WING TAI HLDGS LTD
W05.SI
Wing Tai (WINGT SP) - In a Position to Exploit Down Cycle
Maintain BUY with new TP of SGD1.91
- We apply varying discount rates to Wing Tai’s sub-segments in our RNAV, which dips from SGD3.44 to SGD2.28. This lowers our TP to SGD1.91 from SGD2.25.
- The significant variance between our valuation and its latest BVPS of SGD4.17 is due to depressed market valuations for its listed entities Wing Tai Malaysia (Not Rated) and Wing Tai Properties (Not Rated). These trade at 0.47x and 0.26x P/BVs respectively.
- Our TP implies 0.5x P/BV, -0.6SD from its 10-year average.
- Expect re-rating catalysts from a progressive lifting of cooling measures.
Good proxy for bottoming residential
- With residential projects in Singapore accounting for 33% of its GAV, we see Wing Tai as a good proxy for a potential bottoming of the market.
- In particular, we expect a re-rating on any news flow on changes in foreign home purchases given its bias towards high-end projects.
- Thanks to its low net gearing of 0.1x, Wing Tai can also replenish its landbank cheaply in this down cycle.
Market valuations of listed entities conservative
- Our RNAV incorporates market values for its listed entities Wing Tai Properties (33.5% stake) and Wing Tai Malaysia (66.2%). As these trade at depressed P/BVs of 0.26x and 0.47x respectively, we believe our RNAV is conservative.
- Every 10% increase in their market value could add 6.4 SGD cts to our RNAV.
Dividends may stay low
- We cut our DPS to 3.0 SGD cts for the next three years even though its cashflow can support higher payouts. We believe that the company is likely to conserve capital for land acquisitions.
Derrick Heng CFA
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2016-01-13
Maybank Kim Eng
SGX Stock
Analyst Report
1.91
Down
2.25
