WCT has secured RM550m contract for construction of shopping mall complex and car parks for Lendlease Projects (M) Sdn Bhd in Tun Razak Exchange (TRX). The works are scheduled to be completed within 2 years. With the latest job win, orderbook is now estimated at RM5.0bn, implying a cover ratio of 3.6x. We remain cautious on the macro job flow outlook following the new government’s review on mega projects. Forecast unchanged as we take a conservative stance. Maintain HOLD with unchanged SOP-drive TP of RM0.78.

NEWSBREAK

Bags new contract. WCT announced that it has been awarded RM555m contract from Lendlease Projects (M) Sdn Bhd on works (superstructure, façade and blockworks) for the project known as the “Proposed Commercial Mixed Development on Plot 1 comprising: (i) 4 levels of shopping complex, (ii) 3 levels of car park, (iii) 1 level open landscape with retail space and 1 information centre and (iv) future development plot on Lot PT 157, Seksyen 67, Jalan Tun Razak/ Jalan Davis, Bandaraya Kuala Lumpur. This contract is for the construction of shopping mall that is develop by Lend Lease at Tun Razak Exchange (TRX). We understand that duration of the work is c.2 years.

HLIB’s VIEW

First construction job win. This is the first construction job win for the company YTD. This brings WCT’s orderbook to c.RM5.0bn which translates to a healthy cover of c.3.6x on FY17 construction revenue.

Cautious on job flow outlook. While this contract win is positive, we remain cautious on the overall macro job flow outlook. This follows from the new government’s move to put all mega projects under review which would inevitably result to project rollout delays or an outright cancellation.

Forecast. Although YTD job wins of RM550m has exceeded our full year assumption of RM500m, we leave our forecast unchanged as we take a conservative stance given the less than sanguine macro job flow outlook.

Maintain HOLD, TP: RM0.78. Maintain HOLD rating and SOP-driven TP of RM0.78. While valuations are turning attractive following the post GE14 sell off, we remain cautious on the slowing macro job flow outlook.

Source: Hong Leong Investment Bank Research - 13 Jul 2018