WCT; Buy; RM2.36
Price Target: RM3.35; WCT MK

WCT believes a realistic target for new wins for 2013 is RM1bn with YTD wins of RM670m. The balance will likely come from Putrajaya Parcel F building job. The total contract value is RM1.4-RM1.5bn but may be awarded to a few contractors. We also understand tenders for earthworks and foundation works for Zone 1 and 2 for Tun Razak Exchange will commence soon. Recall, WCT won RM169m worth of orders for Zone 3.

The Qatar infrastructure job worth RM1bn will likely be awarded early next year as the client has asked the contractors to resubmit some tenders. WCT’s focus in the Middle East will remain in Qatar where it is seeing more infrastructure projects calling for prequalifications in the run up to the World Cup in 2022.

WCT is confident of meeting its RM775m property sales guidance for FY13F (YTD of RM462m). Although 3Q billings for property have been hampered by labour issues from its subcontractors, this is expected to pick up as WCT is now supplying labour directly to the subcontractors. Property sales are expected to accelerate also as two projects are expected to receive their advertising permits soon which have been delayed. These projects are Paradigm Residences (RM80m sales based on 40% booking rate) and Laman Greenville @ Klang South (RM130m sales based on 50% bookings).

WCT does not discount a listing of its property arm which we highlighted in our last report. But it believes a more appropriate time would be after it achieves a larger sustainable profit base.

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

Source: HwangDBS Research - 25 Nov 2013