THE BUZZ
WCT has proposed to set up a new holding company, called WCT Holdings (WCTH), which will assume the former’s listing status on Bursa Malaysia. The group will also transfer its 100% stake in WCT Land, its property development and investment arm, to WCTH.
OUR TAKE
Details on the proposal. Under the corporate proposal, all existing WCT share- and warrant-holders will exchange their respective holdings in WCT on the basis of one-for-one for a corresponding equivalent stake in WCTH. Subsequently, WCT will become a 100%-owned subsidiary of WCTH, with the latter assuming WCT’s listing status on the Bursa Malaysia Main Market. Meanwhile, WCT’s existing property development and investment arm, WCT Land, will be transferred over as a direct subsidiary of WCTH, while its present construction business would remain under the WCT umbrella.
Neutral on the move. We are neutral on the proposed restructuring given that WCT’s core businesses remain largely intact while the exercise, on completion, would have no impact on the group’s consolidated financials. On paper, the proposal carves out its existing property business and creates a new holding company overlooking both WCT’s property and construction divisions.
Potential listing of property business? While management highlighted that the proposed restructuring is intended at segregating as well as streamlining its operations, we believe this could be a prelude to a potential separate listing of its property business under WCT Land in view of its aggressive landbank expansion. In an earlier move, the group had proposed to acquire two separate pieces of land this year at a total acquisition cost of RM630m. Its outstanding landbank currently stands at about 1,040 acres. In the meantime, its property investment division continues to flourish with three properties currently under its management. These are Bandar Bukit Tinggi Shopping Mall and Premiere Hotel both in Klang as well as the Paradigm Mall in Kelana Jaya. By 2QCY13, the group’s 70%-owned KLIA2 Integrated Complex should commence operation. We estimate that WCT’s property division as a whole chalks up profit of some RM120m-RM140m p.a. at EBIT level. Although it is still preliminary at this juncture, we see the potential floating of this division as a positive move to help unlock the value of the group’s fast-growing property business as well as to shore up its balance sheet for future expansion.
BUY. We are largely neutral on the proposed corporate restructuring at this juncture, with potential catalysts being the possible separate listing of WCT’s property development and investment business. Hence, we are maintaining our BUY recommendation, with our FV unchanged at RM3.36, or RM2.92 ex-bonus issue.
WCT has proposed to set up a new holding company, called WCT Holdings (WCTH), which will assume the former’s listing status on Bursa Malaysia. The group will also transfer its 100% stake in WCT Land, its property development and investment arm, to WCTH.
OUR TAKE
Details on the proposal. Under the corporate proposal, all existing WCT share- and warrant-holders will exchange their respective holdings in WCT on the basis of one-for-one for a corresponding equivalent stake in WCTH. Subsequently, WCT will become a 100%-owned subsidiary of WCTH, with the latter assuming WCT’s listing status on the Bursa Malaysia Main Market. Meanwhile, WCT’s existing property development and investment arm, WCT Land, will be transferred over as a direct subsidiary of WCTH, while its present construction business would remain under the WCT umbrella.
Neutral on the move. We are neutral on the proposed restructuring given that WCT’s core businesses remain largely intact while the exercise, on completion, would have no impact on the group’s consolidated financials. On paper, the proposal carves out its existing property business and creates a new holding company overlooking both WCT’s property and construction divisions.
Potential listing of property business? While management highlighted that the proposed restructuring is intended at segregating as well as streamlining its operations, we believe this could be a prelude to a potential separate listing of its property business under WCT Land in view of its aggressive landbank expansion. In an earlier move, the group had proposed to acquire two separate pieces of land this year at a total acquisition cost of RM630m. Its outstanding landbank currently stands at about 1,040 acres. In the meantime, its property investment division continues to flourish with three properties currently under its management. These are Bandar Bukit Tinggi Shopping Mall and Premiere Hotel both in Klang as well as the Paradigm Mall in Kelana Jaya. By 2QCY13, the group’s 70%-owned KLIA2 Integrated Complex should commence operation. We estimate that WCT’s property division as a whole chalks up profit of some RM120m-RM140m p.a. at EBIT level. Although it is still preliminary at this juncture, we see the potential floating of this division as a positive move to help unlock the value of the group’s fast-growing property business as well as to shore up its balance sheet for future expansion.
BUY. We are largely neutral on the proposed corporate restructuring at this juncture, with potential catalysts being the possible separate listing of WCT’s property development and investment business. Hence, we are maintaining our BUY recommendation, with our FV unchanged at RM3.36, or RM2.92 ex-bonus issue.
Source: OSK
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