Journey to Wealth
WCT - Next phase of growth BUY
- Maintain BUY on WCT with our fair value revised downwards to RM2.85/share (previously: RM3.05/share) - as we roll-forward our valuation base to FY13F and account for new issuance of warrants. We have introduced FY15F net profit of RM288mil (+22% YoY).
- Stripping off an exceptional gain from the revaluation of investment properties totalling RM218mil (mainly on Paradigm Mall), WCT reported FY12 results which came 14% below ours, and 17% of consensus.
- We believe the key weaknesses in 4QFY12 mainly came from:- (i) start-up costs for Paradigm Mall; and (ii) slow progress on the Doha administrative building contract.
- But, we are unperturbed. We expect FY13F core net profit to rebound by a strong 33% on account of strong property sales; (ii) step-up in progress from higher-margin local projects that were secured in 2H11/2012; and (iii) maiden contributions from Gateway@KLIA2.
- WCT garnered ~RM1.9bil worth of new contracts in FY12. As for FY13F, we expect the job pipeline to gain further momentum post-elections.
- The key bids for 2013 include:- (i) two hospitals in Sabah (~RM900mil); (ii) Media City (RM400mil); (iii) Phase 2 of RAPID earthworks package (RM500mil); (iv) Tun Razak Exchange earthworks (RM1bil); and (v) the Penang Traffic Alleviation plan.
- WCT has also put in a bid to be the Project Delivery Partner (PDP) for the re-development of the Sg.Buloh RRIM land.
- We estimate WCT to have achieved record new property sales of ~RM700mil in FY12F. The group's outstanding GDV has ballooned to RM14bil following a series of strategic land purchases in Iskandar Malaysia and the Klang Valley over the past two to three years.
- The Gateway@KLIA2 (NLA: 350k sq ft; 6,000 car parks) is to start contributing from 2Q13 onwards. We have pegged a value of RM346mil to it at an 8% cap rate.
- We continue to rate WCT as one of our top large-cap picks for the construction sector. Valuations are alluring at core FD FY13F-15F PEs of 9x-13x against robust EPS CAGR of 24%.
Source: AmeSecurities
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