WCT Holdings (WCT) FY22 headline net profit rose 30.7% YoY, attributed to recovery across all business segments. This was mainly attributable to higher sales of unsold inventories and business recovery across its hotels & malls. Cumulatively, FY22 core net profit exceeded ours and street estimates, accounting for 177% and 158.4% of full-year forecast respectively. Despite that, the Group core business remains sombre as no contract was awarded in FY22. Our earnings estimates are kept unchanged for now pending guidance from management. We maintain our Neutral call with an unchanged SOTP-based TP of RM0.50. Management proposed a final dividend of 0.5sen per share, rendering a dividend yield of 1.1%.

• FY22 revenue added 20% YoY. Topline recovery is mainly supported by the property development and property investment & management division. The property development division achieved 42.3% increase in revenue YoY, which we understand, was due to the continuance clearance of unsold, completed inventories. On the other hand, the property investment & management division revenue rose 21.3% YoY due to improved footfalls and occupancy rates across its hotels and malls.

• FY22 PBT lowered by 49.7% YoY pressured by higher operating expenses and financing cost. The Group’s operating expenses hiked 9.2% YoY as key construction material prices rose more than 10% since Dec 2022. Meanwhile, financing cost also climbed 24.8% YoY as a result of the central bank’s contractionary policy directive.

• Our view. Despite seeing recovery, we continue to remain neutral on WCT as the Group’s core business remains sombre – the Group has not secured any construction projects in FY22. As of FYE22, WCT’s outstanding orderbook was at RM3.5bn, which represents earnings visibility for less than 3 years. Current unbilled sales stood at RM273m vs RM303m last quarter. However, we see a potential in the Group, in relation to the Subang airport regeneration project as announced in Budget 2023. WCT owns 60% stake and operates SkyPark Terminal of the Subang airport. In addition, the Group proposed to regenerate Subang airport into a city airport at an initial cost of RM3.7bn back in 2021.

Source: PublicInvest Research - 28 Feb 2023