MARC Ratings has affirmed its ratings on WCT Holdings Berhad’s (WCT) debt/sukuk programmes and the rating outlook on all programmes has been maintained at positive.
The group’s rated issuances are as follows:
- RM5.0 billion Islamic Medium-Term Notes (IMTN)/ Perpetual Sukuk Programmes at A+IS /A-IS
- RM1.0 billion Medium-Term Notes Programme at A+
- RM1.5 billion Sukuk Murabahah Programme at A+IS
- Perpetual Subordinated Sukuk Musharakah Programme (Perpetual Sukuk) of up to RM1.0 billion at A-IS
The ratings affirmation considers the improvement in WCT’s construction order book and balance sheet. The two-notch rating differential between its perpetual sukuk and senior sukuk ratings is based on MARC Ratings’ notching principles for subordinated debt and hybrid securities. The group’s construction order book has shown some improvement after a period of subdued replenishment, with 2026 awards totalling RM2.8 billion. These include a RM1.72 billion commercial and residential contract in Abu Dhabi, the RM600.9 million Menara Ethos office tower project at TRX, and contracts totalling RM255.0 million for highway interchange and drainage facilities in Taiwan. These have lifted the year-to-date order book to about RM4.2 billion from RM2.1 billion in 2025.
The group’s RM14 billion tender book, which includes sizeable domestic infrastructure projects, would provide further potential order book buildup, although the timing of these rollouts remains uncertain. Earnings from the engineering and construction segment are expected to improve as the newly secured projects, which are expected to generate higher margins, progress. MARC Ratings notes that exposure to volatility in construction material prices amid ongoing geopolitical tensions could pressure margins and delivery timelines on earlier secured projects.
The property development segment continued to perform well, registering a 76% overall take-up rate across ongoing projects with a combined gross development value (GDV) of RM2.5 billion as at end-June 2026. Unbilled sales of RM868 million provide earnings visibility for at least two years. Nevertheless, the Aras Residences high-rise development at OUG, with a GDV of RM503 million, recorded a take-up rate of 36%, reflecting intense competition in the Bukit Jalil and Jalan Kuchai Lama area. Meanwhile, recurring income from Paradigm REIT and other investment assets remains a key credit strength, supported by consistently high occupancy across its retail malls.
WCT’s balance sheet has strengthened materially, with gross and net debt-to-equity (DE) ratios improving to 0.96x and 0.71x (2024: 1.16x and 1.00x), following the injection of three retail malls into Paradigm REIT and the use of disposal proceeds to reduce borrowings. Following the acquisition of the remaining 30% stake in Jelas Puri Sdn Bhd and the planned injection of its three hotels into Paradigm REIT, the gross DE ratio is expected to reduce further to 0.78x by 2027.