Stock Name: WCT
Company Name: WCT BHD
Research House: MAYBANK
WCT Bhd
(May 10, RM3)
Maintain buy at RM2.99 with target price of RM3.75: We maintain our 'buy' call on WCT as 1Q11 results, due on May 26, are likely to meet expectations. Job win potential remains positive on the domestic front, which could substantially lift its RM3.7 billion outstanding order book (as at end-2010). Strong property sales should provide for stronger quarters ahead. We make no change to our forecast for a 31% jump in 2011 net profit. Our target price pegs the stock to sum-of-parts valuation (15 times 2012 price-earnings ratio plus 20 sen value enhancement for KLIA 2 retail concession).
Net profit in 1Q11 should expand year-on-year (1Q10: RM35 million), driven by strong property sales while construction margins are expected to normalise towards the 8% level post final account recognition for the Abu Dhabi F1 contract. This'' resulted in a 14% to 15% higher earnings before interest and tax (Ebit) margin in 3Q10 and 4Q10. We estimate 1Q11 net profit to at least meet 20% of our full-year forecast of RM184 million.
There is potential for positive job wins. First, WCT has participated in the tender for Package B of the LRT extension which closed on March 14. We think WCT stands a high chance of securing the job based on its lean cost structure, hence, more competitive bid. We estimate the value to be RM1.9 billion for the entire 18.1km stretch, based on contract values for Package A, awarded last November (RM95.5 million per km), after including a 10% rise in material costs. Work awards are expected by mid-2011.
Second, WCT has participated in the contractors' pre-qualification exercise for the Klang Valley MRT (Sg Buloh-Kajang line) elevated structure works, which closed on April 13. We believe that it also stands a high chance of being pre-qualified. The elevated structure, spanning an estimated 41.5km, offers works value of RM10 billion, we estimate. The call for tender is expected in July, while work awards should be towards end-2011.
Property sales were strong in 1Q11 with about RM100 million locked in, almost half the RM220 million sales of 2010. Sales in 1Q11 came from the Klang township developments, while 1 Medini (condominium) and another 18.7ha in Klang (luxury homes) are slated for a maiden launch in 2H11. These new projects offer RM900 million in total gross development value (Medini: RM600 million, Klang: RM300 million). WCT's 2011 internal sales target stays at above RM400 million. ' Maybank IB Research, May 10
This article appeared in The Edge Financial Daily, May 11, 2011.
Company Name: WCT BHD
Research House: MAYBANK
WCT Bhd
(May 10, RM3)
Maintain buy at RM2.99 with target price of RM3.75: We maintain our 'buy' call on WCT as 1Q11 results, due on May 26, are likely to meet expectations. Job win potential remains positive on the domestic front, which could substantially lift its RM3.7 billion outstanding order book (as at end-2010). Strong property sales should provide for stronger quarters ahead. We make no change to our forecast for a 31% jump in 2011 net profit. Our target price pegs the stock to sum-of-parts valuation (15 times 2012 price-earnings ratio plus 20 sen value enhancement for KLIA 2 retail concession).
Net profit in 1Q11 should expand year-on-year (1Q10: RM35 million), driven by strong property sales while construction margins are expected to normalise towards the 8% level post final account recognition for the Abu Dhabi F1 contract. This'' resulted in a 14% to 15% higher earnings before interest and tax (Ebit) margin in 3Q10 and 4Q10. We estimate 1Q11 net profit to at least meet 20% of our full-year forecast of RM184 million.
There is potential for positive job wins. First, WCT has participated in the tender for Package B of the LRT extension which closed on March 14. We think WCT stands a high chance of securing the job based on its lean cost structure, hence, more competitive bid. We estimate the value to be RM1.9 billion for the entire 18.1km stretch, based on contract values for Package A, awarded last November (RM95.5 million per km), after including a 10% rise in material costs. Work awards are expected by mid-2011.
Second, WCT has participated in the contractors' pre-qualification exercise for the Klang Valley MRT (Sg Buloh-Kajang line) elevated structure works, which closed on April 13. We believe that it also stands a high chance of being pre-qualified. The elevated structure, spanning an estimated 41.5km, offers works value of RM10 billion, we estimate. The call for tender is expected in July, while work awards should be towards end-2011.
Property sales were strong in 1Q11 with about RM100 million locked in, almost half the RM220 million sales of 2010. Sales in 1Q11 came from the Klang township developments, while 1 Medini (condominium) and another 18.7ha in Klang (luxury homes) are slated for a maiden launch in 2H11. These new projects offer RM900 million in total gross development value (Medini: RM600 million, Klang: RM300 million). WCT's 2011 internal sales target stays at above RM400 million. ' Maybank IB Research, May 10
This article appeared in The Edge Financial Daily, May 11, 2011.
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