24-04-2025
MAHB's New Owners' Decision Could Worry WCT
CIMB Investment Bank Bhd (CIMB Securities) has maintained its HOLD rating on WCT Holdings Bhdwhile lowering its target price to RM0.70 from RM0.87. The company cited heightened uncertainty surrounding the group's new order book outlook and the potential impact of a review of the Subang Airport Regeneration Plan (SARP).
The research house has cut its FY25F–27F new contract win projections by 17–50%, now expecting between RM500 million and RM1 billion worth of new jobs annually, down from previous estimates. Analysts believe the recent acquisition of Malaysia Airports Holdings Bhd (MAHB) by the Gateway Development Alliance may lead to a reassessment of the SARP.
WCT, through its 60%-owned unit Subang Skypark Sdn Bhd (SSSB), holds a 30-year sub-concession with MAHB for Subang Airport operations. This concession ends in December 2027, with a potential extension of another 29 years.
In FY2023, SSSB posted a net loss of RM4.9 million, narrowing from RM5.8 million a year earlier. WCT had previously anticipated the SARP to unlock RM1 billion in job opportunities and revitalise commercial prospects at Subang Skypark. However, according to local news, MAHB is now reviewing the SARP to align it with the Kuala Lumpur International Airport master plan, which could dampen short-term growth potential at Subang.
The plan's original RM3.7 billion budget aimed to expand Subang Airport's passenger capacity to eight million by 2030 and enlarge its business aviation footprint to nearly four million sq ft of gross floor area.
In addition to the SARP reassessment, AirAsia's relocation of domestic operations to KLIA Terminal 2 in April is seen as a further setback. As at mid-February, WCT's tender book exceeded RM13 billion, though no major new wins have been recorded year-to-date, leaving its outstanding order book at RM2.8 billion as of end-2024.
On a more positive note, CIMB Securities highlighted the potential balance sheet boost from the proposed listing of Paradigm REIT by the second quarter of 2025. WCT plans to inject Paradigm Mall PJ, Paradigm Mall JB, and Bukit Tinggi Shopping Centre into the REIT in a RM2.4 billion deal, to be settled through 1.6 billion new REIT units and RM837 million in cash. WCT is expected to retain a 60.7% stake post-listing.
The move is anticipated to be earnings-accretive, with WCT's pro forma net loss for FY23 projected to narrow by 14% to RM202 million. The listing would also improve net gearing significantly from 92% to 47%, helping to strengthen its financial position.
Despite the REIT uplift, CIM Securities has widened WCT's sum-of-the-parts (SOTP) discount to 70% from 60%, reflecting lingering concerns over future job flows and potential delays in project execution. The stock is trading at a price-to-book ratio of 0.3 times, in line with its historical mean. Related
