Stock Name: WCT
Company Name: WCT BHD
Research House: HLG
WCT Bhd
(March 1, RM3.02)
Maintain buy at RM2.97 with target price of RM3.85: We view WCT's proactive initiative to close the chapter on Bakun dam positively. Impoundment works are being carried out and scheduled for completion by mid-2011, followed by handover at end-2011. The write-back on the provisions, depends on the government's approval which, if successful, will most likely happen in 2012.
Half of WCT's RM3 billion order book is from the Middle East, of which a total of RM78 million is derived from Bahrain, where the project is already completed pending final claims. The remaining projects are in Qatar where WCT is undertaking the RM1.4 billion Qatar Government Administrative Office project.
WCT does not see similar revolts happening in Qatar as the country is much more affluent with large oil and gas reserves compared with neighbouring countries. WCT is still bullish on Qatar by virtue of the country hosting the 2022 World Cup.
As at end-2010, WCT's unbilled property sales stood at RM178 million, accounting for 76% of its FY10 property sales.
Management has targeted RM400 million worth of launches in 2011. The terms and agreement for the KLIA2 concessionaire have more or less been finalised. Paradigm Mall is expected to be opened by end-2011 and 40% of the 700,000 sq ft net lettable area has been committed. The anchor tenant, Tesco, will occupy 120,000 sq ft.
Risks to WCT's performance include execution, regulatory and political risks, besides rising raw material prices.
We revise our forecast for WCT's FY11 and FY12 earnings per share downwards by 1.7% and 3.5% respectively.
But we maintain our 'buy' call on the stock due to the positive outlook for the sector. Share price weakness due to the Middle East turmoil is an opportunity to make an entry into the stock. Our target price for WCT shares is reduced to RM3.85 post earnings revision based on 15 times average FY11 and FY12 earnings. ' Hong Leong IB Research, March 1
This article appeared in The Edge Financial Daily, March 2, 2011.
Company Name: WCT BHD
Research House: HLG
WCT Bhd
(March 1, RM3.02)
Maintain buy at RM2.97 with target price of RM3.85: We view WCT's proactive initiative to close the chapter on Bakun dam positively. Impoundment works are being carried out and scheduled for completion by mid-2011, followed by handover at end-2011. The write-back on the provisions, depends on the government's approval which, if successful, will most likely happen in 2012.
Half of WCT's RM3 billion order book is from the Middle East, of which a total of RM78 million is derived from Bahrain, where the project is already completed pending final claims. The remaining projects are in Qatar where WCT is undertaking the RM1.4 billion Qatar Government Administrative Office project.
WCT does not see similar revolts happening in Qatar as the country is much more affluent with large oil and gas reserves compared with neighbouring countries. WCT is still bullish on Qatar by virtue of the country hosting the 2022 World Cup.
As at end-2010, WCT's unbilled property sales stood at RM178 million, accounting for 76% of its FY10 property sales.
Management has targeted RM400 million worth of launches in 2011. The terms and agreement for the KLIA2 concessionaire have more or less been finalised. Paradigm Mall is expected to be opened by end-2011 and 40% of the 700,000 sq ft net lettable area has been committed. The anchor tenant, Tesco, will occupy 120,000 sq ft.
Risks to WCT's performance include execution, regulatory and political risks, besides rising raw material prices.
We revise our forecast for WCT's FY11 and FY12 earnings per share downwards by 1.7% and 3.5% respectively.
But we maintain our 'buy' call on the stock due to the positive outlook for the sector. Share price weakness due to the Middle East turmoil is an opportunity to make an entry into the stock. Our target price for WCT shares is reduced to RM3.85 post earnings revision based on 15 times average FY11 and FY12 earnings. ' Hong Leong IB Research, March 1
This article appeared in The Edge Financial Daily, March 2, 2011.
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