for the company given that the majority of its focus is on Malaysia and Australia, and the fact that the Norwegian market is dominated by Canadian company Bredero. She added that the contract had expanded Wah Seong’s order book by a massive 70 percent bringing it to RM1.6bn.
The Polarled Development Project is a project for the transportation of gas from the Aasta Hansteen Field in the Norwegian Sea to an online processing facility in Nyhamna, Norway. According to the company’s press announcement, Wah Seong’s scope of work will include anti-corrosion coating, internal flow coating and concrete weight coating. The contract also includes coating work for the Kristen Project, which links the Kristen field to the Polarled pipeline.
The project is due to commence in the third quarter of 2013 and is expected to take two years to complete. Hong Leong Investment Bank analyst Samsukri Glanville believes that the company has “ample capacity and thus the ability to deliver fast.” He also believes that this ability to deliver on schedule will stand Wah Seong in good stead to secure other projects such as ones in the North Malay Basin and internationally.
Wah Seong Corporation Berhad is an international oil and gas and industrial services group. The company is currently listed on the main market of Bursa Malaysia. In 2012, third quarter earnings showed that Wah Seong recorded profits of RM6.38 million down sharply from their earnings in the corresponding quarter of 2011 when profits stood at RM29.54 million.
Despite this, analysts are recommending that investors commit to Wah Seong in the long term as their 2013 prospects both locally and internationally look strong. The company’s on-going projects are progressing on schedule and it is in a good position to secure other contracts that they are currently bidding for, analysts say.