Stock Name: WCT
Company Name: WCT BHD
Research House: MIDF
WCT Bhd
(May 24, RM2.56)
Maintain buy at RM2.57 with unchanged target price of RM3.30: WCT recorded a net profit of RM35 million for 1Q10, down 11% year-on-year (y-o-y) and'' +7.4% quarter-on-quarter (q-o-q).
Although the E&C (engineering and construction) division registered lower earnings before interest and tax (Ebit), other divisions especially property development and property and investment holding recorded higher Ebit in 1Q10 as property sales showed an improvement as compared to 1Q09. WCT's turnover in 1Q10 dropped 60% y-o-y due to lower recognition from its construction division. ''
The group continues to aggressively bid for new jobs, both overseas and domestic in order to replenish its existing order book of RM3.2 billion. Year to date (YTD), WCT secured the RM221 million Bahrain City Centre Hotels fit-out works in February via its 50%-owned company, Cebarco-WCT. Besides that, WCT is also bidding for other jobs in Iskandar Malaysia, Johor and a major water infrastructure work in Sabah.
We believe that WCT would retain its 50:50 split between local jobs and the Middle East contracts.
On the home front, WCT was recently identified as one of the prequalified main contractors for the LRT extension project, together with 16 other prequalified applicants. WCT was also prequalified for the subcontractors.
Although we are expecting intense competition among the prequalified bidders, we do not discount the possibility of WCT clinching a portion of the LRT extension job as the company would likely be a strong runner in terms of competitive pricing. ''
We are maintaining our target price of RM3.30, implying a potential upside of 32% (including dividend yield of 3.5%) from its current share price of RM2.57, backed by positive outlook in the construction sector and WCT's proven track records in securing jobs, both domestic and in the Middle East.
The current share price weakness resulting from the global selldown provides an opportunity for investors to accumulate WCT shares. ' MIDF Research, May 24 ''
This article appeared in The Edge Financial Daily, May 25, 2010.
Company Name: WCT BHD
Research House: MIDF
WCT Bhd
(May 24, RM2.56)
Maintain buy at RM2.57 with unchanged target price of RM3.30: WCT recorded a net profit of RM35 million for 1Q10, down 11% year-on-year (y-o-y) and'' +7.4% quarter-on-quarter (q-o-q).
Although the E&C (engineering and construction) division registered lower earnings before interest and tax (Ebit), other divisions especially property development and property and investment holding recorded higher Ebit in 1Q10 as property sales showed an improvement as compared to 1Q09. WCT's turnover in 1Q10 dropped 60% y-o-y due to lower recognition from its construction division. ''
The group continues to aggressively bid for new jobs, both overseas and domestic in order to replenish its existing order book of RM3.2 billion. Year to date (YTD), WCT secured the RM221 million Bahrain City Centre Hotels fit-out works in February via its 50%-owned company, Cebarco-WCT. Besides that, WCT is also bidding for other jobs in Iskandar Malaysia, Johor and a major water infrastructure work in Sabah.
We believe that WCT would retain its 50:50 split between local jobs and the Middle East contracts.
On the home front, WCT was recently identified as one of the prequalified main contractors for the LRT extension project, together with 16 other prequalified applicants. WCT was also prequalified for the subcontractors.
Although we are expecting intense competition among the prequalified bidders, we do not discount the possibility of WCT clinching a portion of the LRT extension job as the company would likely be a strong runner in terms of competitive pricing. ''
We are maintaining our target price of RM3.30, implying a potential upside of 32% (including dividend yield of 3.5%) from its current share price of RM2.57, backed by positive outlook in the construction sector and WCT's proven track records in securing jobs, both domestic and in the Middle East.
The current share price weakness resulting from the global selldown provides an opportunity for investors to accumulate WCT shares. ' MIDF Research, May 24 ''
This article appeared in The Edge Financial Daily, May 25, 2010.
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