• Another MYR316m EPCC contract in RAPID from PETRONAS lifts external orderbook by 8% to MYR4.03b.
• Job win streak would continue into 2016.
• Further sizeable job wins, reduced gearing concerns to rerate this undervalued stock. Maintain BUY, MYR2.20 RNAV TP.

What’s New

WCT has clinched another contract from PETRONAS (Not Listed) for engineering, procurement, construction and commissioning (EPCC) of substations, field auxiliary rooms, operator shelter and local control building for the utilities, interconnecting and offsites (UIO) facilities in RAPID, Pengerang worth MYR316m. The job scope covers earthworks, piling & foundation works, architectural & design works, architectural modelling works, building structural works and building services works. The total works are expected to complete by 4Q18.

What’s Our View

This job win has raised WCT’s outstanding external orderbook by 8% to MYR4.03b. Assuming a pretax profit margin of 8%, we forecast a net profit contribution of MYR18.9m (1.6sen EPS) into 2018. WCT’s total job wins YTD of MYR2.73b is at an 8-year high. While it has exceeded our MYR2b job win forecast for 2015, we maintain our earnings forecasts pending further details from management.

WCT’s construction job replenishment outlook remains robust with potential jobs from the Pan Borneo Sarawak Highway, RAPID, TRX, Kwasa Land and West Coast Expressway. As the award progress of these projects are picking up, WCT’s job win streak could persist into 2016. Meanwhile, actions taken to alleviate its gearing (see our update note on 9 Nov 2015 titled “Weathering uncertainty”) would also be positive to stock sentiment.

Reiterate BUY with an unchanged RNAV-TP of MYR2.20.

Source: Maybank Research - 13 Nov 2015