INVESTMENT HIGHLIGHTS

• 6MFY18 results encouraging

• Earnings recovered

• FYE18/FYE19 Earnings forecasts unvaried

• Maintain BUY recommendation with a TP of RM1.47

6MFY18 results encouraging. WCT’s 6MFY18 earnings of RM82.1m (+52% YoY) came in within ours and consensus’ expectations at 50.4% and 52.8% of full year estimates respectively. Furthermore, revenue grew +41.0%YoY to RM1.2bn. The increased revenue is influenced by higher billings recognition.

Earnings recovered. The positive growth of revenue coupled with improved net margin of 6.8% means WCT is currently going full throttle to complete its projects. Despite its compressed share price, we are keen to observe WCT’s improvement as earnings gain momentum. Going forward, we reckon the Subang Skypark project would be an exciting project to embark on for WCT in the near term.

Earnings forecasts unvaried. With its orderbook standing at an estimated RM4.5b, we reiterate our view that earnings will be recuperated in upcoming quarters due longer project timeline such as Pan Borneo Highway, TRX and upcoming Subang Skypark Terminal.

Recommendation. We maintain our BUY recommendation with SOPbased TP of RM1.47 per share. Notably, WCT is trading at price-to-book ratio of 0.43x and an earnings yield of 12%, implying an attractive opportunity to increase exposure.

Source: MIDF Research - 28 Aug 2018