Wasco Bhd has been garnering investors’ interest recently. Wasco reported a jump in net earnings to RM35.8 million in 2QFY24, up 49% year-on-year (YoY). This brings its 1HFY24 bottom line to RM92.8 million, which was a 103% increase YoY.

According to consensus expectations, it is forecasted to achieve a net profit of RM120.2 million for FY Dec 2024 and RM120.6 million for FY Dec 2025. In terms of valuation, the stock is currently trading at prospective price earnings ratios of 7.2x for both financial years.

What is exciting is that there could be possibility of the company resuming its dividend payout. It last distributed dividends in 2020. Another re-rating catalyst could be the successful value unlocking exercises, such as disposal/spin-off of non-core assets/businesses.

Wasco is poised to benefit from an estimated 196,000 km of new trunk oil and gas pipelines globally, from 2023-2030. Its orderbook stands at RM3.2 billion, with a huge tenderbook of RM7.3 billion.

Robust orderbook will sustain at RM3 billion-RM3.5 billion in the coming years, given the highly visible job replenishment pipeline to replace existing orders.

The company should also see plenty of opportunities within the energy transition space. This is on the back of demand for pipelines to facilitate carbon capture and storage) activities and hydrogen transportation.

In addition, Wasco’s engineering division is supported by ample job orders mainly due to growing capex in the oil and gas sector. Its engineering segment includes construction of modules for floating production storage and offloading units (FPSOs) and mobile offshore production units (Mopu), as well as gas plant and substations

Wasco expects an average of eight-to-12 FPSOs to be built annually over the next five years. Investors should be quite confident that Wasco will continue delivering solid earnings in the coming quarters and naturally, reflected by higher share price.