Strategic investors to take up 10% of new WCT shares: AmInvestment

WCT and Bina Puri are among the more active contractors in Sabah over the past few years

KUALA LUMPUR: AmInvestment Research is retaining its Hold call for WCT, its forecasts and also fair value of RM1.86 after meeting with WCT’s new management after the recent takeover by Tan Sri Desmond Lim. 

It said on Monday the key takeaways from the meeting are that firstly, the placees for the recently proposed placement of up to 10% new WCT new shares are likely to be “strategic investors.

Secondly, WCT is disposing of Paradigm Mall and BBT Shopping Mall to a REIT for cash – it is giving up the ownership of the assets entirely and is unlikely to hold any meaningful stake, if at all, in the REIT.

Thirdly, the new management is putting WCT’s existing landbank under review -  land parcels considered “non-strategic” (those located in the Klang Valley outskirts, including in Klang) will be sold.

Fourthly, the development plan (including timing of launches and product types) for the 60-acre land in OUG, Kuala Lumpur, will be revised to ensure that it will not pose direct competition to the nearby Bukit Jalil City, which is being developed by sister company Malton.

Fifthly; WCT will indeed be turned into the flagship public-listed property development company of Tan Sri Desmond Lim, and Malton and his private business ventures including Pavilion Kuala Lumpur and Pavilion Damansara Heights will eventually be brought into WCT’s fold; and 

Finally, the plan for a separate listing for the construction unit is still intact, but not a priority now.

“We believe the de-gearing exercise via the asset disposal is positive, but at the expense of foregoing prized assets. 

“The consolidation of Malton and Tan Sri Desmond Lim’s private business ventures into WCT could potentially double its market capitalisation to above RM4bil, making WCT even more investable. 

“However, the devil is in the details. We believe it is too premature to tell if the corporate exercises in the pipeline will be value-enhancing to WCT’s existing shareholders, as that depends largely on the structure and pricing of the assets and new shares to be issued pursuant to the corporate exercises,” said AmInvestment Research.