In conjunction with its 4QFY11 results release, WCT hasindicated its intention to secure a number of contracts including one worthRM400m relating to Vale's distribution centre in Teluk Rubiah, 2 buildings inPutrajaya worth RM1bn, and a hospital inthe Iskandar region. Elsewhere, RM1bnworth of properties will be launchedthis year, with its Paradigm Mall expected to bring in rental income by 2Q12. We like its three-pronged approach to expand its property development, investmentand management activities by leveraging on its engineering and constructionexpertise. Maintain BUY, at a revised FV of RM3.17, based on 14x FY12 PER andan enlarged share base, following its ESOS and warrants exercise.
RM2.7bn-strongorderbook. WCT's orderbook currently stands at a sturdy RM2.7bn, with thebulk (>40%) comprising works on the Qatari Government Administrative Office.As the group has secured RM631m worth of jobs YTD, we peg our FY12 and FY13 replenishmentat RM2bn p.a. We believe these targets are achievable since management isaggressively converting its existing LOIs relating to the construction of a RM2.8bndam in Kota Kinabalu and a RM200m hospital in Sabah. On top of that, we alsounderstand that the group is eyeing RM400m worth of jobs in Teluk Rubiah from Valeas well as potentially bagging two government buildings in Putrajaya totaling RM1bn,and a private hospital in the Iskandar region.
Targeting projectsworth RM1bn GDV in 2012. As of Dec 2011, WCT was sitting on unbilled salesof RM357m. For FY12, the group is targeting to launch new projects worth atotal of RM1bn in GDV, mainly comprising luxury homes near its existing Bandar Parklandsdevelopment, serviced apartments at its Paradigm project in Kelana Jaya as wellas Phase 2 of its 1Medini project in the Iskandar region. We are now modelingfor relatively more modest property sales of RM400m p.a. for both FY12 andFY13, up from our earlier assumption for RM350m p.a.
Paradigm Mall the third self-run commercial play.WCT currently operates two commercial properties ' the BBT Shopping Mall (in which AEON Jusco is the sole tenant) and the Premiere Hotel in Klang, launched in 4QFY10. On the back of these properties,its property investment arm chalked up a decent revenue of RM52.3m in FY11 atan appealing gross margin of >70%. For FY12, we expect growth to stem from themaiden contribution from its 700k sq ftParadigm Mall, targeted for launch in 2QFY12. The 70%-owned development (30%held by EPF), comprising office towers, a shopping mall and servicedapartments, is strategically located near the Kelana Jaya LRT station along theLDP highway.
Source: OSK188
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