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Monday, November 14, 2011

WCT Berhad (CIMB)

Project flows for 2012 are backed by the RM4bn worth of jobs that WCT has tendered for. This underpins our BUY rating. Investors should look beyond 2011, which may be a letdown in terms of project awards. We are cutting EPS for lower order book assumptions. Our target price falls because 1) we roll it forward and apply our revised target market P/E of 12.6x (14.5x P/E) to CY13 construction earnings, and 2) double our RNAV discount to 20% for subdued project award prospects.

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