Aseambankers favours WCT for its sizeable RM5.2 billion order book, backed by good project management and further exposure to the Middle East
RESEARCH firm Aseambankers Malaysia Bhd has maintained a "buy" call on WCT Engineering Bhd and estimates that the construction and property development group's share price can go up to RM4.15.
In a research note to investors yesterday, Aseambankers head of research Vincent Khoo said his target price is based on 11 times of WCT's share price to forecast earnings for next year.
WCT has so far completed the bulk of work at the Kota Kinabalu International Airport and the UiTM Campus, leaving a few building jobs in Putrajaya exposed to rising steel and cement prices.
However, WCT is expected to be able to claim for higher costs from the government.
"In the Middle East, however, rising building material costs are not a major concern as most of the materials have been procured," Khoo said.
"We favour WCT for its sizeable RM5.2 billion order book, backed by good project management and further exposure to the Middle East," he added.
Khoo believes that WCT is eyeing major infrastructure jobs in Bahrain, Dubai, Abu Dhabi and Qatar on a selective basis.
While WCT's order book should still sustain growth until next year, he anticipates that WCT is capable of securing up to RM1 billion worth of new jobs in the second half of this year.
"Over the near term, WCT's construction activities should offset the slowdown in property, which has seen revenue decline in this year's first quarter results following weaker buyer sentiment," he said.
Khoo also expects WCT's property project in Vietnam to start contributing to the group's bottom line in 2010.
From Business Times Online 20 May 2008
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