Investment Highlights

• We maintain our forecasts, SOP-based FV of RM1.88 (Exhibit 1) and HOLD call, following an analyst briefing today.

• WCT maintained its guidance for >RM2bil new construction jobs in FY17F (in line with our replenishment target of RM2bil annually in FY17-19F). YTD, it has secured new jobs worth a total of RM206mil. It is eyeing station packages of MRT2 (

• WCT now believes the listing of WCT REIT, realistically, will only happen in FY18, as it is still in the midst of sorting out certain land title issues with the authorities. To recap, WCT will bundle Paradigm Mall in Petaling Jaya (70%-owned), BBT Shopping Mall and Premiere Hotel in Klang (both wholly-owned), under the REIT. WCT hopes to raise about RM400mil by paring down its stake in the REIT with an expected market value of RM1.1bil, to just under 50%.

• WCT reiterated its plan to raise about RM500mil from the disposal of landbank considered “non-strategic” in Klang Valley outskirts, such as Bandar Bukit Tinggi (Klang), Rawang and Serendah. It has resorted to "re-pricing" (price cuts of up to 10-20% for certain products) to help clear unsold property stock. It is on track to achieve its target of RM500mil sales in FY17 (vs. RM281mil achieved in FY16). YTD, it has sold properties worth a total of RM261mil, and its unbilled property sales stand at RM322mil currently.

• These, coupled with RM330mil expected to be raised from share placement and warrant conversion, and after factoring in additional working capital requirements, should eventually reduce WCT's net gearing of 0.9x as at end-2QFY17 to 0.5-0.6x.

• We maintain our view that WCT will ultimately be turned into the flagship PLC of Tan Sri Desmond Lim, via the injection of Malton (a sister company of WCT, with its prized asset being Pavilion Bukit Jalil) and Lim’s private business ventures including Pavilion Kuala Lumpur and Pavilion Damansara Heights. This could potentially double WCT’s market capitalisation to above RM4bil. However, we believe it is premature to tell if the exercise 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 exercise.

Source: AmInvest Research - 25 Aug 2017