Wing Tai Holdings Ltd - OCBC Investment 2017-05-24: Offer For Wing Tai Malaysia Berhad

Wing Tai Holdings Ltd - OCBC Investment 2017-05-24: Offer For Wing Tai Malaysia Berhad WING TAI HLDGS LTD W05.SI

Wing Tai Holdings Ltd - Offer For Wing Tai Malaysia Berhad

  • Offer price at RM1.80 per share.
  • Decent operating results.
  • Maintain BUY with S$2.37 FV.

Unconditional voluntary take-over offer for Wing Tai Malaysia Berhad 

  • Wing Tai Holdings Ltd (Wing Tai), together with its subsidiaries, has announced an unconditional voluntary take-over offer to acquire all issued ordinary shares of Wing Tai Malaysia Berhad (WTM) not already owned by the joint offerors for a cash offer price of RM 1.80 per share. 
  • The offer price represents a premium to the following last traded price of RM 1.18 per WTM Share on 22 May 2017, the last full trading day prior to the offer. 
  • The joint offerers now directly hold over 50% of the voting shares in WTM – approximately 66% – and hence the offer is not subject to any minimum level of acceptances.
  • Wing Tai has indicated that they intend to take WTM private by offering the minority shareholders of WTM the opportunity to exit and realize their investments for cash at the offer price. The offer will allow Wing Tai to further explore synergies and integrate their financial and operational resources, which could result in cost savings and improved operational efficiencies. 
  • Given the benefits of a potential WTM privatization and the reasonable offer price (the net asset value per WTM share was RM 2.70 per share as at end June 2016), we see this development as a positive one.

Decent set of 3QFY17 results 

  • To recap, Wing Tai reported a firm set of 3QFY17 results with PATMI increasing to S$7.4m from S$2.1m in the same period last year mainly due to lower rental and depreciation from retail outlets in Singapore and stronger share of profits of associated and JV companies, partially offset by lower contributions from development profits.
  • In terms of the topline, 3QFY17 revenues dipped 35% YoY to S$73.5m similarly due to lower income recognition from development projects.
  • 9MFY17 PATMI cumulated to S$10.6m, again up significantly versus S$5.2m in 9MFY16, and we deem the latest results to be broadly within expectations. 
  • Maintain BUY on Wing Tai with an unchanged fair value estimate of S$2.37.

Eli Lee OCBC Investment | 2017-05-24
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 2.370 Same 2.370