KUALA LUMPUR: CIMB Equities Research is positive on the entry of Tan Sri Desmond Lim Siew Choon, who is the executive Chairman of Malton Bhd
, as the single largest shareholder of WCT Holdings.
It said on Thursday that WCT Capital, the founding company, sold its entire stake of 245.7 million shares for RM2.50 a share (RM614mil), a 42% premium over the latest closing price.
“We believe this should have positive implications for the company,” it said, commenting on Lim’s purchase of 19.7% stake from the private vehicle of WCT co-founder and MD, Peter Taing Kim Hwa. T
To recap, Lim’s private vehicle Dominion Nexus Sdn Bhd purchased 245.7 million shares at RM2.50 a share, valuing the transaction at RM614mil.
WCT Capital is co-owned by Taing and Wong Sewe Wing. It is unknown at this point if Taing will take on an advisory role.
The purchase price of RM2.50 a share represents a whopping 43% premium over the previous day’s closing price. It translates into 1.2 times price-to-book value, based on 2Q16’s book value of RM2.12.
“From a P/E standpoint, it implies FY17 P/E of 21 times, higher than the average FY16 construction sector P/E of 15 times,” it said.
“This transaction is not likely to trigger a general offer as it is below the 33% threshold,” it said.
Lim is a well-known corporate figure within the property and construction sector. He is the chairman and executive director of Pavilion REIT Bhd (Add) and the executive chairman of property/construction outfit Malton Bhd (Not Rated).
Some of Malton’s key projects include Bukit Jalil City, Pavilion Damansara Heights and the Royal Pavilion Hotel.
“We are positive on this development. We believe the emergence of Lim as the new substantial shareholder will have far-reaching implications for WCT amid the group realising its plans for a REIT exercise (BBT Mall and Paradigm Mall).
“WCT’s construction arm could see new order book opportunities through Pavilion REIT and Malton. The presence of the new shareholder could also enhance the group’s chances of securing jobs. Add retained; deal is positive for share price.
“Our FY16-18 EPS forecasts are unchanged. This development is a catalyst for the share price given the overhang from the delayed IPO and REIT plans and asset monetisation moves.
“Our target price is retained for now (based on an unchanged 30% discount to RNAV) pending more details on the group’s way forward. Indicatively, narrowing the RNAV discount to 20% will raise the target price to RM2.15. A downside risk is uncertainty about management’s new turnaround plans,” it said.
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