Wing Tai Holdings Ltd - OCBC Investment 2019-06-26: Hive Of Activity

WING TAI HLDGS LTD (SGX:W05)

Wing Tai Holdings Ltd - Hive Of Activity

Against the backdrop of demonstrations in Hong Kong, we note that some developers have taken a cautious approach in terms of pricing for primary launches. It has been reported that Wing Tai Properties, an associate of WING TAI HOLDINGS LTD (SGX:W05), is looking at selling its units at OMA OMA in Tuen Mun at an ASP of HK$12,463 psf, or ~20% lower than Sun Hung Kai Properties’ Mount Regency phase two.
Given the uncertain outlook, we believe that Wing Tai Properties could likely be offering a discount in the initial phase, but might look to adjust prices subsequently. In our view, the benign interest rate outlook and low Mar-May19 unemployment rate of 2.8% should help to support the market, despite the macro headwinds.
In the secondary market, property prices (according to Centaline data) have bottomed out in Feb’19 after a 10% correction from an all-time peak in Aug’18; we believe prices could inch up another 0-5% for the rest of 2019, given the housing supply shortage.

Last week, Wing Tai announced that it has acquired Red Planet Hotel Asakusa Tokyo for a consideration of 4.25b Yen. This is not surprising, as management has expressed interest previously in acquiring investment properties for recurring income in Australia and/or Japan.
Separately, Wing Tai was awarded a prime Middle Road land parcel at a bid of ~S$492m (~S$1,458 psf ppr), which was ~4.7% higher than the second-highest bid by a tie-up between MCC Land (Singapore) and Greatview Investment. The group intends to make this a residential development with commercial uses at the first storey.
In our view, Wing Tai remains in a good position to weather through the obvious residential headwinds in Singapore, given its healthy net cash position, viz-a-viz the average net gearing ratio of 65.8% for the peers we track.
Wing Tai currently trades at a consensus blended forward P/B of 0.45x, which is ~0.7 S.D. below the 10-year mean. We maintain our estimates and fair value of S$2.41.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2019-06-26

SGX Stock Analyst Report BUY MAINTAIN BUY 2.410 SAME 2.410