Kenanga raises earnings outlook on WCT on Sabah port contract surprise

KUALA LUMPUR: Kenanga Research has increased its earnings outlook on WCT Holdings Bhd as it raised expectations for the group's contract wins for the year.

Recently, WCT announced that its 60:40 joint venture with China Communications Construction Company secured a RM899.8mil contract from the Malaysian government to undertake the expansion of Sapangar Bay Container Port in Sabah.

The project brought WCT's year-to-date contract wins to RM1.2bil, which surpassed Kenanga's target of RM1bil.

Consequently, the research house raised its order-book replenishment to RM1.2bil increased FY22 earnings projections by 3% to RM84mil.

"We were positively surprised as we did not expect any public project roll-outs amidst the pandemic," it said in a note.

However, Kenanga kept its replenishment target below management's guidance of RM2bil as it believes the other sizeable tenders targeted by the group such as the Pan Borneo Sabah and Sabah Sarawak Link Road are unlikely to be awarded this year as the government will likely conserve fudns for pandemic assistance.

Kenanga has an "outperform" recommendation with an unchanged target price of 64 sen, pegged to 0.3x price-book value.
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Kenanga Research , WCT , Sapangar Bay , port


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