WCT’s orderbook swells to RM5.5b on Kelantan win


WCT Holdings Bhd’s RM440 million contract win to expand and upgrade the Sultan Ismail Petra Airport in Kota Baru, Kelantan, has helped its orderbook swell to RM5.5 billion, a 9% increase, bringing its year-to-date jobs to RM577 million.

Hong Leong Investment Bank Bhd (HLIB Research) analyst Jeremy Goh said the job win falls within the research firm’s RM1 billion assumption for the financial year 2021 (FY21).

“Looking ahead, remaining job wins would be supported by its RM10 billion worth of tenders submitted or pending submission (RM4 billion from building works).

“On the infrastructure side, near-term opportunities centre largely in Sabah, in particular the Pan-Borneo Highway,” Goh said in a note yesterday.

HLIB Research maintained a ‘Hold’ call on the counter with an unchanged target price (TP) of 61 sen, implying FY21/FY22 price-earnings ratio (PER) of 16.4 times/15.5 times.

“While WCT is poised to recover gradually along with declining cases, we reckon valuations are fair trading at FY21-FY22 PER multiple of 16 times/15.1 times,” Goh said.

Public Investment Bank Bhd analyst Nurzulaikha Azali expects the project to contribute RM22 million profit at operating level, spreading over the construction period of three years with recognition of up to FY24.

“On the outlook, we foresee WCT’s earnings improving this year though we maintain our conservative assumptions of RM1 billion for construction orderbook and RM500 million in new property sales,” Nurzulaikha said.

“This is versus management’s target of RM2 billion and RM1 billion respectively. Our conservative stance lies in the fact that its onetime net gearing may limit its growth potential and flexibility in project execution,” she added.

Nurzulaikha expects contract awards in the sector to pick up in line with Putrajaya’s RM68.2 billion allocation towards development expenditure this year.

“We raise our call to ‘Neutral’ with a higher TP of 53 sen as we lower the discount in our FY21 sum-of-the-parts valuation from 35% to 10%, the 10% remaining given its one-time net gearing, limiting its growth potential and flexibility in managing project execution risks,” she said.

Read our previous report here

WCT wins RM440m contract to upgrade Sultan Ismail Petra Airport