WCT eyes concession projects for land

KUALA LUMPUR (May 31): Having opened its second shopping mall last week, construction firm WCT Bhd is eyeing more infrastructure concession projects locally to further broaden its recurring earnings base.

For that, the company is willing to accept land as payment for undertaking build-operate-transfer (BOT) jobs on public-private partnership (PPP) terms promoted under the country's Economic Transformation Programme, said corporate affairs manager Kenny Wong at the Invest Malaysia 2012 event on Wednesday.

Wong did not elaborate on details but stressed that WCT's move to secure more concessions is a "forward transformation" for the company, to help mitigate the impact of cyclical construction and property development earnings.

Analysts said WCT's current construction order book stands at about RM2.4 billion while the value of its tenders come to RM5 billion. Tenders include the construction of a 400-bed hospital in Sabah for some RM900 million under PPP terms.

The company already has an established concession portfolio, with interests in three highway concessions in India on a BOT basis. The three Indian concessions are the Durgapur Expressway and Panagarh-Palsit Expressway undertaken in collaboration with Gamuda Bhd in West Bengal, India, and a 21.6% stake in India-based Swarna Tollway Pte Ltd that owns a 30-year concession for a 157.8km highway in Andhra Pradesh.

In Malaysia, WCT secured its first concession in 2010 when it clinched from Malaysia Airports Holdings Bhd a RM486 million contract to build and maintain an integrated complex within the new low-cost carrier terminal (LCCT) in Sepang. The contract not only involves construction but entails the management of a retail centre at the integrated complex, with a net lettable area (NLA) of 350,000 sq ft and car parks. The concession is on BOT terms under a 25-year concession.

Wong said the new LCCT's retail centre, to be known as "Gateway", will be opened next year. Including Gateway, the company's total NLA of retail space will come to some two million sq ft, including its AEON Bukit Tinggi Shopping Centre in Klang, and the recently-launched Paradigm Mall in Petaling Jaya. AEON Bukit Tinggi and Paradigm Mall have NLAs of one million sq ft and 680,000 sq ft respectively.

Property development and investment, apart from hotel operations are expected to have a greater prominence in WCT's portfolio, as the company expects to derive more than 50% of operating profit from non-construction businesses by 2016 compared to 36% last year.

WCT had said its property development segment is expected to grow in the next three financial years, helped by its projects in Johor's Iskandar Malaysia enclave and Selangor's Shah Alam and Klang areas.

The company still has an outstanding landbank of 1,029 acres (412 ha) across Malaysia and Vietnam. For the current financial year ending Dec 31, Wong expects new property sales to grow 53% to RM700 million from RM457 million a year earlier while the value of new launches is also anticipated to rise at a similar quantum to RM1 billion from RM650 million previously.

This story appeared in The Edge Financial Daily on May 31, 2012.