happy days, page-5

This is a broking firm's thoughts on the new market darling

Outlook remains positive, underpinned by a growing pipeline
Following today's AGM, we remain confident that the company's growth trajectory is
set to continue. Currently, Watpac (WTP) has around 20 properties under development, a +A$600m work book that is expected to increase to +A$800m in the
short term following further project wins and a growing NSW business. In addition, the company has established two businesses that will boost recurring income streams including developing gated communities for retirees and investing in MLRs. Despite the construction market continuing to suffer from labour shortages and rising costs,we continue to expect margins to remain stable moving forward, reflecting the
favourable construction environment.
FY07: strong growth expected
We forecast +20% profit growth in FY07 and a 13c per share fully franked dividend.
EPS growth is expected to be neutral following the recent rights issue. Given the current pipeline and property sales to date, we remain confident in our forecasts. This week, the company announced it has entered into an unconditional contract for the
sale of a property at 318 Brunswick St in the Fortitude Valley, Brisbane for A$18.5m.
The commercial property was owned by WTP and a private developer, and is
expected to deliver a pre-tax profit of around A$4.4m (WTP share). The sale should
settle in January 2007.