WCT; Buy; RM2.65
Price Target: RM3.70; WCT MK

WCT announced its second win for 2012 which is a RM331m contract to construction of mixed commercial development with purpose medical centre at Kota Kinabalu, Sabah. The scope of works comprises the construction and completion of a 9-storey hospital with 200 beds (Block A), a 10- storey Complex with SOHO, Office Suites and 3 levels of retail space (Block B), and 1 level of basement carpark. The completion date is August 2014. This was one of the contracts where WCT had a LOI in hand for some time.

This is a good start to 2012 for WCT being its second win and bringing YTD wins to RM631.5m and current outstanding orderbook to c. RM3bn.

We expect margins to be c.5%, typically of other building jobs but may trend higher given its reputation of being cost competitive. 4Q11 results will be released today followed by an analyst briefing tomorrow where its Managing Director, Peter Taing will make his first appearance. We expect FY11 results to be in line with full year net profit of RM160m (+13% yoy). We maintain our BUY rating and SOP-derived TP of RM3.70.

Source: HwangDBS Research 23 Feb 2012