KUALA LUMPUR: WCT Holdings Bhd's future prospects remain bullish following its recent announcement of a RM250 million highway contract win, according to CIMB Securities.
WCT announced late last week that it had bagged a contract involving road widening works for PLUS Expressway.
The project will be completed within three years, and represents WCT's first construction win after a two-year hiatus.
As for its returns, CIMB Securities projects the gross margins for the upcoming contract from PLUS to be in the upper mid-single digit range.
"While there could be some cost pressures arising from the diesel subsidy cuts – part of it could be borne by its pool of subcontractors.
"Overall, we make no changes to our earnings forecast, as it still falls within our job replenishment assumptions of RM1.5 billion for financial year 2024 (FY24)," it said.
As contract momentum re- accelerates, CIMB Securities expects the revival of the Subang Airport Regeneration Plan (SARP) to be a major re-rating catalyst for the group.
In addition to this, it understands that the group is actively scouting for job opportunities under Pan Borneo Sabah Phase 1B, as well as in Sarawak.
"They form part of WCT's active tenderbook, which is in excess of RM20 billion (outstanding orderbook: RM3 billion as of Jan 31, 2024).
"We maintain our Buy recommendation on WCT with an unchanged target price of RM1.10," it added.