MIDF Amanah Investment Bank Bhd (MIDF Research) has upgraded WCT Holdings Bhd to a BUY with an unchanged target price of 97 sen, citing its strong financial rebound in fourth quarter fiscal year 2024 (4QFY24).
The revised rating reflects the group’s improved earnings, a robust RM2.76 billion order book, and potential growth from ongoing project tenders. Despite persistent margin pressures in its engineering and construction segment, analysts believe the company’s earnings outlook is supported by a recovery in its property and investment divisions, as well as its planned real estate investment trust (REIT) listing.
The group posted a 122.9% year-on-year (YoY) surge in net profit to RM56.3 million for 4QFY24, reversing from a loss in the previous year. Revenue climbed 35.1% YoY to RM542.6 million, bringing full-year revenue to RM1.82 billion, a 5.6% increase YoY. The 12MFY24 core net profit stood at RM76.4 million, outperforming both MIDF Research’s and consensus estimates at 127.1% and 127.5% of full-year projections, respectively.
WCT’s engineering and construction segment remained the group’s largest revenue contributor, generating RM1.04 billion in 12MFY24, despite a 9.5% decline due to slower project progress. Operating losses narrowed significantly to RM19.0 million, compared to RM220.0 million in 12MFY23, an improvement of 91.4%. While margins remain under pressure from rising costs, MIDF Research noted that the company has been actively bidding for new contracts, with a tender book exceeding RM13.0 billion, including major projects such as the Penang International Airport expansion, Pan Borneo Sabah, and North-South Expressway works.
The property development segment delivered strong growth, with revenue increasing 42.5% to RM516.0 million. Operating profit surged 85.0% YoY to RM37.0 million, driven by higher property sales and billings. The group also exceeded its calendar year 2024 sales target of RM960 million, achieving RM1.04 billion in year-to-date sales, with total unbilled sales reaching RM1.07 billion. Inventory levels also improved, with unsold completed properties dropping 87.0% to RM23.0 million as of December 2024.
Meanwhile, the property investment and management segment emerged as the primary profit driver, recording an operating profit of RM362.0 million for 12MFY24, reflecting a 199.2% jump YoY. Revenue for the segment increased 23.5% YoY to RM268.0 million, supported by higher occupancy rates in its retail malls and improved contributions from its hospitality assets. The sharp rise in operating profit was largely attributed to a one-off RM184.0 million net gain in 3QFY24 from the remeasurement of interest in a jointly controlled entity, alongside a fair value gain of RM42.0 million from investment properties.
Looking ahead, WCT’s RM2.76 billion order book provides earnings visibility up to FY27, with analysts expecting new contract wins to support future growth. Management has intensified efforts to secure projects both domestically and internationally, with potential opportunities in data centre developments. Additionally, the group’s proposed REIT listing, which includes three retail malls, is expected to unlock asset value and improve financial flexibility, aiding in debt reduction from its RM3.58 billion borrowings.
