Analysts neutral on WCT’s plan to de-gear balance sheet

PETALING JAYA: Analysts are generally neutral on WCT Holdings Bhd’s plan to de-gear its balance sheet and to boost its construction business portfolio for a more resilient growth.

The construction and property development company expects to improve its financial standing as it plans to de-gear its balance sheet by monetising its assets and inventory.

This involves the sale of its two malls – AEON Bukit Tinggi in Klang and Paradigm Mall – apart from the planned disposal of its “non-strategic” land bank.

AllianceDBS Research said the planned moves to reduce net gearing were in addition to the proposed disposal of WCT’s Ascent Paradigm to the Employees Provident Fund and the proposed private placement of up to 125 million new shares, which represent about 10% of WCT’s existing issued and paidup capital.

WCT was in a net debt position of RM3bil and a net gearing of 1.1 times as at Dec 31, 2016.

“We understand that besides the obvious avenue of injecting both malls valued at about RM1.2bil into the Pavilion REIT, WCT is speaking to some funds to sell both malls where it may remain as the operator or still hold a minority stake.

“It expects to firm up a deal by mid-2017,” said AllianceDBS in a note, adding that WCT had earmarked a few land plots of 608 acres for sale. These land plots are largely in Bandar Bukit Tinggi in Klang and Sungai Buaya in Serendah.

It is estimated that the sale of the land plots could raise up to RM500mil over 24 months.

AmInvestment Bank has also projected a high likelihood for Aeon Bukit Tinggi and Paradigm Mall to be sold to Pavilion REIT, primarily due to Tan Sri Desmond Lim being the common controlling shareholder in WCT and Pavilion REIT.