HLIB Research cuts target price for WCT to 38 sen

KUALA LUMPUR (March 16): Hong Leong IB (HLIB) Research has maintained its “sell” rating on WCT Holdings Bhd at 42.5 sen with a lower target price (TP) of 38 sen (from 65 sen previously) after WCT announced that the Court of Arbitration in Qatar ordered the group to pay 133 million riyals (RM153 million) to its subcontractors.

In a note today, the research house said WCT will be recognising an additional provision of RM116 million resulting in a reported loss after tax and minority interest of RM27.6 million for FY19.

“Maintain forecasts and 'sell' with lower SOP (sum of parts)-driven TP of 38 sen (from 65 sen) after increasing SOP discount to 60% (from 40%) to reflect: i) heightened risk premium from elevated market uncertainty and ii) increasingly difficult tender environment due to potential delays in infra jobs; further exacerbated by the recent collapse in oil price which could limit government’s fiscal flexibility in rolling out new infra jobs,” HLIB Research said.

At 10.48am, WCT shares lost 7.06% or 3 sen to 39.5 sen, valuing the group at RM560.17 million.