WING TAI HLDGS LTD
W05.SI
Wing Tai (WINGT SP) - Weak Performance Priced-in
Maintain BUY with SGD1.91 TP
- Retain our BUY rating and SGD1.91 TP despite the weak 1H16 results.
- We continue to see Wing Tai as well-positioned for this residential down cycle in Singapore.
- Its conservative gearing should allow it to replenish land bank on the cheap.
- Our RNAV of SGD2.28 is conservative as it incorporates the depressed market value of its listed units, Wing Tai Properties and Wing Tai Malaysia, which is the key variance from its latest book value of SGD4.09 per share.
- We have also factored in the challenging Singapore office outlook into our valuation.
Missed on weaker margins and higher tax rates
- 1H16 net income of SGD3.1m was below expectations at just 3% of our full-year estimates.
- Weaker-than-expected profit margins and higher tax rates were the key variances.
- Sales recognition was broadly in line at 50% of full-year forecast.
- The soft bottom line was also impacted by the higher base from a one-off gain booked in the comparable period.
- Sales for the period include recognition for The Tembusu & Le Nouvel Ardmore in Singapore, The Lakeview in China and Jesselton Hills in Malaysia.
Soft Singapore and Malaysia, but positive on China
- Management continues to guide for weaker performance in Singapore and Malaysia, but expect China operations to benefit from policy relaxation in the country.
Slow home sales in Singapore
- We note that its high-end projects Le Nouvel Ardmore and Nouvel 18 remain substantially unsold and are weighed down by the soft prevailing sentiments for the luxury market.
- Sales for The Crest, its mid-range project, were also slow with only 10 units sold over the quarter.
- Despite the soft showing, we see the challenging market conditions largely priced-in and expect a bottom for Singapore's residential market in the year ahead.
Derrick Heng CFA
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2016-02-05
Maybank Kim Eng
SGX Stock
Analyst Report
1.91
Same
1.91
