Wah Seong Corporation Berhad Annual Report 2020

28 WAH SEONG CORPORATION BERHAD Discussion on expectations of future results The International Energy Agency (“IEA”) forecast that the world oil demand is expected to rise by 5.5 mb/d in 2021. The Brent oil price rose to USD60/bbl, reflecting a boost in demand during colder winter in Europe and Asia, with OPEC’s continued supply cuts. As for natural gas, IEA forecast that the market is expected to recover progressively in 2021 as consumption returns to pre-pandemic levels. IEA also expects that global vaccine rollout will put the demand for oil and gas on a stronger trajectory to recovery during the year. This will have a positive impact on industry players as a whole in 2021 and beyond. Over the years, the projects secured by WASCO has been predominantly driven by gas development. This trend is expected to continue as more countries introduce policies to push forward the climate change agenda by supporting cleaner energy aspirations. Energy demand will also grow significantly in Asia, led by China and India. WASCO believes that it is positioned strategically in these markets to capture future gas development opportunities. As more oil and gas companies announced their decarbonisation targets, WASCO sees opportunity in the short term. These companies invest in upgrading their existing operations with more energy-efficient pumps and compressors, installing LIDAR systems and vapor recovery units and expanding petrochemical production. This will increase the demand for WASCO’s products and services using our existing resources and core capabilities in many instances. In the more developed markets, the push for alternative and renewable energy has opened up a new market opportunity for WASCO. The early engagement and positioning of capabilities for the past three years has enabled WASCO to win projects related to wind energy and hydrogen. WASCO anticipates that this new market will grow steadily over the years. RENEWABLE ENERGY (“RE”) Discussion of strategies, operational capabilities to achieve the desired business objectives and results During the year, RE business was adversely affected by COVID-19 pandemic lockdown in ASEAN and worldwide. Many planned projects were deferred or delayed. Despite the challenges and restrictions imposed due to the pandemic, the RE process equipment unit managed to complete the supply of significant packages to Honeywell UOP for their Calcasieu Pass LNG Export Project located in the USA. This achievement has demonstrated RE’s ability to deliver on time and budget despite the challenges presented during the year. It has placed RE in a good position to succeed in the subsequent phases of this mega-development which is expected to be rolled out in 2021 and beyond. During the year, Jutasama Sdn. Bhd. moved its entire process equipment operations to the new waterfront location at Teluk Panglima Garang fabrication facility. This enables the Group to manufacture larger size and higher value process equipments. MANAGEMENT DISCUSSION AND ANALYSIS