Tuesday, Sep 10, 2002
The affirmation of WCT Engineering Bhd’s (WCT) corporate debt rating at A– (s) reflects the improving economic outlook, the group’s competitive position in the construction sector as evident by its ability to secure overseas construction projects, strengthening financial profile, conservative financial management and an experienced management team. The bonds issue is supported by an irrevocable banking facility of RM15 million provided by MayBank Bhd that serves to cover any temporary liquidity shortfall towards meeting the sinking fund obligation. However, the overhang of excess capacity in most of the property sub-sectors and the highly competitive and cyclical nature of the industry continue to constrain the rating.
Operating mainly in the civil engineering sector, WCT specializes in earthwork, highway construction and related infrastructure works. Property development activities have in recent years assumed a growing proportion of the group’s overall project portfolio. As at end January 2002, the group’s revenue reached RM473.86 million, representing a 5.28% growth over the previous year’s figure; backed by new contracts.
During the period under review, the group secured new contracts that included the construction of the 22.65 km Guthrie Corridor Expressway valued at RM386 million, additional construction packages for the East Coast Expressway and construction of residential units in the affluent area of Taman Tun Dr. Ismail. WCT was also part of the consortium of Malaysian companies that secured several highway construction contracts from the Indian Government. WCT’s share of the total project is estimated at RM342 million. The group’s order book comprised RM1.05 billion worth of outstanding contracts as at 1Q 2002 which will sustain the revenue base for the next two to three years. Supplementing the group’s earnings are its property development activities in Bandar Bukit Tinggi, Kelang. Market demand for the integrated township developments under Bandar Bukit Tinggi 1 and 2 have been satisfactory with an overall take-up rate of 83% and 52% respectively since their maiden launches in 1998 and 2001.
The group’s near-to-medium term business outlook appears positive set against an active construction environment driven by civil engineering works. The revival of many infrastructure related projects are expected to act as the stimulus for the construction sector. The overall property sector nevertheless is expected to remain soft against the backdrop of excess capacity especially in the office and retail space sub-sectors.
The bonds issue is backed by a sinking fund that captures 10% of the gross proceeds from a selected pool of contracts. A total of RM300 million worth of contracts is required to be identified on an annual basis for inclusion in the pool.
Revenue and earnings growth in the near term will be supported by newly secured contracts as well as the development of the Bandar Bukit Tinggi project. The group’s construction and property development activities as well as its investments in India will continue to make significant demands on its operational cash flow. Capital structure remains manageable, with the expanded debt base matched by the growing shareholders’ funds (through retention of profits).
Operating mainly in the civil engineering sector, WCT specializes in earthwork, highway construction and related infrastructure works. Property development activities have in recent years assumed a growing proportion of the group’s overall project portfolio. As at end January 2002, the group’s revenue reached RM473.86 million, representing a 5.28% growth over the previous year’s figure; backed by new contracts.
During the period under review, the group secured new contracts that included the construction of the 22.65 km Guthrie Corridor Expressway valued at RM386 million, additional construction packages for the East Coast Expressway and construction of residential units in the affluent area of Taman Tun Dr. Ismail. WCT was also part of the consortium of Malaysian companies that secured several highway construction contracts from the Indian Government. WCT’s share of the total project is estimated at RM342 million. The group’s order book comprised RM1.05 billion worth of outstanding contracts as at 1Q 2002 which will sustain the revenue base for the next two to three years. Supplementing the group’s earnings are its property development activities in Bandar Bukit Tinggi, Kelang. Market demand for the integrated township developments under Bandar Bukit Tinggi 1 and 2 have been satisfactory with an overall take-up rate of 83% and 52% respectively since their maiden launches in 1998 and 2001.
The group’s near-to-medium term business outlook appears positive set against an active construction environment driven by civil engineering works. The revival of many infrastructure related projects are expected to act as the stimulus for the construction sector. The overall property sector nevertheless is expected to remain soft against the backdrop of excess capacity especially in the office and retail space sub-sectors.
The bonds issue is backed by a sinking fund that captures 10% of the gross proceeds from a selected pool of contracts. A total of RM300 million worth of contracts is required to be identified on an annual basis for inclusion in the pool.
Revenue and earnings growth in the near term will be supported by newly secured contracts as well as the development of the Bandar Bukit Tinggi project. The group’s construction and property development activities as well as its investments in India will continue to make significant demands on its operational cash flow. Capital structure remains manageable, with the expanded debt base matched by the growing shareholders’ funds (through retention of profits).