KUALA LUMPUR: WCT Holdings Bhd's outstanding construction order book is projected to increase by eight per cent to RM2.86 billion following the group's acquisition of a RM214 million construction contract from Kwasa Land Sdn Bhd.
Public Investment Bank Bhd (PublicInvest) expects this to contribute approximately seven per cent to 15 per cent per annum to the group's earnings over the 30-month contract period.
"With this job win, cumulative job replenishment for FY24 rose to RM463.7 million, representing 46.4 per cent of our financial year 2024 (FY24) job replenishment assumption of RM1.0 billion.
"The group's outstanding orderbook rose by eight per cent to RM2.86 billion.
"Assuming mid-single-digit margins, we expect these two contracts to contribute about RM2 million, or 12.6 percent, in net profit per annum on average from the FY24–26 forecast, based on certain levels of work completion each year," it said in a note.
PublicInvest has not made any changes to its earnings estimates for WCT, as this is included in its FY24 order book replenishment assumption.
The firm has retained its 'Neutral' call on WCT with an unchanged target price of RM1.00 pegged at a ten-year average price-to-book value (PBV) of 0.5 times.
The contract was awarded by Kwasa Land under work package contract two, which involves the construction and completion of common infrastructure works and a new vehicular underpass at Kwasa Damansara Township.
The job includes site clearance, demolition works, earthworks, geotechnical works, road works, bridge structures, vehicular underpass structures, drainage works, water reticulation, sewerage works, mechanical and electrical works, river improvement, and routine maintenance works.
The works under the contract are expected to be completed within 30 months from August 1, 2024.
Kwasa Land is a wholly-owned subsidiary of the Employee Provident Fund (EPF) and the master developer of Kwasa Damansara.
Kwasa Damansara is a 943.93-hectare township located in the vicinity of Kota Damansara and Petaling Jaya.
It consists of a mix of residential, commercial, recreational, institutional, and educational development.
In September 2015, WCT secured a similar contract worth RM127 million from Kwasa Land, which has been completed.