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Wednesday, July 27, 2016

Brokers Report: WCT Holdings - secures RM1.29 bil Pan Borneo job



Maintain Outperform with unchanged SOTP-derived TP of RM1.80. 

WCT Holdings

WCT Holdings Berhad, via its joint-venture with KKB Engineering Berhad, secured one of the Pan Borneo packages worth RM1.29bn. This job win, which is the Group’s first in FY16, is expected to take 51 months from now to complete. WCT owns 30% of the JV, with the remaining owned by KKB Engineering Berhad. As such, its net stake of c.RM390m is within our replenishment rate of RM2bn p.a. for the Group. This job win is estimated to raise the Group’s outstanding orderbook to RM4.8bn. ensuring earnings visibly for the next few years. Maintain Outperform with SOP-derived TP of RM1.80.

RM1.29bn Pan Borneo Package. The scope of works, among others includes upgrading of Pan Borneo Highway in Sarawak which involving Phase 1, spanning from Sungai Arip Bridge to Bintulu Airport junction. The works are including piling works, civil works which includes demolition & site clearance, earthworks, geotechnical works, drainage work, roads & pavings, road furniture and other miscellaneous works.

C.RM4.8bn outstanding orderbook. With the new job win, the Group’s outstanding orderbook is estimated at RM4.8bn. To recap, the Group is expected to clinch jobs worth RM2bn in 2016, with RM1.6bn expected locally and the rest from the Middle East. Going forward, other key jobs eyed are RAPID Pengerang civil works (c.RM300m), TRX infrastructure and buildings (c.RM800m), Kwasa Damansara civil and infrastructure works, KL118 infrastructure, Southern Double Track, LRT3 and MRT2 rail works.

Maintain Outperform with unchanged SOTP-derived TP of RM1.80. With the potential value to be unlocked from reorganization, we believe the re-rating catalysts are on the cards. Elsewhere, the arbitration claim of AED1.15bn or c.RM1.3bn would potentially add another RM0.95/share to our SOTP valuations. Earnings are kept unchanged.

Source: PublicInvest Research, 27 July 2016

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