PETALING JAYA (Nov 28): All the assets and businesses under WCT Holdings Bhd such as hotels and malls, construction and property development have been adversely impacted by the Covid-19 pandemic, The Edge Malaysia reported this week.

“The pandemic appears to have weakened the group [WCT] more notably than others … While WCT’s outstanding order book appears healthy at around RM5 billion, we foresee the group may face some challenges in project execution given the new norms.

“The award of new contracts also remains uncertain given the current operating climate. Its high financial commitments and de-gearing exercise, made more challenging by the weak operating conditions, will limit its growth potential,” Public Investment Bank noted in a report last week.

Public Investment Bank has a “neutral” call on WCT, with a 12-month target price of 44 sen.

For the nine months ended Sept 30, WCT saw its net profit drop 87.9% to RM9.24 million from RM76.3 million a year ago, largely due to the Covid-19 pandemic, reported The Edge. Analysts say the company distributed RM24.3 million to holders of its perpetual sukuk, which also adversely impacted its bottom line.

Revenue was lower at RM1.16 billion compared with RM1.33 billion a year ago.

As at end-September, WCT had cash and bank balances of RM600.68 million. It also had long-term borrowings of RM1.9 billion and short-term debt commitments of RM924.29 million, and RM817.9 million in perpetual sukuk on its books.

After WCT’s financial results were announced last week, Hong Leong Investment Bank maintained its “hold” call on the company, with a target price of 42 sen, down from 44 sen previously.

“Our target price is derived based on a 40% discount to sum-of-parts value of 70 sen. Our target price implies FY2020/21/22 price-earnings multiples of 59.7 times, 10.9 times and 9.3 times [respectively]. While the stock trades at a low price-to-book value of 0.19 times, we reckon it is reflective of WCT’s weak earnings prospects and fragile balance sheet,” wrote the bank.

WCT’s share price hit a 52-week low of 24.3 sen on March 19, but has since gained some traction, trading above the 40 sen band. This is notably way below its net asset per share of RM2.23 as at Sept 30.

Read the full report in this week’s The Edge Malaysia

Get the latest news @ www.EdgeProp.my

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