WING TAI HLDGS LTD (SGX:W05)
Wing Tai Holdings Ltd - Look Beyond Short-Term Challenges
- Wing Tai's 2QFY20 results above expectations.
- Short-term pain on sales.
- Lower Fair Value estimate of S$2.25.
2Q20 PATMI was up 61% y-o-y.
- Wing Tai (SGX:W05)’s 2QFY20 results were above our expectations due to lower than expected cost of sales (-29% y-o-y) and higher contributions from Le Nouvel Ardmore. 2QFY20 revenue fell 10% y-o-y to S$104.2m, while PATMI rose 61% y-o-y to S$26.0m.
- For 1HFY20, revenue was down 5% y-o-y to S$183.5m while PATMI grew 79% y-o-y to S$32.8m.
Robust sales at The M
- Wing Tai launched its new project, The M recently and received overwhelming responses from home buyers. Despite the fears over COVID-19, it was reported that more than 360 units or ~70% of the 552-unit project were sold at an average price of S$2450 psf over the first weekend of public preview. The strong sales were likely driven by The M’s prime location in the Core Central Region, unique work/home concept and healthy demand. This resonated with management’s earlier expectations that the impact of COVID-19 on transaction volumes likely to be temporary and property prices should remain steady in Singapore among healthy demand.
- While the situation is more challenging in Hong Kong with some property developers cutting prices to boost sales amid social unrest and the outbreak of COVID-19, management remained confident over long-term. We believe that the transaction volumes will pick up from pent-up demand in the market, driving the recovery of Hong Kong property prices after the coronavirus situation is under controlled.
Retail business likely to see more impact from COVID-19
- Wing Tai’s retail business, however, is likely to see more headwinds from the outbreak of COVID-19 as people shy away from public areas/crowded places on fears of contracting the coronavirus. As at June 2019, Wing Tai has 243 stores, and a portfolio of 19 fashion brands in Singapore and Malaysia.
- Wing Tai currently trades at a consensus blended forward P/B of 0.47x, which is ~0.5 S.D. below the 10-year mean.
- After adjustments, our fair value estimate decreases slightly from S$2.27 to S$2.25.
- See Wing Tai Share Price; Wing Tai Target Price; Wing Tai Analyst Reports; Wing Tai Dividend History; Wing Tai Announcements; Wing Tai Latest News.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2020-02-28
SGX Stock
Analyst Report
2.25
DOWN
2.27
