Yesterday WCT announced that they have bagged a contract award amounting to RM322.6m from PRPC Utilities and Facilities Sdn. Bhd.
The scope of works for the RAPID package 14-0401 consists of phased demolition and restoration works, excavation and backfillings works, storm drainage works, piling works, roads & paving works, underground piping works, concrete works, structural works, electrical and instrumentation works and any other miscellaneous works and are expected to be completed in the next 28 months.
This contract would mark the fifth contract win by WCT since October, bringing its total orderbook replenishment for FY15 to c.RM2.9b, far exceeding our FY15 orderbook replenishment assumptions of RM1.3b by 123%.
However, we are still neutral on the contract award as it is still within our FY16E orderbook replenishment of RM2.5b.
Assuming a conservative PBT margin 8%, the contract is expected to contribute c.RM19.4m to our net earnings estimate for the next 2-2.5 years.
This contract award further boosts WCT’s outstanding orderbook to c.RM4.6b (previously, c.RM4.3b), sufficient to sustain the group for another 2-3 years.
While its outstanding orderbook remains sizeable at c.RM4.6b, we are concerned on the execution of these contracts, as labor issues could potentially be a main drag to its construction margins.
No change to our FY15-16E net profit as the recognition of the contract award are still within our FY16E assumptions of RM2.5b.
Maintain MARKET PERFORM
No changes to our SoP-based TP of RM1.51 (@20% discount) and keeping our MARKET PERFORM call on WCT as our TP of RM1.51 implies Fwd. PER of 20.9x, which is rich compared to other big cap contractors.
Lower-than-expected new contract flows.
Lower-than-expected construction margins.
Lower-than-expected property sales.
Source: Kenanga Research - 16 Dec 2015
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Created by kiasutrader | Aug 23, 2024
Created by kiasutrader | Aug 23, 2024
WCT bags Rm322.6 millions job at Pengerang's RAPID is really just peanut compared to MPHBCAPITAL.
Wait till the Full Revelation of what MPHBCAPITAL Got to Gain From RAPID.
It will blow your mind away!
Stay tuned.....
By Calvin Tan Research
2015-12-16 21:42
SuperMan 99
Fair
2015-12-16 21:35