By Hong Leong Investment Bank
Target price: RM2.26
HONG Leong Investment Bank (HLIB) attended WCT’s second quarter 2014 (ended June 30) briefing and came away feeling “neutral” about its near term outlook.
It said the second quarter performance was weak with both revenue and core earnings declining by 17% year-on-year and 19% year-on-year respectively.
This, it added, was due to weak contribution from both the construction and property development divisions as the former has yet to significantly replenish its order book while new property sales for the latter had been slow.
So far, HLIB said WCT had only secured one project worth RM342mil for the construction of Refinery and Petrochemical Integrated Development’s common access road, which was a far cry from its annual order book replenishment target of RM1bil local jobs and RM1bil overseas jobs.
Despite the disappointing new contract wins over the past few years, it added management reiterated its prudent stance when bidding for contracts.
Overall, HLIB said WCT had tendered for RM4.6bil worth of contracts whereby overseas prospects comprised RM1.5bil, adding that the division had RM1.88bil outstanding order book, translating to 1.6 times 2013’s construction revenue.
HLIB said the company achieved only RM245mil of property sales (inclusive of bookings) compared with its 2014 sales target of RM1.2bil.
By Kenanga Research
Target Price: RM4.36
ALTHOUGH the net profit in the first half of 2015 of RM9.7mil only accounted for 34%-33% of Kenanga/street calendar year 2014 estimates, Kenanga Research said it considered the results to be within expectations as the second half was always stronger than the first half.
On Aug 15, 2014, Pestech announced the change of its financial year-end to June from December. Thus, financial year 2015 (ending June 30) will have six quarters; 18-month period from January 2014 to June 2015.
The second quarter 2015 net profit leapt 22% sequentially to RM5.4mil from RM4.4mil as revenue soared 29% to RM58.2mil from RM45.1mil previously, which the research house said was mainly led by the project segment, which saw its operating profit rising 17% to RM8.9mil as revenue jumped 28% over the quarter.
Year-on-year, the second quarter 2015 net profit grew 8% from RM5mil last year as topline surged 40% from RM41.6mil.
Kenanga Research said as 90% of its total RM262.5mil contracts secured in 2013 were in the second half of 2013, part of these contracts were starting to be recognised in the current period.
It added year-to-date, the first half of 2015 net profit jumped 32% to RM9.7mil from RM7.4mil last year for the same reason as revenue surged 57%.
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