PublicInvest trims Wasco forecasts
KUALA LUMPUR: Public Investment Bank Bhd (PublicInvest) has cut its earnings forecasts for Wasco Bhd for financial years 2026 to 2028 (FY26-FY28), citing expected operational delays from the Middle East crisis.
PublicInvest has reduced its earnings forecasts for Wasco Bhd for the financial years 2026 to 2028 due to anticipated operational delays stemming from geopolitical tensions in the Middle East. The bank has lowered Wasco's earnings estimates by 59 percent for FY26, 27 percent for FY27, and 25 percent for FY28. This reduction is attributed to the ongoing crisis, which has impeded project execution and negatively impacted Wasco's operational performance.
PublicInvest noted that peace talks and increased fighting have yet to resolve shipping through the Strait of Hormuz, further complicating the situation. QatarEnergy subsequently extended force majeure arrangements for some liquefied natural gas (LNG) customers until November-December 2026, highlighting that essential equipment has yet to reach Qatar, potentially delaying the nation's offshore and pipeline initiatives.
As a result, there is a risk of delays in Wasco's Middle East operations, with some parts possibly postponed until FY27 pending material deliveries. The Middle East accounts for 23 percent of Wasco's FY25 revenue and 22 percent of its non-current assets. The bank's pipeline facility in Qatar, spanning 266,000 square meters, as well as a newer 25,000 square meter fabrication yard in Dubai, are part of Wasco's Middle Eastern operations.
As of Q2 FY26, Wasco's pipeline order book was valued at RM409 million, with around half of these orders tied to Qatar. Despite the contracts remaining in effect, execution is contingent upon the timely arrival of client-supplied materials and adherence to the offshore installation timetable. At the second quarter of FY26, Wasco reported being in a net cash position while its gross gearing improved to 0.25 times from 0.29 times in Q1 FY26, primarily due to ongoing debt reduction and proceeds from Wasco Australia's sale.
The firm emphasized that Wasco's low gearing and net cash position provide ample flexibility to cover working capital needs, maintain reasonable dividend payments, and manage the prolonged disruptions in the Middle East. PublicInvest kept its neutral stance on the stock with a lower target price of 67 sen.
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