UOB Kay Hian 2015-08-14: Wing Tai Holdings - 2Q15 Results Above Expectations. Maintain BUY.


2QFY15: Wing Tai Results Above Expectations 

  • Wing Tai results were above expectations. 
  • Maintain BUY on Wing Tai with an unchanged target price of S$2.50
  • The company announced a final dividend of 3 S cents per share. 


• Results above expectations. Maintain BUY with an unchanged target of S$2.50. 

  • Wing Tai Holdings (Wing Tai) reported 4QFY15 PATMI of S$115.9m (-19% yoy), bringing FY15 PATMI to S$150.3m (-41% yoy). Core earnings of S$137.8m have exceeded our (>200%) & consensus expectations due to higher-than-expected sales and completion of property development projects in Singapore and contribution from associates. Le NouvelArdmore, which last saw sales in Aug 13, moved two units in the quarter, one of which sold for S$51m, or S$3,675 psf. 
  • Revenue for the year also included contributions from The Tembusu, the additional units sold in Foresque Residences and Helios Residences in Singapore, as well as The Lakeview in China. 
  • Share of profits from associated and JV companies saw a 21% yoy drop to S$96.2m mainly due to the lower share of operating profit from Wing Tai Properties Limited in Hong Kong. 
  • The company has announced a dividend of S 3 cents
  • Our target price is pegged at a 30% discount to RNAV of S$3.56/share, factoring in the bleak outlook for its high-end residential portfolio. 

• Lacklustre home-buying sentiment in 2Q15 as management believes unwinding of cooling measures to be imminent. 

  • 2Q15 saw private home prices fall 0.9% qoq, while prices of resale HDB flats extended its downtrend to eight consecutive quarters as it fell 0.4% qoq. The private residential and public housing price indices are down 6.7% and 9.7% from their respective peaks in 3Q13 and 2Q13. 
  • We anticipate the impact of multiple rounds of cooling measures, together with higher supply, will lead to a 10-15% moderation in property prices from the peak after which prices should trend in line with GDP growth (2-4%). 
  • Management is bullish on potential unwinding of stifling cooling measures like Additional Buyer’s Stamp Duties, pointing to an almost 20% drop in high-end property prices.

Vikrant Pandey | Derek Chang | http://research.uobkayhian.com/ UOB KH 2015-08-14
BUY Maintain BUY 2.50 Same 2.50