WCT shares jump 8% on Kwasa Land job

KUALA LUMPUR: WCT Holdings Bhd’s trading stock jumped over 8% after it secured a common infra contract from Kwasa Land Sdn Bhd worth RM214mil.

Shares in the engineering firm rose to a high of RM1.22 apiece before falling back to RM1.20 as at 9.39am, representing a gain of nine sen over its reference price, after 25.42 million shares were done.

The contract, announced yesterday, is to undertake and execute the works for construction and completion of Phase 1 of common infrastructure and a vehicular underpass at the Kwasa Damansara township development.

The works will take approximately 30 months from the date of site possession, slated for Aug 1, 2024.

According to Hong Leong Investment Bank (HLIB) Research, the new contract lifts the group’s orderbook to a respectable RM3.4bil, which represents 3.1x cover on FY23 construction revenue.

It said there will be more job wins to come as the group’s tenderbook stands at more than RM20bil while it expects the conversion of a RM1bil airport contract this year.

“We had earlier highlighted a noticeable increase in its tender value submitted/pending submission from over RM12bil to over RM20bil – driven by domestic civil and infrastructure space (including Penang Airport).

“We reckon it is reasonable to assume that more of these tenders will come to an award decision going in the coming months,” said the research firm in a company update.

HLIB maintained its “buy” rating on WCT with an unchanged target price of RM1.48.

Meanwhile, Kenanga Research said WCT is poised for a better FY24 on the impending roll-out of various public infrastructure projects such as the Mass Rapid Transit 3 (MRT3), Penang International Airport expansion, Pan Borneo Sabah, Subang Airport regeneration plan and various government hospitals.

The research firm raised its FY24-25 earnings foreacsts by 50% and 106% respectively as it lifted its FY24 job win assumption to RM2bil, in line with WCT’s guidance. FY25 job win assumption as maintained at RM1.5bil.

Kenanga raised the stock’s target price to 95 sen from 88 sen previously, but downgraded the stock to “underperform” from “outperform” as the share price has outrun the fundamentals.

TA Securities Research, on another note, is bullish over WCT’s decision to establish and list a real estate investment trust (REIT), which it said will unlock the value of its investments.

The research firm upgraded WCT to “buy” and raised its target price to RM1.52 from 83 sen following a shift in valuation methodology to a 0.65x price-book multiple against its 2025 book value per share.

“The shift in valuation methodology better reflects the deep value embedded in WCT’s investment property assets,” it said in a company update.

“Overall, we are positive about the proposed exercise, as the proceeds from the REIT listing will enable the group to primarily reduce borrowings and capitalise on strategic opportunities as they arise.”