WCT Bhd - OUTPERFORM - 23 May 2012

Period   1Q12

Actual vs.  Expectations

Within ours and the consensus expectations.

1Q12 net profit made up 23% and 21% of ours and the consensus’ forecasts of RM177.8m and RM182.0m respectively.

Dividends  No dividend was declared during the quarter.

Key Result Highlights

QoQ, the net profit fell  by 16% on the back of lower revenue recognition by 30% due to shorter working days during the quarter.  

YoY, revenue grew by 8% backed by a 13% increase in property contribution. The net profit has also increased by 7% in tandem with the higher revenue. 

We expect better margins in the coming quarter as billings pick-up momentum from ongoing projects i.e. KLIA2, Doha International Airport and Qatar Administration office.

Outlook  WCT has secured c. RM630m worth of new contracts to date. Going forward, we are confident of management’s abilities to meet our FY12E orderbook replenishment assumption of RM1.0b.

Its current construction order book now stands at about RM2.7b (external), which will last it for the next 2 years.

Change to Forecasts

No changes to our FY12 and FY13 forecasts. 

Rating  MAINTAIN OUTPEFORM

Our OUTPERFORM rating  is maintained as the current share price implies a 77% upside to our Target Price.

Valuation   We are keeping our target price unchanged at RM3.93 based on SOP valuation.

Risks  Delays in contract award i.e. ETP based projects.   

Source: Kenanga