Pan Borneo project to boost WCT order book, more construction jobs ahead

WCT and Bina Puri are among the more active contractors in Sabah over the past few years

KUALA LUMPUR:  WCT Holdings Bhd’s recent win for the joint contract work for the first phase of the Pan Borneo Sarawak Highway project will boost its construction orderbook and open doors for more construction jobs. 

Maybank IB Research on Wednesday said WCT’s successful contract win for the project would lift its outstanding construction orderbook by 11% to RM3.8bil and could clinch more construction jobs from highways, rails and transit-oriented developments. 

The research house said its earnings forecast remain unchanged as it had already imputed RM1bil worth of construction job wins in its financial year 2016 forecast, adding that it was maintaining a buy call on the stock with sum-of-parts (SOP) based target price of RM2.30.

WCT’s portion of the contract value is worth RM387mil based on its 30% stake in the joint venture, which increases its outstanding orderbook by 11% to RM3.8bil. “Assuming a pre-tax profit margin of 8%, we forecast a total net profit contribution of RM24mil (1.9sen earnings per share ) over four years into 2020. Total job win for the company year-to-date amounts to RM521mil. 

“WCT could clinch more jobs from other highways project including DASH, SUKE and WCE and rail projects such as KVMRT 2 and KVLRT 3. It could also benefit from potential construction works from TRX and Kwasa Damansara Township,’’ Maybank IB noted. 

WCT Holdings in a statement to Bursa Malaysia said yesterday the company together with KKB Engineering Bhd have jointly secured a contract worth RM1.29bil for the first phase of the project from Lebuhraya Borneo Utara Sdn Bhd.

The contract was given to their joint-venture partnership, in which WCT has a 30% stake and KKB the remainder stake.

Under the contract, the partnership would undertake and complete the proposed development and upgrading of the Pan Borneo Highway in Sarawak, from the Sungai Arip bridge to the Bintulu Airport junction.

The contract included piling works, demolition and site clearance, earthworks, geotechnical, drainage, roads and pavings and is expected to be completed in 51 months from the date of the letter of award.