WCT; Buy
Price Target: RM3.35; WCT MK

WCT announced that it has accepted a Letter of Award from 1MDB Real Estate Sdn Bhd for Zone 3 on the Proposed Earthworks, Retaining Walls and Foundation Works for Phase 1 Tun Razak Exchange (TRX). The contract sum is RM169.3m with a duration of 26 months. The scope of works generally comprise site clearance, earthworks & rock excavation, secant pile wall, grouting works, bored pile & basement raft and other miscellaneous and associated works.

This represents WCT second win for 2013 bringing YTD wins to RM484m and total outstanding orderbook to RM3.1bn. This is a positive surprise as it makes up for the recently cancelled Batinah Expressway Phase 2 and gives the market visibility that this TRX project will take off. This award is part of a total package of RM1bn if including Zone 1 and Zone 2 where we also expect WCT to have a strong chance of clinching.

We have not made changes to our earnings projections as YTD win forms 24% of our RM2bn new order win assumption for FY13F. We think the next sizeable job to potentially be awarded to WCT is the Kwasa land civil works (c.RM1bn). WCT will likely have a JV partner for this where the contract may follow the PDP format similar to the current MRT project.

We maintain our BUY rating and SOP-derived TP of RM3.35.

Source: HwangDBS Research - 17 Apr 2013