KUALA LUMPUR: RHB Research has maintained its Neutral call on WCT with a target price of RM1.64 based on 12 times revised fully-diluted FY15F EPS of 13.7 sen, in line with its benchmark sector one-year forward target P/Es of 10-16 times.
In a note on Tuesday, the research house said the prospects for the construction sector are strong, underpinned by the RM73bil Klang Valley MRT project, which should keep industry players busy until 2021.
However, WCT is not an ideal proxy as it has yet to secure any Klang Valley MRT jobs. Its property business is facing headwinds amid various sector cooling measures, it said.
RHB added that WCT missed its construction orderbook replenishment target of RM2bil in FY14. It ended FY14 with new job wins of only RM994mil vis-à-vis its guidance for RM2bil.
It added that the recent collapse in crude oil prices will have a negative bearing on oil wealth, and hence impede the ability of certain oil exporting countries in the Middle East to continue with their spending on lavish projects.
While contracts in the Middle East only make up 11% of WCT’s current order backlog, the Middle East remains an important market to WCT.
WCT is currently bidding for basic infrastructure works (roads, bridges, tunnels, etc) worth RM1bil in Lusail, Qatar, and its guidance for job wins has always been RM1bil each from Malaysia and the Middle East every year, RHB noted.
Limited time offer:
Just RM5 per month.
