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Gaining traction
Highlights:
• Outperform: We are recommending Outperform with the target price of RM3.10 ascribing forward PE of 15X against EPS of 20.7sen. We are convinced of the turnaround in their construction activities following the implementation of government projects in 2HCY10.
WCT outstanding order book stood at RM2.4bn as at 31st Mar 2010, which would underpin their earnings up to FY11. Project secured in FY10 thus far are additional works for the Bahrain City Centre Hotel Fits Out works valued at RM221m. The management expects to secure RM2.0bn worth of order book replenishment.
We are optimistic WCT will be able to meet its target following the roll out of major local infrastructure projects and potential jobs recovering in Middle East. Potential jobs which WCT could land into are: LRT Ampang and Kelana Jaya line extension; Sabah Water supply scheme; Langat 2 water treatment plant; seven PPP highways under 10MP; and couple with JV projects in Qatar.
• 2QFY10 revenue rose by 28.4% q/q to RM513.6mn: Elevated top line was mainly driven by improvement in construction and property segments, which grew by 26.7% and 23.6% q/q respectively. We expect further improvement from these two segments, moving forward. We expect future launches of Bandar Parkland and 1 Medini developments to lead the growth in property segment.
• Subsiding construction margin: Operating margin from civil engineering and construction segment contracted by 21%q/q, offsetting the marginal improvement of property development segment which gained by 3.9%q/q. Baring significant construction projects secured, we expect construction margin to remain at 5%-7%.
Highlights:
• Outperform: We are recommending Outperform with the target price of RM3.10 ascribing forward PE of 15X against EPS of 20.7sen. We are convinced of the turnaround in their construction activities following the implementation of government projects in 2HCY10.
WCT outstanding order book stood at RM2.4bn as at 31st Mar 2010, which would underpin their earnings up to FY11. Project secured in FY10 thus far are additional works for the Bahrain City Centre Hotel Fits Out works valued at RM221m. The management expects to secure RM2.0bn worth of order book replenishment.
We are optimistic WCT will be able to meet its target following the roll out of major local infrastructure projects and potential jobs recovering in Middle East. Potential jobs which WCT could land into are: LRT Ampang and Kelana Jaya line extension; Sabah Water supply scheme; Langat 2 water treatment plant; seven PPP highways under 10MP; and couple with JV projects in Qatar.
• 2QFY10 revenue rose by 28.4% q/q to RM513.6mn: Elevated top line was mainly driven by improvement in construction and property segments, which grew by 26.7% and 23.6% q/q respectively. We expect further improvement from these two segments, moving forward. We expect future launches of Bandar Parkland and 1 Medini developments to lead the growth in property segment.
• Subsiding construction margin: Operating margin from civil engineering and construction segment contracted by 21%q/q, offsetting the marginal improvement of property development segment which gained by 3.9%q/q. Baring significant construction projects secured, we expect construction margin to remain at 5%-7%.
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