WCT - Buys commercial land in Johor for RM180mil

Date: 
2012-08-24
Firm: 
AMMB
Stock: 
WCT
Price Target: 
1.27
Price Call: 
BUY
Last Price: 
0.915
Upside/Downside: 
+0.355 (38.80%)

BUY

FAIR VALUE: MYR1.27

Investment Highlights


  • 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's wholly-owned unit WCT Hartanah Jaya entered into a sale and purchase agreement with Malaysia Building Society Bhd (MBSB) for the acquisition of land in Johor.
  • The purchase consideration has been set at RM180mil. It would entail a plot of commercial land in Johor Bahru together with an abandoned shopping mall.
  • The building consists of a (i) four-level retail podium block; and (ii) two-level car park on freehold land in Tebrau, Johor Bahru district. The size of the land is approximately 50,107 sq m or 12 acres. 
  • We understand that WCT won the bid by way of a public tender that closed on 22  June 2012 with a reserve price of RM160mil. Apart from WCT, the value of the other bid stood at RM89mil.
  • The net book value of the land was approximately RM124mil as at 31 December 2011. Based on the acquisition price of RM180mil, we estimate that WCT had purchased the land for ~RM334 psf. 
  • The development cost for WCT's new venture is not known for now. But, we believe the required outlay would be capped as it involves a brownfield project on an existing abandoned mall located within the matured Tebrau neighbourhood.
  • In comparison, the planned megamall in Tebrau within the integrated SouthKey development in Johor ' a 70:30 JV between IGB and Selia Pantai ' is estimated to cost RM2bil-3bil on a GFA of 3 mil sq ft. 
  • Furthermore, this solidifies WCT's widening portfolio of shopping malls under its belt. Excluding another planned mall in OUG, WCT's shopping mall NLA would bump up to ~2.1 mil sq ft with the scheduled debut of its Gateway@KLIA2 by 2Q13.
  • We do not expect WCT to have any problems in raising funds for this new project with its RM1bil bond programme well in place. 
  • This latest deal would also serve to lift WCT's growing prowess in Johor. This would include ongoing infrastructure works within Medini Iskandar and landbank within the area with a combined GDV of ~RM1.5bil (21 acres) or 13% of the group's total GDV (RM11.2bil).



Discussions
Be the first to like this. Showing 4 of 4 comments

Yee Fang Toh

Maintain buy, but Price Target = 1.27?

2012-08-24 15:25

chieng8182

Maintain BUY on WCT with an unchanged fair value of RM3.05/share/share

2012-08-24 18:16

boboijohn

Maintain Buy! TP RM 3.05 tapi Fully Value RM 1.27! Mana yg betul ini?

2012-08-24 19:44

KC Loh

hahaha... classic boo-boo!

2012-08-24 19:47

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