Journey to Wealth
WCT Berhad - OUTPERFORM - 08 June 2012
News WCT announced that it had secured a contract worth RM72.8m from Vale Malaysia Mineral Sdn Bhd (VMM). The scope of work includes piling, foundation of conveyors, sampling towers, pipe and cable racks and pump house, storm water pond civil works and drainage work at VMM's Minerals Project in Teluk Rubiah, Perak.
Comments We view this news as a pleasant surprise. Management has guided that there will be more potential contracts coming from VMM in the near term. The works will be completed in 18 months.
The newly secured contract value is within our RM1.0b order book replenishment expectation for FY12. To date, WCT has secured three Malaysia based contracts worth RM700m in FY12.
To recap, in July 2011, WCT secured the first contract from VMM worth RM115m for the site earthworks. The outstanding works for the contract is currently at about RM80m and is slated for completion by April 2013.
We expect WCT will be able to chalk up about a 12% operating margin from this project, which would be in line with its track record.
Its current order book stands at RM2.4b, of which 53% are driven by Malaysia-based projects.
Outlook We believe that WCT will be able to meet our RM1.0b order book assumption for FY12. With the new contract secured, we expect WCT to secure at least another RM300m worth of contract(s) in the remaining months of FY12.
We believe that the foundation contract for KLFID will be awarded in the near term. The expected contract value is around RM1.5b to RM1.7b. We understand that WCT was one of the bidders which had the available resources to start the foundation work immediately. This is an advantage for WCT to win the contract.
We also expect that WCT will be able to secure some more projects in Middle East countries i.e. in Qatar and Abu Dhabi.
Forecast No major change to our forecasts as the contract value is within our expectation.
Rating Maintain OUTPERFORM
We are maintaining our OUTPERFORM recommendation for WCT with its attractive upside (+63%) from the current share price.
Valuation No change in our Target Price of RM3.93, which is based on SOP valuation.
Risks Further delays in ETP and Middle East-based projects.
Source: Kenanga
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
More articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City
Created by kiasutrader | Mar 29, 2018
Kenanga Research - On our Portfolio - Parliament dissolution around the corner?
Created by kiasutrader | Mar 25, 2013
Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT
Created by kiasutrader | Mar 25, 2013
Pavilion Reit - Limited upside, earnings upside have been priced in HOLD
Created by kiasutrader | Mar 25, 2013
Discussions
Be the first to like this. Showing 1 of 1 comments
Post a Comment
Featured Posts
Latest Videos
MQ Trading Signals
Time
Signal
Duration
Type
2024-11-22 16:20:00
EMA 5
10 Mins
SELL
2024-11-22 16:15:00
EMA 5
5 Mins
SELL
2024-11-22 16:10:00
EMA 5
5 Mins
BUY
2024-11-22 15:45:00
EMA 5
5 Mins
SELL
2024-11-22 15:25:00
TURTLE SYSTEM 20
5 Mins
SELL
Apps
Top Articles
1
Axcapital's investment blog
KAB - Executing its way to a record quarter. Could more Petronas contracts be coming?
3
4
Koon Yew Yin's Blog
5
BFM Podcast
6
BFM Podcast
7
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
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....
chong
Looks good.
2012-06-10 15:05