WCT ... Aug09

The award of RM766m jobs to WCT is a sign that things are starting to pick up in the construction sector, said HWANGDBS VICKERS RESEARCH on Jul 20, 2009. The Government's pump-priming efforts were accelerating and the research house was also positive about contracts given to the lowest bidder via an open tender.

AMRESEARCH said that the handing out of public contracts highlighted a resurgence in public infrastructure spending as one of the two major themes anchoring recovery in Malaysia's economic growth in 2010.

WCT received four letters of award (LOA) for infrastructure works in 'Medini Iskandar Malaysia, Johor', in mid-Jul 2009. The works are expected to be completed by Jul 2011 for MEDINI ISKANDAR MALAYSIA sb, a unit of ISKANDAR INVESTMENT bhd.

ORDERS OF RM1 BIL FOR 2009 - ORDER BOOK OUTSTANDING OF RM3.7 BIL
AMRESEARCH said WCT had almost reached its new orders target of RM1 bil for 2009 with its latest contracts and this should also lift its outstanding Order Book to about RM3.7 bil.

HWANGDBS said that it expects WCT to convert at least one other LOA for a Sabah job by end 2009.

LOW PBT FOR CONTRACT JOBS
The research house pointed out that the PBT margin for the RM766m contracts was rather low at 5%, implying some risks in the event of cost overruns. The contracts will ensure better earnings continuity post- FYE Dec 31,2009 and secure its footing in the Iskandar region it said. However, the valuations of WCT continue to remain stretched at 17 times calendar year 2010 EPS - a premium to IJM's 14 times and GAMUDA's 16 times.

AMRESEARCH said WCT was expected to be among the key beneficiaries of the Federal Government's pump-priming initiatives moving into the second half of 2009.The research house said WCT was well-positioned to benefit from an expected uptick in domestic contract flows in 3Q-CY2009. The research house also said that in the near term, the Company was working hard to clinch a smaller package for a major infrastructure contract in Sabah, worth in excess of RM1 bil, within the next two months.

OVERSEAS PROJECTS
On WCT's overseas projects, AMRESEARCH said the encouraging signs of a re-acceleration in Middle East job flows due to the rise in oil prices would benefit the Company. WCT is eyeing more repeat jobs within the massive USD40 bil Yas Island (Abu Dhabi) development.

MORE JOBS AT IDR & LCCT
OSK RESEARCH added that it learned that there would be more construction works from Iskandar Malaysia in the near future and WCT intended to execute the recent contracts swiftly and bid for more jobs from the same client. It also said that WCT had a good chance of participating in the new Low-Cost Carrier Terminal worth RM2 bil at the KL International Airport.