KUCHING: WCT Bhd (WCT) has recently secured its first job of the year from Putrajaya Holdings Sdn Bhd (Putrajaya Holdings), potentially paving the way for it to retain its solid orderbook until 2016.
“WCT announced that it has accepted a letter of award from Putrajaya Holdings Sdn Bhd for the Proposed Construction and Completion of the Commercial Office Buildings and External Works in Precinct 2, Putrajaya.
“The contract is worth RM315 million and is for two blocks of commercial office comprising a seven-storey podium office and an overall 14-storey tower, and two levels basement carpark,” analyst Mohd Iqbal Zainal Abidin from the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) said in a research note yesterday.
He further highlighted that this was the first job that WCT had landed so far in 2013.
“We are not surprised with the announcement as the management had indicated the project in a briefing to analysts.
“Nonetheless, the timing of the job award came as a surprise as we were only expecting the project to be awarded after the General Election,” Mohd Iqbal said.
The project, which would take about 32 months to complete, had bumped up the group’s total orderbook to RM3.4 billion, which could last until 2016, the analyst pointed out.
“Approximately 51 per cent of its orderbook is from the Middle East while the remaining 49 per cent is from Malaysia,” he said.
Additionally, the analyst opined that the recent project could potentially have a positive impact on the group’s earnings.
“Assuming a seven per cent increase on pre-tax margin, we estimate WCT to generate on average RM7.4 million pre-tax profit per year from this project until 2015.
“We are maintaining our earnings forecasts as the job value is within out 2013 new contracts assumption RM1.8 billion,” he said, optimistic on the outlook of the group.Looking ahead, the analyst expected WCT would continue to replenish its orderbook in 2013, leveraging on its expertise, delivery track record and strong financials.
“Amongst other projects that WCT could potentially clinch in 2013 are two Sabah hospitals (RM900 million), Kwasa Damansara Land civil works (RM1 billion), redevelopment of Angkasapuri, Media City (RM400 million), and phase two of Petronas’ Refinery & Petrochemical Intergrated Development (Rapid), Pengerang civil works (RM500 m),” he added.
However, Mohd Iqbal cautioned, risk to the new orderbook forecast remained on lower than expected new contracts value and delay in payment progress.
The research firm pegged the target price RM3.17 per share, based on sum-of-parts valuation. He noted, “At current price, WCT is trading at undemanding price earning ratio 2013 of 8.9-fold against its five-year price earning ratio average of 15-fold.