Investment Highlights

• We maintain our forecasts, FV of RM1.91 based on sum of parts (SOP) (Exhibit 1) and HOLD call.

• WCT has been awarded by Prasarana a second viaduct package of the LRT3 (Package GS02 – from Bandar Utama to Johan Setia) for RM640mil, to be completed within the next 35 months.

• Recall, WCT in Aug 2017 won the first viaduct package of the LRT3 (Package GS03 – from Suria Damansara to Temasya Glenmarie) for RM840mil. Prior to that, WCT was also appointed the contractor for Johan Setia Depot (Phase 1) of the LRT3 (RM185.9mil) in Apr 2017.

• The latest contract is WCT’s fourth major one in FY17, boosting its YTD job wins to RM1.69bil and its outstanding construction order book to RM6bil (Exhibit 2). We are keeping our forecasts that assume job wins of RM2bil annually in FY17-19F. We are positive on the latest development.

• We maintain our view that WCT will ultimately be turned into the flagship PLC of Tan Sri Desmond Lim, via the injection of Malton (a sister company of WCT, with its prized asset being Pavilion Bukit Jalil) and Lim’s private business ventures including Pavilion Kuala Lumpur and Pavilion Damansara Heights. This could potentially double WCT’s market capitalisation to above RM4bil.

• However, we believe it is premature to tell if the exercise will be value-enhancing to WCT’s existing shareholders, as that depends largely on the structure and pricing of the assets and new shares to be issued pursuant to the corporate exercise.

Source: AmInvest Research - 6 Oct 2017