• 1QFY18 results in line
• In net cash position
• FV estimate increased to S$2.77

1QFY18 PATMI up YoY From S$1.1m to S$8.2m

Wing Tai’s 1QFY18 PATMI increased from S$1.1m to S$8.2m YoY mainly due to contributions from Le Nouvel Ardmore, Le Nouvel KLCC as well as disposal gains on the Huai Hai project in Shanghai. In addition, we also saw the group’s share of profits of associated and joint venture companies increased 17% YoY to S$6.7m given higher contributions from Wing Tai Properties Ltd in Hong Kong.

In terms of the topline, however, 1QFY18 revenues decreased 4% YoY to S$67.1m as the group recorded lower homes sales over the quarter. Overall, we judge 1QFY18 results to be broadly within expectations.

Fair Value Estimate Increased to S$2.77; Maintain BUY

To recap, in Aug 2017, the group together with Keppel Land acquired through a government land sales tender a 99-year leasehold residential site in Serangoon North Ave 1. The site, which has a gross floor area of 462,561 square feet in the Serangoon Gardens area, will be redeveloped into a new condominium development with over 600 homes.

As at end Sep 2017, Wing Tai continues to sit on a strong balance sheet in a net cash position with over S$1,011m in cash and equivalents. We now forecast for Singapore home prices to appreciate 1% in 2017 and 3% to 8% in 2018 and, given the group’s ample dry powder, we believe that Wing Tai is well positioned to benefit from the turnaround in the domestic housing sector.

Notwithstanding a 46% share price appreciation over the year to date, we see the group’s current price to be relatively undemanding at 0.57x price-to-book. After updating our valuation model with our latest assumptions and firmer average selling prices, our fair value estimate increases from S$2.37 to S$2.77. Maintain BUY.

Source: OCBC Research - 25 Oct 2017