KUALA LUMPUR (Feb 27): Hong Leong IB Research has downgraded WCT Holdings Bhd to Sell with a target price of RM1.49 and said construction margins were under pressure due to downward revision in profit margin target.
In a note Friday, the research house said RM23 billion worth of domestic tenders which is centered on the Penang Transport Master Plan, making it an “all or nothing” situation.
“Orderbook of RM2 billion implies a thin cover of 1.6x construction revenue.
“Cut FY15-16 earnings by 16% and 5%. We are now 30-36% below consensus which appears too optimistic.
“Downgrade to SELL, TP: RM1.49, outlook to remain challenging,” it said.