Thursday 28 Mar 2024
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KUALA LUMPUR (July 6): Wah Seong Corp Bhd shares rose 1.59% at mid-morning today after its unit entered into a distributorship agreement with Switzerland-based Ammann BauAusrűstung AG's to be an exclusive dealer for the sales and services of its construction products within West Malaysia.

At 10.45am, Wah Seong rose 2 sen to RM1.28 with 234,300 shares done.

In a bourse filing, Wah Seong said its 60%-owned indirect subsidiary WDG Resources Sdn Bhd has inked the agreement with Ammann to distribute its products including Pavers, Heavy Compaction and Light Compaction.

The distributorship is expected to contribute positively to the earnings of Wah Seong over the period of the distributorship agreement, the group said, adding the agreement would be effective for an indefinite period unless otherwise terminated by either of the parties by giving three months' written notice, and upon the terms and conditions stipulated in the agreement.

WDG is principally involved in the distribution and service of construction equipment, power systems and related parts.

Ammann Group is a world-leading Swiss supplier of mixing plants and machines and in providing services to the construction industry with core expertise in road building and transportation infrastructure.

PublicInvest Research has upraded Wah Seong Corp Bhd to “Trading Buy” at RM1.26 with an unchanged target price (TP) of RM1.64.

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.

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