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WCT looks to asset divestment to pare gearing; to list REIT latest by 2Q2017

KLANG (May 27): WCT Holdings Bhd is looking to sell off some assets to raise more than RM500 million, the proceeds of which it expects to use to reduce its net gearing to 0.5 times from 0.8 times currently.

WCT general manager (corporate and finance) Chong Kian Fah said the company's target is to raise more than RM500 million in the next six months.

"Moving forward, we will continue towards monetisation, because we have a lot of assets in our book. And it is the right time, they are matured for monetisation," Chong told reporters after the group's annual general meeting here today.

However, WCT chairman Datuk Captain Ahmad Sufian said discussions on the group's asset sale are still ongoing and more details could not be revealed at this point of time, adding the group has to be creative to monetise its assets to bring in cash flow.

As at March 31, Chong said the group is in a net debt position with RM13 million debt. The group wishes to return to a net cash position by the second or third quarter this year.

Meanwhile, WCT plans to focus on listing its property Real Estate Investment Trust (REIT) first by the first or the second quarter of 2017, before moving to float its engineering and construction division.

Captain Ahmad also said WCT will put Bandar Bukit Tinggi Mall and Paradigm Mall, which are collectively valued at RM1.2 billion, into the REIT.

Chong added the group's gateway @ klia2, WCT's third retail project, is only in its second year of operation and so the group will only consider injecting it into the REIT later.

Presently, Chong said WCT's tender book stood at RM10 billion, of which RM5 billion has been submitted, and RM5 billion is under preparation. However, the figure is subject to change with more invitation in the future, he added.

The group is aiming to secure at least RM2 billion worth of projects from the jobs it is bidding for.

To date, the group's outstanding construction order book stood at RM4.4 billion, mostly from projects in Malaysia.

When asked on how WCT plans to manage its foreign exchange (forex) as its first quarter ended March 31, 2016 (1QFY16)'s net profit declined to near 70% to RM10 million from RM33.29 million a year ago due to unrealised forex loss, Chong replied that forex is not a big issue with WCT.

"Our main concern is more on the profitability of the projects. Last year, we had huge forex gains, but in the last 10 years before that, we had forex loss every year.

"It's a fluctuating mechanism. It may affect us in the short term, but, in the long run, it (the impact) will even out. We did a calculation on the forex gains and loss, we are in an even position," Chong added.

As for its property segment, WCT has set a sales target of RM600 million, its expectation of a softer property market till 2017 notwithstanding.

Chong said the sales target should be achievable as the group has exceeded its sales target for the first quarter with the launch of its Paradigm Garden City in Overseas Union Garden.

At 12.30pm, WCT dropped 2 sen or 1.3% to RM1.52, with 3.3 million shares traded. – theedgemarkets.com

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