WCT; Buy; RM2.61
Price Target: RM3.75; WCT MK

WCT has entered into a sale and purchase agreement to acquire 3 parcels of land spanning 23 ha or 56.8 acres in Overseas Union Garden, KL via the entire equity interest in Timor Barat Properties. The shareholders of Timor Barat are Eng Lian Entereprise, Shen & Sons and AMC.

The land is situated along Taman Yarl and will be a mixed development. The acquisition price translates into RM180 psf based on a purchase price of RM450m. The conversion premium of RM15 psf which is pending will be borne by the vendors. We think this is fair for a prime piece of land in a matured neighbourhood. Timor Barat has also applied for a contiguous piece of land in the area and if approved will be acquired by WCT for RM150 psf (freehold) and RM135 psf (leasehold).

The acquisition will increase WCT's total outstanding land bank by 6% to 1,037.8 acres. There was no guidance given for GDV but assuming a plot ratio of 2x, ASP of RM500 psf and land efficiency of 70%, potential GDV is RM1.7bn.

WCT will be launching RM1bn worth of sales in FY12F (target RM700m). This is after a strong FY11 with RM457m sales (vs RM220m in FY12F). We remain confident WCT will achieve this given exposure to the resilient mid-end segment in matured locations such as Bandar Parklands and Klang (RM650m sales in FY12F) and 1 Medini (RM360m). 1 Medini is off to a good start with 80% take up of the RM150m launch from Phase 1.

We maintain our BUY rating and SOP-derived TP of RM3.70.

Source: HwangDBS Research 15 March 2012