WCT Holdings Bhd’s latest joint venture landed a job to expand Sapangar Bay Container Port in Kota Kinabalu, Sabah. This joint venture sees WCT working alongside China Communications Construction Company (M) Sdn Bhd (CCCC). The value of this port expansion job is RM899.81 million.
Information About the Project
In a filing with Bursa Malaysia, WCT said that it would serve as the lead partner of this 60:40 joint venture. On July 2, 2021, WCT executed a letter of acceptance. In this letter, WCT stated that it would undertake and execute the expansion project as its main contractor. The Sabah Economic Development and Investment Authority (SEDIA) issued this letter.
There are a total of 11 elements which are part of the deal. These elements are dredging and reclamation works, building works, environment protection and enhancement, quay deck, traffic management control, site investigation works, demolition and site clearance, mechanical and electrical services, container yard, external works, and seawall construction.
Work on the expansion project will begin in September 2021. The expected completion date is February 2025.
This is not WCT’s first project at Sapangar Bay. WCT is currently in the midst of a project involving the extension of a jetty at Sapangar Bay Oil Terminal. Sabah Ports Sdn Bhd awarded WCT the related contract. The value of that contract is RM91.9 million. It involves the undertaking and completion of 12 different elements. It was also WCT’s first project in Sabah.
The Financial Impact of the Project
Somewhat surprisingly, shares of WCT closed at a lower value following this announcement. They closed at RM0.015 lower at RM0.51. This represented a decline of 2.86%. The total value of the group’s shares is now RM723.26 million.
However, Kenanga Research increased WCT’s earnings outlook. This was because the port expansion job caused Kenanga to increase WCT’s expectations for contract wins this year.
This project brought the value of WCT’s year-to-date contract wins to RM1.2 billion. That figure exceeds Kenanga’s initial projection of RM1 billion. As a result, Kenanga raised its order-book replenishment to RM1.2 billion. It also increased WCT’s earnings projection for the 2022 financial year to RM84 million. This represented an increase of 3%.
Commenting on these increases, Kenanga said, “We were positively surprised as we did not expect any public project rollouts amidst the pandemic.”
However, Kenanga maintained its replenishment target for WCT. This target remains below management’s guidance of RM2 billion. It did so because it believes that other major tenders which WCT currently targets will not come to fruition this year. This is because the government is likely to conserve funds to combat the Covid-19 pandemic. Examples of the other major tenders which WCT targets include the Sarawak-Sabah Link Road and the Pan Borneo Highway Sabah.
9th July 2021 15:04
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