WCT’s 9MFY12 net profit of RM119.9m fell below both our and consensus expectations, at 65.7% and 66.5% of the estimates respectively due to continued weakness in its construction division. We are trimming our EPS forecasts by 6.3% for FY12 and 2.3% for FY13 to account for the slower-than-expected progress in its Qatar project. That said, we remain positive on the company’s long-term prospects given its sturdy outstanding orderbook of over RM3bn. Maintain BUY, with our FV lowered to RM3.29, based on an unchanged 12x FY13 PE.
Below expectations. WCT’s 9MFY12 revenue came in at RM1.18bn (+12.0% y-o-y) due to improved showing from its property development and investment divisions, which grew 65.8% and 51.0% respectively. This helped to offset the marginal 1.9% decline in its construction segment. Meanwhile, the group’s core earnings expanded by a smaller 4.7% y-o-y to RM119.9m owing to lower construction margins. On a quarterly basis, the 3QFY12 numbers generally showed some decent improvement on a y-o-y and q-o-q comparison due to better showing from its property arm, which helped to offset the sluggish performance of its construction segment as revenue fell and margins weakened.
Revising forecasts. With its construction division coming in weaker than expected for two consecutive quarters, we are taking precautions and revisiting our model to incorporate the slower revenue recognition of its ongoing project in Qatar, which we believe experienced some delays. Accordingly, we are trimming our FY12 and FY13 net profit forecasts by 6.3% and 2.3% respectively while leaving our FY14 numbers largely unchanged.
Potential jobs flow. Having secured RM2.10bn worth of new jobs YTD, WCT’s outstanding construction orderbook currently stands at an estimated RM3.2bn. While we do not expect any more job wins for the remainder of the year, our FY13 and FY14 orderbook replenishment targets are RM1.5bn and RM2.0bn respectively. it is worth noting that the group has tendered for some RM4bn worth of jobs, comprising RM1.3bn worth of civil works in Pengerang, RM1bn in foundation works for the Tun Razak Exchange, as well as a few hospital projects in Sabah.
BUY. Despite marginally tweaking our earnings estimates, we remain positive on WCT’s long-term prospects as the impending opening of KLIA2, scheduled for May 2013, could turn out to be a re-rating catalyst. Hence, we maintain BUY, with our FV adjusted to RM3.29, based on an unchanged 12x FY13 PE.
Below expectations. WCT’s 9MFY12 revenue came in at RM1.18bn (+12.0% y-o-y) due to improved showing from its property development and investment divisions, which grew 65.8% and 51.0% respectively. This helped to offset the marginal 1.9% decline in its construction segment. Meanwhile, the group’s core earnings expanded by a smaller 4.7% y-o-y to RM119.9m owing to lower construction margins. On a quarterly basis, the 3QFY12 numbers generally showed some decent improvement on a y-o-y and q-o-q comparison due to better showing from its property arm, which helped to offset the sluggish performance of its construction segment as revenue fell and margins weakened.
Revising forecasts. With its construction division coming in weaker than expected for two consecutive quarters, we are taking precautions and revisiting our model to incorporate the slower revenue recognition of its ongoing project in Qatar, which we believe experienced some delays. Accordingly, we are trimming our FY12 and FY13 net profit forecasts by 6.3% and 2.3% respectively while leaving our FY14 numbers largely unchanged.
Potential jobs flow. Having secured RM2.10bn worth of new jobs YTD, WCT’s outstanding construction orderbook currently stands at an estimated RM3.2bn. While we do not expect any more job wins for the remainder of the year, our FY13 and FY14 orderbook replenishment targets are RM1.5bn and RM2.0bn respectively. it is worth noting that the group has tendered for some RM4bn worth of jobs, comprising RM1.3bn worth of civil works in Pengerang, RM1bn in foundation works for the Tun Razak Exchange, as well as a few hospital projects in Sabah.
BUY. Despite marginally tweaking our earnings estimates, we remain positive on WCT’s long-term prospects as the impending opening of KLIA2, scheduled for May 2013, could turn out to be a re-rating catalyst. Hence, we maintain BUY, with our FV adjusted to RM3.29, based on an unchanged 12x FY13 PE.
Source: OSK
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