TA Securities keeps ‘sell’ call on WCT but with higher target price of 55 sen
KUALA LUMPUR: The worst could be over for WCT Holdings Bhd as its construction division is supported by a healthy outstanding order book, potentially higher property sales in its financial year 2021 and a recovery in property investment division.
TA Securities Holdings Bhd said in a note with an outstanding construction order book of about RM5 billion, WCT could see earnings visibility for the next two to three years.
“For the financial year 2021, the management has targeted an order book replenishment of RM2 billion, versus our assumption of RM1 billion.
“WCT is believed to be a frontrunner in securing the extension and upgrading of the Sultan Ismail Petra Airport in Kota Baru with a project value of between
RM400 million and RM500 million.”
TA Securities said WCT had set an ambitious property sales target of RM1 billion for financial year 2021, versus the research firm’s assumption of RM500 million, with RM420 million coming from inventory, RM170 million from ongoing projects and the remaining from new launches.
Despite being negatively impacted by the Covid-19 pandemic, WCT recorded higher property sales of RM350 million in its financial year 2020 versus RM322 million previously, it said.
Its unbilled sales jumped to RM152 million as of end-December, boosted by the sales from Block TA of Maple Residences at W City OUG, here, which was launched in November last year.
TA Securities also noted that as part of degearing exercises, WCT had disposed of land in two transactions totalling about RM123 million and expected a profit of about RM80 million to be reflected in the first quarter results.
It is also in discussions to monetise other plots of land.
Meanwhile, the research firm expects a recovery in WCT’s retail malls, in line with improved market sentiment and the lifting of movement restrictions.
TA Securities has tweaked its financial years 2021 and 2022 earnings forecasts slightly lower by 1.7 and 1.4 per cent, respectively.
“We have raised the target price for WCT to 55 sen from 46 sen. However, we maintain a ‘sell’ call on the stock as we think the current share price has fully reflected its value,” it added.