KUALA LUMPUR (Aug 5): Shares of construction and property group WCT Holdings Bhd (KL:WCT) plunged to their lowest in one month, after the stock exchange suspended intraday short-selling activities of the stock on Monday morning.
The suspension was triggered after the counter dropped more than 15% or 15 sen from its reference price. The stock’s intraday short selling will only be activated on Tuesday (Aug 6) at 8.30am, according to Bursa Malaysia’s special announcement.
WCT’s share price dropped as much as 17 sen or 15.18% to 95 sen during the morning session. As of 9.11am, the stock was trading at 95.5 sen — still down 16.5 sen or 14.73% — with some 13.3 million shares traded. At 95.5 sen, WCT is valued at RM1.8 billion.
The counter was one of the worst casualties on Monday, adding to the 12% decline on Friday.
Still, WCT has had a great rally so far in 2024, as its stock price more than doubled at the end of last year, tracking a rally in the construction sector, largely fuelled by optimism about the government’s rollout of major infrastructure projects and contract awards in the private sector.
Analysts, meanwhile, have had doubts over the prospects of WCT’s share price. There are currently four “buy” calls, four “hold” ratings, and one “sell” recommendation, according to Bloomberg. The consensus target price of RM1.25 was breached on July 18.
WCT, meanwhile, is planning a private placement to raise up to RM163 million for working capital and repayment of bank borrowings, a move which Public Investment Bank Bhd (Public IB) said is “positive” for the company, even though it will dilute earnings per share.
The move would allow “WCT to raise the requisite funds to execute the ongoing construction projects smoothly” and “complement the ongoing de-gearing initiatives” that aim to reduce gross gearing to below 0.6 times, the house noted. WCT has total outstanding borrowings of RM3.1 billion, representing a gross gearing of 0.86 times as of March 31, 2024.
While it could dilute the immediate year earnings per share forecast by about 9%, Public IB is still keeping a “neutral” call on WCT and its earnings forecast, pending finalisation of the private placement.