Don't bother to buy at this price. WCE needs to raise at least RM 1 billion to fund the remaining development and we haven't even talk about the huge interest expense costing RM 250 million a year. If you want to know why insiders are throwing you should check out the project cash flow projection. In summary, all i can say is based on a DCF of 8% discount rate, the value of 80% in WCE was originally only around RM 1.8 billion. But now with much higher interest expense than expected and massive cost overrun, i think this company right now only worth around RM 400 million or even less. You won't see it so soon but when yhey have to raise funds up to RM 1 billion, your share in this company will diluted like nobody's business. The only upside is the concession period can extend another 10 years, but that will be in 2060 the value of RM 1 then and now will be huge so barely helps anything. And definitely not enough to cover the huge cost overrun from interest expenses and land
To get some perspective, PLUS revenue in 2010 was 3.3bil, gross profit was 2.3bil, servicing 750m interest expense p.a.
My estimation for WCE is at least 1/4-1/3 of these figures. What is 250m interest expense to them? As at latest quarter ended 31/12/2022, their cash and equivalent was 580m, GSL credit line left with about 100m, term loan credit line left with about 100m also, of course expecting more dilution from RCPS and RUMS etc to get addtional cash if needed, and slight help from 4 opened section of toll. I think right issue is not needed looking at rate of cash flow drain.
Government will launch Amanah Lebuhraya Rakyat (ALR) to takeover main highway in Malaysia. Litrak share price has gain a lot. WCEHB share price also jump 5% today. Will this price will go further to 50 send?
Plus was bought by the GOM and sold to EPF and Khazanah for 23B in 2011.By 2020 there were three bidders of as high as 30B to takeover Plus highways. WCE highway when ready competes directly with Plus for destinations in the north and enjoy advantages of being relatively flat which will appeal to commercial traffic for fewer wear and tear losses and passing through and closeby many towns and villages which will be attractive to motorists and holiday seekers .It is highly conceivable that WCE will be a takeover target to have all highways under the same roof to harmonise toll rates and reduce competition and cannibalisation
The route alignment of WCE from the north to the south up to Banting and thereafter by FR32 to KLIA is superior as the distance and toll charges are expected to be lower compared to present travelling into and out of KLIA involve different tolled higways with separate charges. Motorists travelling on WCE will also experience saving from the non-tolled stretch fron Tanjung Karang to Hutan melintang
@ John, thanks for sharing. Therefore if cost more than double current price, takeover price minimum 70c? This doesn't factor future earnings. Wonder what's the fair value as win win for both parties, as they say? If some parties can estimate they will start buying in a big way.
@Edge, I think major shareholders like Surin and Pang will not agree if the takeover offer is anything less than $1.50. Notwithstanding that the RI was cheap , their cost for the initial batches of share acquisition was $1.30+ . Someone has worked out the NPV of the cash flows based on certain assumptions of traffic volume about 2 years ago and he arrived at fair median value of $1.50+ too. You can search for that posting in this forum .
@JohnZhang, thanks for reply. If the government is really serious to take over this company, the price shd fly when it is nearer to official announcement. At least 500% return from this level! Seems there's some slow buying interest these few days.
@Albert, yeah possible. We hv all kinds of people here. Anyway since this is open forum with freedom of speech, let's hear what he has to say. Who knows, he may know something that most others can't see. We can learn a thing or two.
This counter is in doldrums is due to excessive delay in highway completion and toll collection schedules, hence greatly affect the company’s cashflow. I think share price will go much higher once toll collection for 80% of its highway is reached . If traffic volume surpass expectation, share price will jump. Patience is the key .
@ John. Thanks for sharing. Checks on website shows latest project schedule updated till September last year. About one month ago, there was a post about fund required to complete highway and huge interest to service. Any concern this will impact project completion or the valuation of the counter? Kindly share your views. Thanks
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