Journey to Wealth
WCT - 3Q12 results broadly in line
Period 3Q12/9M12
Actual vs. Expectations The 9M12 results came in broadly within our expectations and that of the consensus at 67% of both estimates. The contribution from its PLUS and Oman projects were not meaningful during the period.
Dividends No dividend was declared as expected.
Key Result Highlights The 9M12 net profit of RM40m was higher by 5% (YoY) on the back of the high growth in its property development contribution (+53%). However, the margin for the property investment and construction division has dropped due to the start-up overheads incurred for its Paradigm Mall and the lower contribution from overseas project.
QoQ, the net profit increased only marginally by 2% due to the lower construction margin, which fell from 10% to just 4%. This was due mainly to a higher initial cost for the newly secured projects, i.e. PLUS and Oman. On the flip side, the property development profit has increased by 52% and the property investment profit by tenfold.
YoY, the net profit improved by 3% due to the strong contribution from the property development division (+97%). The construction revenue meanwhile grew by 59% due to a higher order book size as compared to last year. To recap, its order book replenishment only started in Feb 2012 i.e. from the MITI building. The company's current order book stands at c.RM3.5b (external).
Outlook The earthwork jobs for TRX (Tun Razak Exchange) and RAPID would be the key catalysts for WCT in the near term (collectively worth c.RM2.0b).
We expect more construction revenue contributions from the newly secured projects, i.e. PLUS and Oman in the coming quarters.
Forecasts No changes in our FY12 and FY13 forecasts.
Rating Maintain OUTPEFORM
We are maintaining our OUTPERFORM recommendation due to the 17% potential upside from the current price to our TP.
Valuation We are keeping our target price unchanged at RM3.17 based on SOP valuation.
Risks Delays in contract awards i.e. TRX and RAPID
Source: Kenanga
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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....
