WCT - First concession in Malaysia (CIMB)

Yesterday’s signing of the 25+10 year concession agreement between WCT and MAHB for the KLIA2 integrated complex is a big milestone for WCT as this is its first concession in Malaysia and will give it both construction and recurring income. A positive surprise is the estimated RM100m-200m upside to the RM530.3m construction cost. We make no changes to our FY11-13 EPS forecasts or RM4.44 RNAV, which already factors in WCT’s 70% share of the integrated complex’s NPV (13% WACC). We retain our OUTPERFORM call and RM3.99 target price, which is pegged to an unchanged 10% RNAV discount. This announcement and other project awards including a potential sizeable contract from the Middle East could catalyse the stock. The group’s end-11 target of RM2bn new contracts remains intact.