KEY INVESTMENT HIGHLIGHTS

• Earnings within our expectation

• E&C segment remained as key contributor

• Property segment revenue jumped +36%yoy to RM347m in FY19

• Maintain BUY with unchanged TP of RM0.88

Earnings within our expectation. In FY19, WCT topline dropped - 21.9%yoy to RM1794.1m. In tandem, the FY19 earnings declined - 16.9%yoy to RM88.8m. The bottom line figure was within our expectation at 103.7% of full year estimate, but lagged consensus at 92.3%.

Engineering and Construction (E&C) segment remained as key contributor. Notably, E&C contributed 57% to the Group’s revenue, underpinned by its healthy current order book which stood at over RM5b – comprising a mix of civil and infrastructure works and building construction jobs. This segment posted revenue of RM1,244m in FY19, dropped by -32.6%yoy from RM1,846m in FY18. We note that the contraction in revenue was due to lower contribution as a result of certain recently completed projects as well as those which are at the tail end.

For property segment, revenue jumped +36.1%yoy to RM347m in FY19. Higher contribution from property segment was underpinned by higher revenue and profits from the sale of undeveloped lands in FY19 of RM118m and RM91m respectively. Moreover, sales of property units for FY19 jumped +120.5% to RM322m compared to the year before. It is also worth noting that WCT’s property development division launched two projects for sale in FY19 with a total gross development value (GDV) of RM259m. The projects launched are (1) The Aronia Apartmnets, a Rumah Selangorku project in Bandar Parklands, Klang – comprising 320 units of affordable apartments, and (2) Paradigm Residence in Johor Bahru – comprising 263 units of residential apartments.

Earning forecast unchanged. Post FY19 financial results, we make no adjustments to our FY20 forecast as the earnings were in line with our expectation.

Source: MIDF Research - 27 Feb 2020