wct berhad : secures rm1.36bn building job in qatar and rm128m hospital project in sabah -...

8/8/2019 WCT Berhad : Secures RM1.36bn Building Job In Qatar And RM128m Hospital Project In Sabah - 21/10/2010

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21 October 2010

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Table 1 : Investment Statistics (WCT; Code: 9679) Bloomberg: WCT MK

Net FD Net

FYE Turnover Profit# EPS# Growth PER EPS# C.EPS P/ CF P/ NTA ROE Gearing GDY

Dec (RMm) (RMm) (sen) (%) (x) (sen) (sen) (x) (x) (%) (%) (%)

2009 4,666.6 147.1 18.8 43.5 16.6 - - 11.3 1.9 11.5 0.2 3.2

2010f 2,553.0 148.9 19.3 2.8 16.1 18.4 19.0 22.6 1.7 10.7 0.5 1.9

2011f 2,254.5 147.8 19.1 (0.8) 16.3 18.3 22.0 23.4 1.6 9.8 0.4 1.9

2012f 1,981.1 152.1 19.7 2.9 15.8 18.7 25.0 23.1 1.5 9.4 0.4 1.9

Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC #Excluding EI * Consensus Based On IBES

3 th and 4th key projects this year. WCT has secured two key contracts,namely: (1) A QAR1.59bn (RM1.36bn) government administrative building job in Doha, Qatar; and (2) The Tuaran hospital project in Sabah worth

RM127.8m. The latest contracts are the 3rd and 4th key jobs WCT has

secured this year, boosting its YTD new contracts secured to RM2.1bn (see

Table 2) and its outstanding construction orderbook by 53% to RM4.3bn

(see Table 3). Assuming an EBIT margin of 8-10%, the latest contracts will

fetch RM119-149m EBIT over the construction period ending Apr/May 2013.

While we are positive on the latest development, we expect limited reaction

from the market as WCT had been hinting on the Qatar job for a while by

now.

Forecasts. We are raising FY12/10-12 net profit forecasts by 6-13%,having reflected RM2.1bn new contracts secured in FY12/10 vis--vis our

previous assumption of RM1.5bn.

Risks to our view. The risks include: (1) New contracts secured inFY12/11-12 coming in above our target of RM1.5bn per annum; and (2)

Better-than-expected construction margins.

Maintain Underperform. We are upbeat on construction stocks as webelieve they will continue to generally outperform the market from 4Q2010,

buoyed by news flow from: (1) The infrastructure development for the

Greater KL National Key Economic Area (NKEA) under the Economic

Transformation Programme (ETP), particularly, the RM40bn MRT project;

(2) The RM7bn Ampang and Kelana Jaya LRT line extension project; and (3)

Federal land deals. WCT, via WCT Synohydro JV, has been pre-qualified

to bid as main contractor and segmental box girder sub-contractor for the

Ampang and Kelana Jaya LRT line extension project. However, WCTsvaluations remain not compelling, despite an 11% upgrade in our indicative

fair value from RM2.30 to RM2.56 based on 14x revised fully-diluted

FY12/11 EPS of 18.3sen, in line with our benchmark 1-year forward target

PER of 10-16x for the construction sector.

Corporate High l ig hts

Ne w s Up d at e

WCTSecures RM1.36bn Building Job In Qatar AndRM128m Hospital Project In Sabah

Malasia

Share Price : RM3.11Fair Value : RM2.56Recom : Underperform

(Maintained)

Issued Capital (m shares) 784.3Market Cap(RMm) 2,439.3

Daily Trading Vol (m shs) 1.9

52wk Price Range (RM) 2.41-3.20

Major Shareholders: (% )

EPF 21.4

Taing KH & Wong SW 20.6

KWAP 7.1

FYE Dec FY10 FY11 FY12

EPS Revision (%) +6 +13 +13

Var to Cons (%) +1 -13 -21

PE Band Chart

Relative Performance To FBM KLCI

Joshua CY Ng

(603) [email protected]

M

AR

KET

DATELINE

PP

7767/09/2011(028730)

21 October 2010

RHB ResearchInstitute Sdn BhdA member of theRHB Banking GroupCompany No: 233327 -M

Please read important disclosures at the end of this report.

WCT

FBM KLCI

PER = 19xPER = 15xPER = 11xPER = 7x


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21 October 2010



Table 2: New Contracts Secured So Far In FY12/ 10

Project Value

(RMm)

Hotel fit-out works at Bahrain City Centre (additional work) 110

Integrated Complex, KLIA2 486

Government administrative building, Doha, Qatar 1,360

Tuaran Hospital, Sabah 128

Total 2,084

Source: Company, RHBRI

Table 3: Outstanding Construction Orderbook

Project Outstanding Value

(RMm)

Overseas

Government administrative building, Doha, Qatar 1,360

New Doha International Airport, Qatar 173

Hotel fit-out works at Bahrain City Centre 238

Others 23

1,794

Local

The Paradigm and other internal jobs 668

Integrated Complex, KLIA2 486

Infrastructure works at Iskandar Malaysia 481

Various building jobs in Putrajaya 252

New permanent LCCT at KLIA, Earthwork Package 1 203

Tuaran Hospital, Sabah 128

Bakun dam access roads 80

Kota Kinabalu International Airport 36

Universiti Teknologi Mara Campus in Kuala Selangor 36

AEON mall in Melaka 28

Others 89

2,487

Total 4,281

Source: Company, RHBRI

Table 4: Earnings Forecasts Table 5: Forecast Assumptions

FYE Dec (RMm) FY09a FY10F FY11F FY12F FYE Dec FY10F FY11F FY12F

Turnover 4,666.6 2,553.0 2,254.5 1,981.1 Construction EBIT margin (%) 6.2 6.9 8.0Turnover growth (%)

25.7 -45.3 -11.7 -12.1New orderbook secured(RMbn)

2.1 1.5 1.5

EBITDA 254.1 223.8 219.7 220.7EBITDA margin (%) 5.4 8.8 9.7 11.1

Depreciation -10.0 -10.0 -10.0 -10.0Net Interest -50.3 -42.3 -39.7 -37.0Associates 17.2 10.0 10.0 10.0EI 0.0 0.0 0.0 0.0

Pretax Profit 211.1 181.5 180.0 183.6Tax 4.8 -32.6 -32.2 -31.6PAT 215.9 148.9 147.8 152.1Minorities -68.8 0.0 0.0 0.0Net Profit 147.1 148.9 147.8 152.1Source: Company data, RHBRI estimates


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21 October 2010



IMP ORTANT DISCLOSURES

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This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives ofpersons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate particularinvestments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will dependon an investors individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts any liability for any loss ordamage arising out of the use of all or any part of this report.

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The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based uponvarious factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more overa period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

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Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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wct berhad : secures rm1.36bn building job in qatar and rm128m hospital project in sabah -...

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