The sale of 19.7% stake in WCT Holdings Bhd
to Dominion Nexus Sdn Bhd, a company controlled by property tycoon Tan Sri Desmond Lim Siew Choon, could open the door for a value unlocking exercise over the medium term although it falls short of triggering a general offer.
Lim via its private vehicle Dominion Nexus on Tuesday bought 245.7mil shares at RM2.50 per share, valuing the transaction at RM614mil, which analyst opined the deal as attractive in view of a premium of 42.8% over its closing price of RM1.75 on the same day.
Maybank IB Research analysts Wong Chew Hann said she view the major shareholder change at WCT positively and expect a value unlocking exercise over the medium term.
A likely scenario she said could be the injection of WCT’s readily REIT-able assets - BBT Mall, Paradigm Mall PJ, which have a total asset value of RM1.2bil into Pavilion REIT, and the streamlining of the construction and property development businesses, presently under both WCT and Malton, into WCT.
The injection of the REIT-able assets for cash would strengthen WCT’s balance sheet which has a net gearing of 0.8 times as at June 30, Wong said.
CIMB Research analyst Sharizan Rosely agreed that the purchase price of RM2.50 a share was attractive to the vendor WCT Capital. It translates into 1.2 times price-to- book value (P/BV), based on 2Q16’s book value (BV) of RM2.12.
From a P/E standpoint, Sharizan noted that it implies financial year (FY) 2017 price earnings (P/E) multiple of 21 times, higher than the average FY16 construction sector P/E of 15 times.
Maybank IB in a note said though pricing looks good but the acquisition falls short of triggering a general offer to minority shareholders.
The disposal of the stake to Lim saw a change at the helm of WCT Holdings. In an announcement to Bursa Malaysia on Wednesday, WCT said Lim, the executive chairman of Malton Bhd, took over as its executive chairman. He replaces former executive chairman Datuk Capt Ahmad Sufian.
While Malton, in a separate announcement, said Lim intended to relinquish his position as the executive chairman of Malton and assume the position of non-independent non-executive chairman with effect from Jan 2 next year.
WCT also announced the resignation of managing director Peter Taing Kim Hwa, executive director Kenny Wong Yik Kae and independent non-executive director Choo Tak Woh.
Taing’s resignation was due to his cessation as a substantial shareholder of WCT, while Wong, Choo and Ahmad were said to have resigned to pursue personal interests.
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