KUALA LUMPUR: News that WCT Bhd has secured a RM1 billion highway project from the Oman government, has come as a surprise to Kenanga Research.

The research house said it expected any additional contract wins to only come in towards the end of financial year 2012.

"With this new contract award, WCT has already secured approximately RM2 billion worth of contracts year-to-date, and which has exceeded our RM1 billion order book replenishment assumption for 2012," Kenanga said in its research note.

However, Kenaga Research has maintained the "outperform" recommendation for WCT with a target price of RM3.93, due to the attractive upside (+60 per cent) from the current price.

It said 2013 will be another exciting year for WCT, riding on its sizeable outstanding order book of RM3.6 billion (external), and the additional recurring income from its upcoming Gateway at Kuala Lumpur International Airport two by the second quarter of 2013.

"We have revised our financial year 2013 earnings higher by nine per cent as we expect the contribution from the Oman Highway to only materially impact its earnings from financial year 2013 onward," it added.

Meanwhile, Alliance Research retained its trading "buy" on WCT with a target price of RM3.10.

Alliance said the net impact of its earnings adjustments is an increase in its target price for WCT from RM3.01 to RM3.10.

It said the WCT potential job flow pipeline includes RAPID civil works in Pengerang, Johor (RM1.3 billion), Tun Razak Exchange earthworks (RM1 billion), Sabah Hospital (RM200 million), teaching hospital via PFI (RM800-RM900 million) and more work from Vale.

As for the Oman highway project, Alliance estimated that the job win brings WCT's orderbook to RM3.49 billion, translating to 3.1 times financial year 2011 construction revenue. -- BERNAMA