1HFY21 CNP of RM31.1m came within our and consensus expectations, at 48% and 60% of estimates, respectively. No dividends as expected. YTD replenishment of RM1.12b is deemed in line with our RM1.2b target (management targets RM2b) as we believe public project rollouts would be deferred in view of the severe pandemic situation. Post results, we maintain our earnings estimates, OP call and TP of RM0.64.

Within expectations. 2QFY21 CNP of RM13.7m led 1HFY21 to CNP of RM31.1m - within our/consensus expectations at 48%/60% of full-year estimates. No dividends as expected.

2QFY21 sales of RM0.2b brought 1HFY21 sales to RM0.3b – within our FY21E sales target of RM0.55b (management targets RM1.0b).

Highlights. QoQ, 2QFY21 CNP of RM13.7m decreased 21% due to weaker property development contributions as the previous quarter recognised land sale profits worth RM57m. Excluding the land sales, we note that this quarter actually improved despite the FMCO lockdown – thanks to stronger construction revenue (+47%) and EBIT margin (+3ppt). YoY, 1HFY21 CNP of RM31.1m surged 3.2x backed by stronger revenue (+19%) on easier lockdown measures.

YTD, WCT has achieved contract replenishments worth RM1.12b – almost hitting our full-year replenishment of RM1.2b (management targets RM2b). However, we keep our replenishment target unchanged as most sizeable tenders targeted by WCT are government-related jobs which we believe would be deferred as government would likely conserve funds to prioritise pandemic assistance packages at this juncture.

Maintain FY21-22E earnings post results.

Maintain OP and TP of RM0.64 based on unchanged FY22E PBV of 0.3x (-1.5SD). At current FY22E PBV valuation of 0.25x, we find WCT’s valuations appealing in view of potential earnings rebound post pandemic.

Source: Kenanga Research - 27 Aug 2021