PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 18 Jun 2021, 10:10 AM


WCT Holdings Berhad- In line

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WCT Holdings’ (WCT) 2QFY20 net profit came in at RM7.4m (>-100% QoQ, -67.6% YoY) again attributed to lower recognition from all key segments due to movement lockdowns implemented since mid-March. Although Group YTD net profit of RM6.1 m (-90.2% YoY) only constituted c.9% and c.11% of our and consensus full year estimates, we deem it as in line as we expect earnings to recover in subsequent quarters. Earnings estimates are kept unchanged for now. Maintain our Neutral rating lower our TP to RM0.47 (from RM0.54 previously), with a wider c.30% discount tagged to its SOP based valuations due to its higher financial commitments. The Group’s de gearing exercise appears more challenging amid the current operating climate, limiting its growth potential.

  • Result highlights. Group revenue and net profit was lower 17% and 70% to RM375m and RM7m respectively mainly due to lower billings from construction business as sites were closed during the MCO which started in March. Construction margins were also adjusted lower for certain projects. Property division, on the contrary, delivered higher revenue and net profit of RM144m (from RM137m in 2QFY19) and RM49m (from RM45m in 2QFY19) respectively due to improved sales performance and profit recognition from the Waltz Residences following the completion of this project during the period.
  • Outlook. While WCT’s outstanding orderbook appears healthy at around RM6bn with the recent award of Parcel 2 of Pavilion Damansara Heights worth RM1.2bn in March this year, we believe the Group may face some challenges in project execution given the new operating norms amid the Covid-19 pandemic, limiting speed and work progress. Progress of other key projects such as LRT3 will also be delayed as the structure and cost has yet to be finalised. WCT’s outstanding orderbook for the various LRT3 packages stand at RM1.3bn, translating to ~20% of total orderbook. Award of new projects also remain uncertain given the current operating climate as well as the Federal government’s financial constraints. The property development segment will also see challenges caused by oversupply issues. Going forward, management is delaying the planned launch of The Maple, originally slated for 3Q20 with no planned launches for 2020

Source: PublicInvest Research - 27 Aug 2020

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WCT 0.55 0.00 (0.00%) 2,526,900 

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