OSK Research ups Wah Seong FV to RM2.33 (5142)

KUALA LUMPUR: OSK Research is revising upwards its earnings forecast for Wah Seong Corp by 1.9% for FY12 and 3.2% by FY13 to account for the increase in contribution from the new associate Petra Energy.
It
said on Tuesday Wah Seong had completed the acquisition of 57.7 million
shares or 26.9% stake in Petra Energy, at RM1.68 per share for
RM96.94mil.
“With the completion of the acquisition, Perdana Petroleum
(BUY, FV under review) is no longer a substantial shareholder of Petra
Energy (BUY, FV RM1.94) with immediate effect,” said the research house.
OSK
Research maintained its view that the acquisition was synergistic for
Wah Seong and Petra Energy as the former can now generate recurring
income from Petra Energy's brownfield services to complement its
existing one-off pipe coating business, while Petra Energy can leverage
on Wah Seong's business network to seek more new jobs moving forward.
The
research house said it had increased its earnings forecast for Wah
Seong and hence raised its fair value slightly to RM2.33, based on the
existing price-to-earnings ratio (PER) of 13 times FY13 EPS.