KUALA LUMPUR: WCT Holdings Bhd won its biggest contract since the group was restructured in mid-2013, which also ends a long dry patch without new Middle East contract wins.
This RM1.2bil contract from Lusail Real Estate Development Company is to build roads, LRT stations and underground carparks in Qatar, according to its announcement to Bursa Malaysia.
Based on its 70% share in the joint venture with Al-Ali Projects Co (W.L.L.), which secured the contract, WCT is expected to see RM847mil in revenue.
The win is very encouraging.
For 2014, WCT just managed to bag RM994mil of new contracts which were a RM651.6mil contract from Boustead Ikano Sdn Bhd and a RM341.9mil job from Petronas Refinery and Petrochemical Corp Sdn Bhd.
The Boustead deal involves building a shopping centre in Kuala Lumpur, to be completed by end of next year. The Petronas job is to build and maintenance roads, temporary drains and culverts, and bridges within the Rapid site in Johor.
WCT has secured quite a few projects in the Middle East, but most of its Middle East-related announcements to the bourse in the last two years had to do with either project disputes or cancellation.
In April 2013 the Gamuda-WCT joint venture in which WCT has a 49% stake, was asked to pay RM52.4mil by an arbitration tribunal to Bahrain Asphalt Establishment BSC. This impacted the group’s 2013 financial year earnings by RM26.285mil).
It was also during the same month it lost the RM1bil Batinah expressway project in Oman after the project was cancelled. WCT is still seeking compensation, reported to be RM30mil, from the Omani government.
It is also still seeking compensation for the termination of the Nad Al-Sheba racecourse in Dubai, but Dubai-based Meydan Group LLC has also filed a counterclaim against the 50:50 WCT-Arabtec Construction joint venture. Arabtec and meydan have withdrawn all pending legal cases as between themselves.
WCT also hit a snag closer to home. Early last year saw the revocation of the the contract given to its indirect subsidiary BSC-WCT Co. to undertake the proposed Platinum Plaza Development Project in Ho Chi Minh City, Vietnam. Construction for the long-delayed project was initially scheduled to start in 2008.
The WCT group was restructured in 2013 whereby the listing status was transferred to new investment company WCT Holdings from WCT Bhd effective July 8. The group’s key business segments such as engineering, construction, toll concession and privatisation remain under WCT Bhd, while WCT Land is the property arm.
Hong Leong Investment Bank (HLIB) Research has upgraded its recommendation to Hold, saying that “while the (latest Qatar) contract improves earnings visibility, we are not entirely excited as it merely makes up for pedestal job wins in the past”.
It raised the company’s FY15-16 earnings by 9%-10%. It said this brings WCT’s orderbook to RM2.8bil, implying 2.3 times cover on FY14 construction revenue.
HLIB Research said the sheer size of WCT’s win has led to its full year target of RM800mil being met.
CIMB Equities Research said the contract value was in line with its RM2bil assumed job wins for FY15, and advised investors to “stay on the sidelines.”
The counter closed at RM1.59, down four sen, after reaching an intra-day high of RM1.71 due to weaker broader market.
