March 19, 2010

WASEONG - Price Target News

Stock Name: WASEONG
Company Name: WAH SEONG CORPORATION BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research is maintaining its Outperform on Wah Seong Corp Bhd at RM2.52 with a target price of RM2.96. The research house said Wah Seong is making progress with its takeover talks with both Orleans and Socotherm. "We now understand that the Socotherm deal may be completed earlier. Wah Seong has sufficient funds to finance the acquisitions and has ruled out a fundraising exercise. As at December 2009, the group had cash reserves of RM471 million," it said. CIMB Research said the acquisition plans, assuming they pan out, would give Wah Seong access to a string of new markets, namely Nigeria, Angola, Brazil, the Middle East and the Gulf of Mexico, thereby narrowing the gap between itself and Bredero, whose annual sales are in excess of US$1 billion. "Apart from the M&A efforts, we expect newsflow to also remain active on the order book front as Wah Seong awaits the awards of pipe coating contracts from clients in Australia and Papua New Guinea. "We maintain our forecasts and target price of RM2.96, pegged to an unchanged target market P/E of 15x. Wah Seong remains an OUTPERFORM, premised on the potential re-rating triggers of an expanding order book, and M&As," it said.

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