• FY17 results broadly in line
• Total FY17 dividends of 6.0 S-cents
• Top bid for Serangoon Garden site

4QFY17 PATMI Up 406% YoY to S$9.5m

Wing Tai’s 4QFY17 PATMI increased 406% YoY to S$9.5m mostly due to a positive lift from taxes and higher share of profits from associates and JVs. We note, however, that operating profit worsened from a S$4.1m loss in 4QFY16 to a S$12.9m loss in 4QFY17 due to lower contributions from property development, though the fall through to the PBT line was partially mitigated by a higher share of profits from Wing Tai Properties Ltd in Hong Kong.

In terms of the topline, 4QFY17 revenues similarly fell 58% YoY from S$140.7m to S$58.6m due to lower development contributions. Over the financial year, the group recognized progressive sales from The Tembusu and the additional units sold in Le Nouvel Ardmore in Singapore and Verticas Residences in Malaysia.

Full year FY17 PATMI amounted to S$20.1m, which translates to a 184% YoY increase, and is broadly within our expectations. A total dividend of 6.0 S-cents (3 S-cents first and final dividend and 3 S-cents special dividend) was proposed, unchanged from the previous year.

JV With Keppel Land for Serangoon Garden Top Bid

Together with Keppel Land Ltd, Wing Tai was recently jointly awarded the tender for a 99-year leasehold residential site at Serangoon North Ave 1 with a top bid of S$446.3m (S$965 psf ppr). The group plans to develop over 600 units for the redevelopment. In China, Wing Tai launched Phase 1 of Malaren Gardens in Shanghai, China, and more than 90% of the 189 units launched (301 total units) has been sold.

To recap, Wing Tai also made a voluntary unconditional cash offer for Wing Tai Malaysia Berhad (WTM) in May 2017, and will proceed to delist WTM after holding 96.75% of the voting shares at the final closing date, which triggered the compulsory acquisition threshold.

We continue to like Wing Tai for its compelling valuation (0.52x PB) and healthy balance sheet, and see the group to be well positioned to benefit from firmer conditions in the domestic housing sector. Maintain BUY with an unchanged FV estimate of S$2.37.

Source: OCBC Research - 29 Aug 2017