Wing Tai Holdings Ltd - OCBC Investment 2017-10-25: Firm Set Of 1QFY18 Results

Wing Tai Holdings Ltd - OCBC Investment 2017-10-25: Firm Set Of 1QFY18 Results WING TAI HLDGS LTD W05.SI

Wing Tai Holdings Ltd - Firm Set Of 1QFY18 Results

  • 1QFY18 results in line.
  • In net cash position.
  • FV estimate increased to S$2.77.

1QFY18 PATMI up YoY from S$1.1m to S$8.2m 

  • Wing Tai’s 1QFY18 PATMI increased from S$1.1m to S$8.2m YoY mainly due to contributions from Le Nouvel Ardmore, Le Nouvel KLCC as well as disposal gains on the Huai Hai project in Shanghai. 
  • In addition, we also saw the group’s share of profits of associated and joint venture companies increased 17% YoY to S$6.7m given higher contributions from Wing Tai Properties Ltd in Hong Kong. 
  • In terms of the topline, however, 1QFY18 revenues decreased 4% YoY to S$67.1m as the group recorded lower homes sales over the quarter. Overall, we judge 1QFY18 results to be broadly within expectations.

Fair value estimate increased to S$2.77; Maintain BUY 

  • To recap, in Aug 2017, the group together with Keppel Land acquired through a government land sales tender a 99-year leasehold residential site in Serangoon North Ave 1. The site, which has a gross floor area of 462,561 square feet in the Serangoon Gardens area, will be redeveloped into a new condominium development with over 600 homes. 
  • As at end Sep 2017, Wing Tai continues to sit on a strong balance sheet in a net cash position with over S$1,011m in cash and equivalents. 
  • We now forecast for Singapore home prices to appreciate 1% in 2017 and 3% to 8% in 2018 and, given the group’s ample dry powder, we believe that Wing Tai is well positioned to benefit from the turnaround in the domestic housing sector. 
  • Notwithstanding a 46% share price appreciation over the year to date, we see the group’s current price to be relatively undemanding at 0.57x price-to-book. After updating our valuation model with our latest assumptions and firmer average selling prices, our fair value estimate increases from S$2.37 to S$2.77. Maintain BUY. 

Eli Lee OCBC Investment | 2017-10-25
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 2.77 Up 2.370