KUALA LUMPUR (July 6): PublicInvest Research has upraded Wah Seong Corp Bhd to “Trading Buy” at RM1.26 with an unchanged target price (TP) of RM1.64 after Wah Seong reported that its indirect subsidiary, WDG Resources SB (WDG) has entered into a Distributorship Agreement with Ammann BauAusrûstung AG (Ammann) for the appointment of WDG as an exclusive dealer of Ammann’s products within West Malaysia.

In a note today, the research house said while this development is positive to the Group’s earnings, the net financial impact will not be meaningful as the major contributor to the Group’s operational profit is its pipeline coating services.

“Hence, we are neutral on the news. Wah Seong is making good progress on the Nord Stream 2 project hence earnings growth prospects remaining on track despite job wins being slow amid a pick-up in oil and gas activities.

“We are upgrading our call to Trading Buy in light of recent price weakness, though with an unchanged TP of RM1.64 (10x FY19F EPS),” it said.