KUALA LUMPUR: WCT Holdings Bhd 's share price rose in early trade today after the construction and engineering company proposed the establishment of the Paradigm Real Estate Investment Trust (Paradigm REIT) to be listed on Bursa Malaysia's Main Market.

As of 10.20 am, WCT had increased by 3.88 per cent or four sen to RM1.07, with 9.16 million shares traded.

The group also proposed the disposal of three shopping malls to the REIT for RM2.44 billion: Bukit Tinggi Shopping Centre in Klang, Paradigm Mall Petaling Jaya, and Paradigm Mall Johor Bahru.

These proposals are expected to be completed by the first quarter of 2025.

MIDF Amanah Investment Bank Bhd maintained a neutral recommendation on WCT but anticipates that this development could generate some trading interest. The bank kept its target price for WCT at RM0.97.

"We believe the REIT plan offers a strong opportunity for the group to reduce its debt and lighten its balance sheet.

"The pro forma effects, as outlined in the bourse filing yesterday, show WCT can lower its net gearing from 0.72 times to 0.33 times," it said in a research note today.

Assuming an issue price of RM1 per unit, the cash proceeds from the mall disposals and Paradigm REIT offering would amount to RM1.40 billion.

Of this, RM838 million will be used to repay WCT's borrowings within 12 months, and RM533.2 million to repay the borrowings of its indirect subsidiaries, Gemilang Waras Sdn Bhd and WCT Hartanah Jaya Sdn Bhd.

MIDF Amanah said WCT would continue benefiting from the malls through dividends expected from Paradigm REIT and management service fees.

"On the construction front, we remain optimistic about the group's prospects to secure new projects," it added.

Public Investment Bank also maintained its neutral stance on WCT, keeping its target price at RM1.08.

"While we view this development positively, we are leaving our forecasts unchanged pending the listing of Paradigm REIT," it added.