WCT: Another Job From Vale

THE BUZZ
WCT announced that it has been awarded a RM72.8m industrial civil works contract by Vale Malaysia Minerals SB. This is the group’s second contract from the mining giant in respect of works in Teluk Rubiah, the first being a RM115.1m job secured in July last year. Works are expected to be completed in 18 months.

OUR TAKE

RM704m worth of new jobs YTD. We deem the announcement within our expectations, bringing WCT’s jobs win YTD to RM704m. The group’s outstanding orderbook now totals RM2.48bn. We continue to peg our FY12 and FY13 orderbook replenishment targets at RM1.5bn p.a. respectively and leave our core assumptions unchanged.

Jobs momentum likely to pick up in 2HFY12. Going into 2HFY12, we believe WCT’s jobs flow momentum is likely to pick up. Management said it has tendered for some RM5bn worth of jobs, including foundation works for the USD8bn Kuala Lumpur International Financial District covering a total land area of 30ha, a RM400m-RM500m road widening job for PLUS Expressway, some station packages for the Klang Valley My Rapid Transit Sungai Buloh-Kajang line, as well as a RM900m 400-bed hospital in Sabah. We understand that WCT’s overseas jobs, which make up some 45% of its existing orderbook, may be augmented by some potential infrastructure jobs from Oman, UAE and Qatar although the quantum remains unknown for now.

BUY. We continue to like WCT’s three-pronged approach to expand its property development, investment and management activities by leveraging on its engineering and construction expertise. Meanwhile, the recent launching of its Paradigm Mall has proved to be a success as it has achieved a tenancy rate of over 90%. Maintain BUY, at an unchanged FV of RM3.10, based on 14x FY12 PER.

Source: OSK