Stock Name: WCT
Company Name: WCT BHD
Research House: HWANGDBS
WCT Bhd
(April 11, RM3.04)
Recommend buy at RM3.08 with target price RM4.15: We believe WCT is the front runner for at least one package of the light rail transit (LRT) extensions Phase 2, given its lean cost structure and execution record (evident in two perceived low-margin jobs ' the low-cost carrier terminal earthworks and Medini Residences infrastructure ' it clinched in 2009 that are reaping 7% margins now).
The total package size for Phase 2 is about RM2.2 billion. We understand WCT was a close second for Phase 1 which was won by TRC Synergy Bhd and Bina Puri Holdings Bhd. It continues to guide for RM2 billion new order wins for 2011 split equally between local and Middle East jobs.
WCT's largest job in its RM3.1 billion order book is a RM1.4 billion contract to build a government office in Qatar with 8% pre-tax margin and 20% advance payment. Its total Middle East exposure is 52% of its order book, but its focus is now Qatar, where infrastructure spending is expected to surge over the next few years as it will host the Fifa 2022 World Cup.
This includes a US$25 billion (RM75.5 billion) urban rail project in the pipeline. Qatar has not been affected by the political unrest in the region because it is a rich nation ' in 2010 it had the world's highest per capita GDP and its economy grew by 19.4%, the fastest in the world.
We understand there is a RM1 billion outstanding tender for a media centre in Doha, Qatar's capital, for which WCT is one of five bidders.
WCT will have a more aggressive property launch pipeline this year, RM400 million against RM220 million in 2010. The successful maiden launch of 1 Medini Residences with RM200 million sales (average selling price US$130psf) will remove scepticism over high rise development in Iskandar Malaysia.
We expect property investment revenue to quintuple by 2013 to about RM161 million once Paradigm PJ and the LCCT build-operate-transfer is completed.
We understand WCT is finalising the concession terms but our back-of-the-envelope calculation suggests it could generate 8.4% project internal rate of return. ' HwangDBS Vickers Research, April 11
This article appeared in The Edge Financial Daily, April 12, 2011.
Company Name: WCT BHD
Research House: HWANGDBS
WCT Bhd
(April 11, RM3.04)
Recommend buy at RM3.08 with target price RM4.15: We believe WCT is the front runner for at least one package of the light rail transit (LRT) extensions Phase 2, given its lean cost structure and execution record (evident in two perceived low-margin jobs ' the low-cost carrier terminal earthworks and Medini Residences infrastructure ' it clinched in 2009 that are reaping 7% margins now).
The total package size for Phase 2 is about RM2.2 billion. We understand WCT was a close second for Phase 1 which was won by TRC Synergy Bhd and Bina Puri Holdings Bhd. It continues to guide for RM2 billion new order wins for 2011 split equally between local and Middle East jobs.
WCT's largest job in its RM3.1 billion order book is a RM1.4 billion contract to build a government office in Qatar with 8% pre-tax margin and 20% advance payment. Its total Middle East exposure is 52% of its order book, but its focus is now Qatar, where infrastructure spending is expected to surge over the next few years as it will host the Fifa 2022 World Cup.
This includes a US$25 billion (RM75.5 billion) urban rail project in the pipeline. Qatar has not been affected by the political unrest in the region because it is a rich nation ' in 2010 it had the world's highest per capita GDP and its economy grew by 19.4%, the fastest in the world.
We understand there is a RM1 billion outstanding tender for a media centre in Doha, Qatar's capital, for which WCT is one of five bidders.
WCT will have a more aggressive property launch pipeline this year, RM400 million against RM220 million in 2010. The successful maiden launch of 1 Medini Residences with RM200 million sales (average selling price US$130psf) will remove scepticism over high rise development in Iskandar Malaysia.
We expect property investment revenue to quintuple by 2013 to about RM161 million once Paradigm PJ and the LCCT build-operate-transfer is completed.
We understand WCT is finalising the concession terms but our back-of-the-envelope calculation suggests it could generate 8.4% project internal rate of return. ' HwangDBS Vickers Research, April 11
This article appeared in The Edge Financial Daily, April 12, 2011.
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