WCT Holdings announced that it has been awarded a RM267m earthworks and infrastructure works package for Petronas’ refinery and petrochemical integrated development (RAPID) project on 26 October 2015. The completion period is 31 months. It was also reported that the consortium of South-Korea-listed Samsung C&T Corp and its local partner UEM Group Bhd is believed to have won the US$505m (RM2.12bn) construction job for the KL118 Tower (Bursa Malaysia and The Star).

Comments: It is positive to note that WCT has secured RM1.22bn worth of local projects year to date with the RAPID project in the bag. Together with the QAR0.85bn (RM0.97m) share of works for the Lusail project in Qatar secured in March, WCT has clinched RM2.07bn worth of projects this year, achieving its RM2bn target for new contracts. No change in our earnings forecasts as we have assumed that WCT will secure RM2bn worth of new contracts (excluding the Lusail project) in FY15-16E and 61% of our target has been achieved.

But WCT, MRCB, IJM Corp and TSR together with their respective partners have lost out to the Samsung-UEM consortium for the KL118 Tower project. WCT was partnering Arabtec in the bid for the KL118 Tower project. No impact to our earnings forecasts as we did not assume that WCT will win this project. Prospect for WCT to grow its order book is good as we understand that it has been pre-qualified to bid for civil work packages for the Klang Valley MRT Line 2 above-ground works (total contract value of about RM16bn) and will also be bidding for packages for the West Coast Expressway Phase 2 (total contract value RM2.2bn). We reiterate our BUY call on WCT with RM1.84 target price, based on 20% discount to RNAV.

Source: Affin Hwang Capital Research - 28 Oct 2015