Journey to Wealth
WCT - Pushing ahead Buy
- Maintain BUY on WCT with an unchanged fair value of RM3.05/share, pegging the stock at a 15% discount to its sum-of-parts value. For 1QFY12, WCT posted a net profit of RM40mil on a turnover of RM342mil, with no dividend declared.
- We consider the results ' representing 22%-23% of both consensus and our full-year forecast ' to be in line on:- (i) a seasonally weaker 1Q; and (ii) maiden contributions from the Paradigm Mall from 2HFY12 onwards.
- Net profit expanded circa 7% YoY mainly on a pick-up in construction billings (+10% YoY) ' for which circa 85% of construction revenue came from domestic billings.
- WCT's outstanding order book currently stands at approximately RM3.3bil, providing earnings visibility until 1Q 2015. Year-to-date, WCT has secured some RM631mil worth of new orders ' already surpassing the RM187mil that the group had secured for the whole of FY11.
- The two new jobs are:- (i) KK Medical Centre & Riverson (RM331mil); and (ii) new MITI building in Putrajaya (RM300mil).
- The local press recently reported that WCT is gunning for RM1bil worth of new contracts in FY12F ' roughly in line with our assumptions. This represents one-fifth of ~RM5bil worth of on-going tenders, with a 60:40 split between local and international jobs.
- While it recently missed out on the RM300mil Ampang line depot contract (won by Fajarbaru Builders), some of its near-term opportunities include:- (i) additional infrastructure packages for Vale's iron ore facilities (RM100mil-RM200mil); (ii) station works for the Sg.BulohKajang MRT line (~RM200mil-RM300mil per package); (iii) two road packages for the Oman Expressways (~RM1bil/package); and (iv) the RM8bil Gemas-JB double tracking project.
- Property unit WCT Land is targeting RM700mil worth of new sales for FY12F, ahead of the record RM400mil++ it had achieved in FY11. New launches ahead include the 1Medini Residences in Johor, Bukit Jelutong and a new luxury development project in Klang.
- The upcoming Paradigm Mall (launching later today) and KLIA2 (1Q 2013) would double the NLA of its shopping mall to 2.1 mil sq ft. Broadly, such a move marks WCT's quest to expand its recurring income base to 25% of group operating profits by FY16F from 15% in FY11.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
