INVESTMENT HIGHLIGHTS

• FY17 result met target

• New World Hotel and Paradigm Mall, Johor Bahru could rejuvenate income stream

• Maintain earnings forecast

• Nevertheless, we upgrade our recommendation to NEUTRAL with a TP of RM1.47 per share

FY17 results met target. WCT’s FY17 PATAMI of RM154.6m (+137.0% YoY) went met ours and consensus’ expectations, meeting 95.0% and 100% of full year estimates respectively. Compared to FY16’s revenue of RM1.93bn, FY17’s revenue narrowed to RM1.91bn (- 1.0%YoY). The FY17 revenue is in line with our estimates impacted by unwavering higher progress billings. Notably, WCT’s FY17’s receivables amounted to RM1.52bn indicating a positive undertone for FYE18.

New World Hotel and Paradigm Mall, Johor Bahru rejuvenated WCT’s income stream. We have predicted that that the opening of New World Hotel, Petaling Jaya and Paradigm Mall, Johor Bahru would rejuvenate income streams to the property segment and provide better tenancy profiles to its property portfolio. Thus, for property development’s operating profit has shown an increase from FY16’s RM108.2m to FY17’s RM120.8m (+11.6%YoY)

Maintain earnings forecasts. We are adamant in maintaining our forecast for FYE18/FYE19 on the assumption that suppressed earnings will be balanced out by progress billings and improved contribution from Paradigm Mall, Johor Bahru in addition to its our estimated unbilled orderbook of c.RM5.5bn.

Recommendation. Altogether, we upgrade our recommendation to NEUTRAL with SOP-based TP of RM1.47 per share.

Source: MIDF Research - 27 Feb 2018