PETALING JAYA: WCT Holdings Bhd
(WCT) could emerge as a potential beneficiary of the proposed RM3.7bil Subang Airport Regeneration Plan (SARP) project, says CIMB Securities.
The SARP was proposed by Malaysia Airports Holdings Bhd (MAHB) and presented to the Cabinet in February this year.
Last week, MAHB signed a revamped operating agreement (OA) with the government, further cementing its role in operating, managing, maintaining and developing 39 airports and short take-off and landing airports (STOLports) nationwide for another 35 years until Feb 11, 2069.
To recap, WCT through its 60%-owned unit Subang Skypark Sdn Bhd (SSSB), has a concession agreement with MAHB that will end on Dec 3, 2037, with an option for extension for 29 years.
CIMB Securities said the revamped OA will provide a clear pathway for the proposed SARP.
“The estimated development cost of RM3.7bil could open up fresh order book opportunities for the group when construction work begins,” it said.
Of the RM3.7bil, RM1.3bil has been allocated for the business aviation and aerospace segment, as well as the development of infrastructure and the opening of new spaces for the high-value maintenance, repair and overhaul market.
The research firm said WCT has handled airport-related projects before such as bulk earthworks contract for the Kuala Lumpur International Airport (KLIA), earthworks package for the new low-cost carrier terminal (KLIA 2) worth RM360mil and the RM704mil expansion of Kota Kinabalu International Airport.
It said the group’s current order book includes the upgrading of Kota Bharu Airport worth RM440mil, which should be completed by 2025.
Separately, WCT had joined forces with Gamuda Bhd to undertake the main civil works for the new Doha International Airport (Hamad International Airport), which was completed in January 2011.
For this year, CIMB Securities imputed RM1.5bil worth of new contracts versus management’s RM2bil target, as WCT did not win any new contracts in the previous two financial years.
“That said, we have not accounted for any contributions from SARP pending further updates.
“The stock is currently trading at price-to-book of only 0.3 times, and at a steep 71% versus its net asset value.”
The research firm has kept a “buy” call on WCT with a target price of 72 sen, as it reaffirms its view that the expected rollout of SARP represents a major re-rating catalyst for the group.
“On the other hand, the group’s ongoing order book may still be exposed to the government’s plans to rationalise diesel prices (expected by May), although management does not anticipate any material markdown in overall construction margins for financial year 2024,” it added.
