WCT; Buy; RM2.40
Price Target: RM3.75; WCT MK

WCT has won a RM72.8m contract for industrial civil works at Teluk Rubiah Perak from Vale Malaysia Minerals. While this is a smallish win, it is important as there is potential for further contract wins from Phase 2 earthworks of 1,000 acres. The tender documents for this will be out in 3Q. Recall also WCT had in July 2011 clinched the earthworks for Phase 1 worth RM115.1m making this to be its second win from Vale.

This is WCT's third contract win for 2012 bringing YTD wins to RM704m. Other nearer term new order wins could come from KLIFD foundation and earthworks; PLUS highway widening and MRT stations. We also think there is a possibility that WCT will exceed its RM1bn new order win assumption for the remaining of 2012 given the strong contract flows locally with lack of reputable contractors with spare capacity. It currently has a RM5bn tenderbook. Our current forecast of new order wins post this win is RM1.3bn.

We maintain our BUY rating and SOP-derived TP of RM3.75. We continue to like WCT as a reliable and cost efficient contractor which will benefit from the current surge in contract flows.

Source: HwangDBS Research - 8 June 2012