Friday, October 21, 2011

WCT advances on land purchase, strong order book

KUALA LUMPUR: Share of WCT BHD [] rose to a high of RM2.46 on Friday, Oct 21 as analysts were positive on the outlook for the company following its 468-acre acquisition in Rawang, Selangor and its strong order book.

At 3.23pm, it was up seven sen to RM2.40. There were 3.04 million shares done at prices ranging from RM2.34 to RM2.46

WCT had has acquired the 468 acres in Rawang for RM38.4 million, which UOB Kay Hian Malaysia Research said implied land cost of RM1.88 psf, which was deemed fair even if converted to residential title assuming a 15%-20% premium.

The research house said the site would be for township development, focusing on affordable houses. It said the site could be next to the North South Expressway and about 10km north of the Rawang toll exit.

UOB Kay Hian Research said this acquisition would fit into WCT's plan to expand its landbank and tap on the mass affordable homes.

It said the estimated gross development value (GDV) and product mix are too early to determine but judging from the relatively low land cost, it expected that the management was not in a hurry to roll out the development.

'WCT's existing CONSTRUCTION [] orderbook stands at RM2.4 billion with a tender book of RM4 billion, consisting of two highways in Oman (RM2 billion), a five-star hotel in Bahrain (RM1 billion) and the remainder RM1 billion comes from domestic tenders.

'So far, WCT has won RM115 million worth of earthwork job for Vale, and we understand there is still RM800 million to RM900 million worth of earthwork contracts for the first 3,000 acres of land. Last but not least, WCT has two on-going letters of intent, namely, the Sabah Hospital (RM200 million) and KK Dam (RM2.8 billion),' it said.

UOB Kay Hian Research said there were no changes to its net profit forecasts of RM160 million and RM184 million for FY11 and FY12 respectively.

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