PETALING JAYA: Analysts remain cautiously optimistic on WCT Holdings Bhd, highlighting the group’s stronger balance sheet, improving property momentum and an expected pickup in construction wins as potential rerating catalysts.

While results for the second quarter (2Q25) showed weaker construction margins, property development delivered robust contributions, helping the group remain broadly on track with forecasts.

CGS International (CGSI) Research noted that WCT is in a “position of strength,” with net gearing improving sharply to 0.47 times in 2Q25 versus 0.82 times in the preceding quarter, mainly due to the listing of Paradigm Real Estate Investment Trust in June.

“WCT said it is currently more aggressive with construction tenders; a series of key wins would be a much-needed rerating catalyst,” the research house said, reiterating its “add” rating with a sum-of-parts-based target price of RM1.28.

Meanwhile, CIMB Securities Research described earnings for the first half of the year (1H25) as slightly ahead of expectations, primarily thanks to RM25mil in land sales.

Core earnings for 1H25 came in at RM30mil, down 47% year-on-year (y-o-y) but ahead of the research house’s forecast at 59% of its full-year estimate.

“Despite posting a lower bottom line y-o-y, we deem WCT’s 1H25 results to be ahead of expectations owing to profit from land sales,” it said, raising its target price to 90 sen from 70 sen but maintaining a “hold” call.

It emphasised that stronger job replenishment remains necessary, especially as property sales only hit RM362mil in 1H25, or one-third of the RM1.1bil target.

MBSB Research maintained its “buy” rating on the stock with a slightly revised target price of 93 sen, acknowledging weaker-than-expected construction earnings but stronger property contribution.

“We expect earnings contributions to gain momentum in the coming quarters, underpinned by progressive recognition from WCT’s recently secured North-South Expressway additional lane contract as well as phase one and two of the Pavilion Damansara Heights development,” said the research house.

In 2Q25, WCT group revenue rose 47% y-o-y to RM553mil, but core net profit fell 48% to RM16mil, reflecting higher costs and weaker associate contributions.

Property development was the key driver, as earnings before interest and tax for the segment surged to RM46mil in 2Q25, more than doubling from a year ago, on revenue of RM241mil.