Surprise contribution from Verticas Residences. We reiterate our BUY recommendation on Wing Tai as its 3Q FYJun13 results beat expectations, with the surprise contribution from its KL project, Verticas Residences. Wing Tai still trades at a deep 24% discount to RNAV, and almost a 40% discount to our updated RNAV of SGD3.78. We raise our target price to SGD2.64, pegged to a 30% discount to RNAV.

3Q JunFY13 results beat forecasts. Wing Tai reported a 3Q PATMI of SGD94.6m (+123% YoY, +7% QoQ). This took 9M FYJun13 PATMI to SGD255.3m, which already accounted for 115% of our full-year estimate and 124% of consensus forecast. The upside surprise came from the recognition of profits from Verticas Residences in Kuala Lumpur upon obtaining its TOP in the quarter.

Slow but steady at the Helios. In addition to Verticas Residences and the progressive recognition from Foresque Residences (94% sold) and L’VIV (100% sold), profits were also recognized from the additional units sold at the already completed Helios Residences (~10 units) and Belle Vue Residences (~3 units). Recall that one unit at Le Nouvel Ardmore was sold in February at a very good price of SGD4,372 psf.

Look out for The Tembusu’s launch. Wing Tai is preparing to launch the 337-unit freehold development The Tembusu, located at its old corporate HQ along Tampines Road, in the next one to two months. We understand that the launch of the Prince Charles Crescent site has been deferred to later this year as the Group prepares to construct the showflat.

Attractively priced. We raise our RNAV estimate to SGD3.78, as we include the Verticas Residences’ profits, as well as adjusting our profit recognition model. Our target price is hence raised to SGD2.64, pegged to a 30% discount to RNAV. We believe Wing Tai remains attractively priced at 0.75x P/B and 0.6x P/RNAV, especially when its net gearing is at an all-time low of 0.17x. Reiterate BUY.

Source: Maybank Kim Eng Research - 14 May 2013