Period 3Q12/9M12
Actual vs. Expectations The 9M12 results came in broadly within our expectations
and that of the consensus at 67% of both estimates. The contribution from its
PLUS and Oman projects were not meaningful during the period.
Dividends No dividend was declared as expected.
Key Result Highlights
The 9M12 net profit of RM40m was
higher by 5% (YoY) on the back of the high growth in its property development
contribution (+53%). However, the margin for the property investment and
construction division has dropped due to the start-up overheads incurred for
its Paradigm Mall and the lower contribution from overseas project.
QoQ, the net profit
increased only marginally by 2% due to the lower construction margin, which fell
from 10% to just 4%. This was due mainly to a higher initial cost for the newly
secured projects, i.e. PLUS and Oman. On the flip side, the property
development profit has increased by 52% and the property investment profit by
tenfold.
YoY, the net profit
improved by 3% due to the strong contribution from the property development
division (+97%). The construction revenue meanwhile grew by 59% due to a higher
order book size as compared to last year. To recap, its order book
replenishment only started in Feb 2012 i.e. from the MITI building. The company’s
current order book stands at c.RM3.5b (external).
Outlook The
earthwork jobs for TRX (Tun Razak Exchange) and RAPID would be the key catalysts
for WCT in the near term (collectively worth c.RM2.0b).
We expect more
construction revenue contributions from the newly secured projects, i.e. PLUS
and Oman in the coming quarters.
Forecasts No
changes in our FY12 and FY13 forecasts.
Rating Maintain OUTPEFORM
We are maintaining
our OUTPERFORM recommendation due to the 17% potential upside from the current
price to our TP.
Valuation We are keeping our target price unchanged at RM3.17
based on SOP valuation.
Risks Delays
in contract awards i.e. TRX and RAPID
Source: Kenanga
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