News Yesterday, WCT announced that it had bagged a commercial
office job worth RM315m from Putrajaya Holdings Sdn Bhd.
The work scope
includes the construction of two blocks of commercial offices comprising
7-storey podium offices and an overall 14-storey tower and two levels of
basement car park and is scheduled to be completed within 32 months.
Comments The RM315m contract award from Putrajaya
Holdings is the first contract award for WCT in FY13 and it was not of a
surprise to us as management had been actively tendering for projects in the
Middle East, Klang Valley and Johor regions. To recap, WCT has secured around
RM2.0b worth of contracts back in 2012 i.e. the Miti building (RM300m),
North-South Expressway Widening (RM391m) and a 80% stake in Batinah Expressway,
Oman (RM1.0b).
We are neutral on the
contract award as it came in within our expectations, making up 32% of our RM1.0b
order book replenishment assumption for FY13 itself.
With this new
contract award, WCT’s outstanding order book (external) currently stands at
c.RM3.4b, translating into 2.2x its FY12 revenue and could last it for the next
two years.
Outlook Moving forward, we believe that WCT will be
able to secure more projects given its strong track records locally and
internationally.
We strongly believe
that 2013 will be an exciting year for WCT given its massive outstanding order
book of RM3.4b above and the operation of its Intergrated Complex namely
Gateway@KLIA2.
Forecast There are no changes to our earnings estimate
given that the contract award falls within our order book replenishment
assumption of RM1.0b for FY13.
Rating Maintain OUTPERFORM
We are maintaining
our OUTPERFORM rating on WCT as we expect the stock to be one of the best construction
winners after the election event.
Valuation There are no changes in our Target Price of
RM2.52, which is based on a SOP valuation.
Risks Delays in executing its order book.
Source: Kenanga
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