Journey to Wealth
WCT - Building its presence in Johor Buy
- Maintain BUY on WCT, with an unchanged fair value of RM3.05/share/share ' pegged to a 15% discount on its sum-of-parts value.
- WCT has announced on Bursa Malaysia that its property arm WCT Land had entered into a conditional lease purchase agreement with Medini Land 'a wholly-owned unit of Iskandar Investment Bhd (IIB) ' worth RM99mil.
- The land measures 18-acre acres and is situated in Medini North, within the Iskandar Development Region. Based on a gross floor area of ~2.8 mil sq ft, the implied land cost for WCT works out to RM36 psf.
- We believe the acquisition price is fair ' as it is close to the RM34.90 psf that Mah Sing Group paid for land in Medini (total: RM75mil for 8.2 acres) in a similar deal with IIB just last month.
- WCT's management was quoted in press interviews that plans are afoot to kick-start the mixed commercial development (estimated GDV: RM1.5bil) project by 3Q13 for completion in five years. We gather that WCT plans to go upmarket with this project.
- This is the second landbanking deal that WCT has embarked on in Medini after the recent acquisition of a 10.3-acre parcel within the 142ha (~352 acre) Medini Business District, located next to Medini North.
- WCT had also in August acquired a 12-acre plot of land that includes the abandoned Kemayan shopping mall in Tebrau (NLA: 770k sq ft) for RM180mil.
- Meanwhile, sales at its maiden property project in Medini (1 Medini) has been encouraging ' with an average take up rate of 69% in 1HFY12 (2QFY12: 70%). Average selling price for Phase 2 has moved up to ~RM550 psf from RM450 psf under Phase 1.
- Being an early mover in Iskandar ' and Medini in particular ' we believe WCT is well-positioned to ride on the recent surge in property development activities within Iskandar Malaysia.
- Taken together, this would boost the outstanding GDV of its property projects in Johor to ~RM3.6bil and bump up the total GDV of its property business to circa RM13.4bil.
- We make no changes to our fair value and assumptions pending more details on this latest project.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
