KUALA LUMPUR (May 20): Wasco Bhd (KL:WASCO) shares fell to a three-month low on Wednesday after the oil and gas services group posted quarterly results that came in sharply below market expectations, prompting several analysts to cut target prices and one broker to downgrade the stock.
At least three of six analysts covering Wasco lowered their target prices by between 9% and 13%, while one downgraded its call on the stock.
Wasco shares dropped as much as 20 sen, or 14%, to 90 sen in early trade — their lowest level since Feb 25. The stock later pared losses to trade at 93 sen at 10.20am, with more than seven million shares changing hands.
Short selling of the stock was suspended for the day. It will resume on Thursday.
The stock’s average target price now stands at RM1.31, down from RM1.39 previously, implying a potential upside of about 40% from current levels.
Kenanga Research analyst Lim Sin Kiat said Wasco’s order book eased to RM2.6 billion in the first quarter ended March 31, 2026 (1QFY2026) from RM2.8 billion in the preceding quarter, implying new order wins of only RM200 million — below the group’s historical run rate.
He added that disruptions in the Middle East, which account for about 15% of Wasco’s total order book, are expected to continue affecting the group in 2QFY2026, particularly as the Strait of Hormuz remains closed.
“We believe the impact should gradually ease if our base-case assumption of a gradual reopening in the second half of FY2026 materialises. Nevertheless, FY2026 would be a challenging year for the group,” Lim wrote.
Meanwhile, Jeremie Yap of Maybank Investment Bank Bhd downgraded Wasco to 'hold' from 'buy', citing lingering operational risks tied to its Middle East projects.
According to Yap, Wasco could continue facing supply chain disruptions that may affect procurement activities, while project delays could lead to cost overruns as fixed costs continue to be recognised despite extended delivery timelines.
“These factors are likely to pressure profitability margins in the near term,” he said.
Still, analysts noted that the affected projects have been delayed rather than cancelled.
Kenanga’s Lim maintained a positive longer-term view on the group, saying Wasco’s engineering and pipe-coating businesses could benefit from a potential upcycle in upstream capital expenditure globally amid growing focus on energy security from FY2027 onwards.
According to AskEdge data, Wasco is now trading at trailing price-earnings ratio (PER) of 5.32 times. In comparison, Malaysia Marine and Heavy Engineering Holdings Bhd (KL:MHB) trades at 5.9 times PER, while Deleum Bhd (KL:DELEUM) trades at 7.4 times.
Wasco's indicative dividend yield currently stands at 6.4%.