WING TAI HLDGS LTD
W05.SI
Wing Tai Holdings - UNDERWHELMING RESULTS WITHIN EXPECTATIONS
- FY16 results broadly in line.
- Expect conditions to remain difficult.
- Nouvel 18 divestment to boost balance.
Challenging year for the group
- Wing Tai reported a FY16 (ending June 2016) PATMI of S$7.1m, which was 95% lower YoY mainly due to weaker contributions from its property development business, lower fair value gains on investment properties and the absence of a one-time divestment gain in FY15.
- In terms of the topline, FY16 revenues also decreased 20% YoY to S$544.5m and were mostly derived from progressive sales from The Tembusu, additional units sold in Le Nouvel Ardmore in Singapore, The Lakeview in China and also Phase 2 of Jesselton Hills in Penang.
- We had expected significantly weaker profits from the group due to challenging market conditions and judge FY16 results to be broadly within expectations.
- The group has proposed a total dividend of 6.0 Scents (3 S-cents first and final dividend and 3 S-cents special dividend), up from 3.0 S-cents in the previous year.
Expect subdued buying sentiments in Singapore
- Wing Tai expects market conditions to remain subdued in 2H16. The group has sold 7 units in Le Nouvel Ardmore at an ASP of ~S$4k; given existing property measures, management expects buying sentiments in the high end segment to be stay suppressed and does not believe price discounts will have much impact.
- In its overseas markets, depending on market conditions, the group plans to launch Le Nouvel KLCC, a high-end 195-unit freehold residential development in Jalan Ampang in KL, Malaysia and Malaren Gardens, a residential development with 301 units in Shanghai, China.
Nouvel 18 sale to boost B/S strength considerably
- In July 2016, Wing Tai divested its 50% stake in Nouvel 18 to City Developments Ltd for S$411.0m. We think the transaction makes sense for Wing Tai, given challenging market conditions and that Wing Tai will now likely book a profit for a development that would have been up for QC penalties later this year. We also expect this divestment to improve Wing Tai’s balance sheet strength considerably.
- Given softer residential assumptions in our model, our fair value estimate dips to S$2.37 (versus S$2.43 previously).
- Maintain BUY.
Eli Lee
OCBC Investment
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http://www.ocbcresearch.com/
2016-08-24
OCBC Investment
SGX Stock
Analyst Report
2.37
Down
2.430
