• WCT Holdings Berhad (WCT) is involved in three key areas:  Engineering and Construction, Property Development, and  Property Investment and Management. Most of their ongoing  projects and outstanding orders are in local building sector.

• Despite not securing any jobs in FY22, WCT has submitted  tenderbook worth RM9bn to date.

• WCT also emerges from pandemic with positive net income  growth and reduced losses.

• With its 60% stake in the SkyPark Terminal (Subang Airport), WCT  is in a favorable position to take advantage of the Subang Airport  Regeneration Project (SARP) which was announced recently in  Fiscal Budget 2024.

• WCT is currently trading at a forward PER of 4.4x which is a  discount against the 5-year average of 10.5x. WCT is indicatively  undervalued.

Notable project portfolio

WCT is a diversified company with operations in engineering and  construction (E&C), property development, and retail mall and hotel  investment and management. The company has delivered several  noteworthy projects, such as the Formula 1 Circuits, Bandar Bukit  Tinggi township in Klang, Paradigm Mall in Petaling Jaya and Johor  Bahru, and SkyPark Aviation in Subang. 65% of its ongoing projects and  orderbook come from the local buildings, while the remaining 35%  from civil and infrastructure projects. 9 out of its 13 projects are set to  be completed in 2023 (Refer Table 1).

Sets Sights on Various Projects and Overseas Expansion

Despite falling short in job security for FY22, WCT has set its sights on  several projects, such as MRT3, flood mitigation projects, ECRL, Pan  Borneo Sabah, Coastal Highway Sarawak, and elevated structures in  Kuching Urban Transportation System. WCT is also exploring  opportunities to expand its overseas operations, with a focus on  Nusantara in Indonesia and the Middle East.

Comprehensive Net Loss Narrows

WCT registered a 3-year revenue and core net profit CAGR of 7.5% and  -192.4% over 2020-2022, respectively. The biggest chunk of the  revenue was contributed by the E&C division, representing 78% of the  group’s consolidated revenue. Post COVID-19, the company's net loss  has improved attributed by: i) the reversal of tax provision due to the  WCT-Meydan suit settlement in the Middle East, ii) continuous  clearance of unsold inventories (-75%), (refer Chart 1) and, iii) better  foot traffic and occupancy rates in its hotels and malls.

Source: BIMB Securities Research - 13 Apr 2023