9MFY21 CNL of RM4.1m came below our/consensus expectations due to weaker-than-expected property division which saw a pre-tax loss this quarter due to conversion levies incurred on its inventories. No dividends as expected. YTD replenishment of RM1.12b is deemed in line with our RM1.2b target. Post results, we reduce FY21E/FY22E earnings by 48%/16%. Maintain MP call on slightly lowered TP of RM0.63 (from RM0.64).

Below expectations. 3QFY21 core net loss (CNL) of RM35.2m dragged 9MFY21 into a CNL of RM4.1m – below our/consensus full-year profit expectation of RM65m/RM49m, respectively. The underperformance this quarter stemmed from the weaker-than-expected property division which saw a pre-tax loss this quarter due to conversion levies incurred on its inventory properties. No dividends as expected.

Key details on property sales will only be revealed in a briefing today (26 Nov). For now, we maintain our FY21E sales target of RM550m (recap that it has achieved RM362m sales in 1HFY21).

Highlights. QoQ, 3QFY21 reversed into losses with CNL of RM35.2m mainly due to: (i) weaker property segment from conversion levies, (ii) higher loss at JV, and (iii) RM24m bi-annual perpetual sukuk payment made every 1Q and 3Q.

YoY, despite higher revenue (+15%), 9MFY21 plunged into the red with CNL of RM4.1m against 9MFY20 CNP of RM9.2m due to: (i) higher losses at JV, (ii) higher effective tax rate (+15ppt), and (iii) higher perpetual sukuk payment (+13%).

YTD, WCT has achieved contract replenishments worth RM1.12b – tracking our full-year replenishment of RM1.2b (management’s target: RM2b). Despite management’s optimistic guidance, we keep our replenishment target unchanged as most sizeable tenders targeted by WCT are government-related jobs which we believe would be deferred to next year. Outstanding order-book stood at c.RM5.0b.

Reduce FY21E/FY22E earnings by 48%/16% to factor in the weaker property contributions post results.

Maintain MP and lower TP to RM0.63 (from RM0.64) based on unchanged FY22E PBV of 0.3x (-1.5SD).

Source: Kenanga Research - 26 Nov 2021