Quick take: WCT shares fall over 4% on unfavourable arbitration ruling

KUALA LUMPUR: Shares of WCT Holdings Bhd fell over 4.7% in early trade Monday after the company lost its arbitration case amid a weak broader market.

The construction and property company shed 4.71%, or two sen to 40.5 sen with over three million shares done.

WCT has been ordered to pay a total of 132.54 million riyals (RM152.65mil) following an unfavourable final award ruling in an arbitration case ordered by the Court of Arbitration of the International Chamber of Commerce (ICC).

“We are negative on this given the group’s current financial constraints (ie. high funding cost) amid the need to preserve its cash for working capital purposes.

“With this judgment, the group is now required to pay the sum of QAR132.5m or equivalent of RM152.6mil to the claimants, ” PublicInvest Research said.

Overall, the research house said outlook remained gloomy given the slower progress on its on-going construction and property projects despite its healthy order book in hand.

While the group’s gearing currently stands at 0.6 times, potential growth moving forward may be limited.

“We also believe the de-gearing exercise, particularly on the listing of its REITs, will be more challenging at this juncture and may take more time to crystalize.

“All said, we maintain our neutral rating for WCT with a lower target price of 53 sen (from 78 sen previously) after making some adjustments to our SOP valuation, with a higher discount rate also applied to account for heightened market risks, ” PublicInvest said.

Source: TheStar