By Xavier Kong
RESEARCH houses MIDF Research and TA Securities have indicated positive sentiments for the contract award secured by WCT Holdings Bhd, noting that this would improve investor sentiments, as this ends the contract drought of WCT.
Kifni Kamaruddin, head of strategy at MIDF, opines that the new project will help to improve investor sentiments towards WCT, “after it received an unfavourable final ruling in an arbitration case.”
It was also noted that this is the first contract clinched by WCT this year, which brings the group’s order book to RM6.2 bil compared to the RM5 bil at the end of February 2020.
“We think that this is a good start to the year for WCT because the group secured only RM119 mil worth of new contracts in the previous year, and RM2.67 bil in the year before that,” said Kifni, who maintains a buy call on WCT, with an unchanged target price of 64 sen.
TA Securities’ analyst Ooi Beng Hooi noted that the contract award does not come as a surprise, however, and the contract could provide WCT with earnings visibility for the next three years.
Ooi raised WCT’s 2021 and 2022 forecast financial results by 6.3% and 6.8% respectively, also upgrading the stock to a buy call with a target price of 33.5 sen after a steep selldown in the stock.
The contract mentioned here is a letter of award from Jendela Mayang Sdn Bhd for the superstructure works of Pavilion Damansara Height Development Parcel 2 project, which carries a sum of RM1.2 bil, and is expected to commence in May 2020, with a construction duration of 42 months.
The contract involves the execution and completion of a block of 32-storey office and hotel on a podium block comprising retail space, mezzanine floors and works to the lower ground floor and basement car park. A further two blocks of residential towers, hard and soft landscape and external works including road and drainage, water reticulation, sewerage, and an MRT link bridge round out the contract.
However, the contract is also recognised as a recurrent related party transaction, as Tan Sri Lim Siew Choon is not only the executive chairman and major shareholder of WCT, but also a substantial shareholder and director at Jendela Mayang.
At the noon close, WCT’s shares were last done at 31.5 sen, up 5 sen, with 11.3 million shares traded. – March 20, 2020
