How come two research house so big different??? One with Buy rating of RM 3.00 and the other one with SELL rating at RM 1.76. Which is which???
WCT - by Hwang DBS
WCT has clinched a RM315m new contract win from Putrajaya Holdings Sdn Bhd for the construction of commercial office buildings and external works at Precinct 2, Putrajaya.
The scope of works include building two blocks of commercial office comprising seven-storey podium office and overall 14 storey tower and two levels basement car park. The duration of the contract is for 32 months.
This represents WCT maiden win for 2013 bringing its total outstanding order book to RM3.4bn. Although pretax profit margin guidance is c.5 per cent, we expect WCT to do better with its low cost base and efficient management. Also, the works is extensive comprising foundation, structural and architectural works, mechanical, electrical & plumbing services, external works and services, and landscape works.
We have not made changes to our earnings projections as the win forms 16 per cent of our RM2bn new order win assumption for FY13F.
After a slow two quarters for construction (3Q and 4Q EBIT of RM18-19m), billings should pick up in 2013 as some new jobs such as PLUS widening, MITI building and KK Medical Centre are still in the initial stages.
We think the next sizeable job to potentially be awarded to WCT is the Kwasa land civil works (c.RM1bn). WCT will likely have a JV partner for this where the contract may follow the PDP format similar to the current MRT project.
We maintain our BUY rating and SOP-derived TP of RM3.00. We continue to like WCT as a reliable and cost efficient contractor which has ample capacity to capitalise on the still robust contract pipeline. The growing property investment income also makes it a more resilient proxy to the sector.
WCT - by RHB equity
WCT has been awarded a RM315m contract by Putrajaya Holding for the construction of “commercial office buildings” in Precinct 2, Putrajaya.
This is the very first key contract WCT has secured in FY13, boosting its construction orderbook by 9 per cent to RM4bn from RM3.7bn.
Assuming an EBIT margin of 5-7 per cent, the contract will fetch RM15.8-22.1m EBIT over a 32-month contract period.
Forecasts are maintained as we have already assumed that WCT will secure RM1.5bn worth of new contracts in FY13.
Fair value is RM1.76. Maintain SELL.