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WCT Holdings Bhd (July 13, 88 sen)
Maintain buy with an unchanged target price of RM1.02: Lendlease Projects (M) Sdn Bhd (LLPM) and WCT Holdings Bhd have executed a preliminary work agreement (PWA).
It is a prelude to an execution of a trade contract to be carried out prior to Oct 10, 2018, for the following work intended to be awarded to WCT, comprising four levels of a shopping complex; three levels of a car park; one level open landscape with retail space; and one information centre at TRX Lifestyle Quarter, all for a lump sum of RM555 million.
Pursuant to the PWA, WCT shall proceed with certain preliminary work, which form part of the trade contract. WCT will be entitled to be paid up to a maximum of RM27.75 million for carrying preliminary work under the PWA.
This is WCT’s first construction job win in the financial year ending Dec 31, 2018 (FY18). With this, the outstanding order book is estimated at RM5.1 billion, which could last for another three to four years.
WCT had completed several shopping complex projects which include Bahrain City Centre, MyTown Shopping Centre, Bukit Tinggi Shopping Centre and The Curve Shopping Centre.
Assuming profit before tax (PBT) margin of 7%, we expect this project to contribute a net profit of RM29.5 million, translating into earnings per share (EPS) of two sen throughout the contract period.
Maintain our FY18 to FY20 earnings forecasts as the job win is within our FY18 order book replenishment assumption of RM1.5 billion. — TA Securities, July 13
This article first appeared in The Edge Financial Daily, on July 16, 2018.
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