• Cautiously optimistic
• Scouting overseas
• FV of S$2.41

One-off 1HFY18 Gain Weighing on Results

Wing Tai’s 1HFY19 revenue rose 7% YoY to S$193.9m, largely due to increased property sales in Malaysia, particularly in Penang and Kuala Lumpur. The group’s 1HFY19 PBT fell 323% to S$16.4m due largely to the absence of one-off disposal gain in 1HFY18. This was however partially mitigated by an increase in the share of profits from associated and JV companies, in particular Wing Tai Properties Limited in Hong Kong and Uniqlo in Singapore and Malaysia.

All considered, PATMI fell 14% to S$18.2m. Taking into account one-offs, we deem this set of results to be broadly within our expectations.

Cautiously Optimistic

In terms of sales, we understand that the group has sold 85% of units at The Crest, 37% units at Le Nouvel Ardmore and ~15% at The Garden Residences. For the latter, we note that competition in the area is stiff from both existing projects as well as Logan Property’s upcoming The Florence Residences, which will yield 1,410 units.

Still, we have been encouraged by the increased interest in The Garden Residences since the announcement of the future Serangoon North MRT station (part of the Cross Island line), slated to be in the vicinity of the project. In the near term, we believe the group will be prudent in acquiring residential land bank in Singapore (if any), given the heightened risks to developers especially with the ABSD increases from mid- 2018.

Instead, we believe the group will train its sights on commercial properties overseas such as those in Australia or Japan, aided by its net cash position.

Wing Tai currently trades at a consensus blended forward P/B of 0.46x, which is 0.6 S.D. below the 10-year mean. We maintain our estimates and fair value of S$2.41.

Source: OCBC Research - 14 Feb 2019