WING TAI HLDGS LTD (SGX:W05)
Wing Tai Holdings Ltd - Weak 2HFY20 On Fair Value Losses
- Wing Tai's 2HFY20 PATMI turned into losses.
- FY20 DPS fell 40% y-o-y.
- Development Properties segment remained resilient.
Wing Tai's FY20 results below expectations on fair value losses
- Wing Tai (SGX:W05)’s 2HFY20 revenue rose 46% y-o-y to S$187.5m, mainly due to higher contributions from Development Properties. PATMI, however, turned from a profit of S$28.4m in 2HFY19 to a loss of S$16.8m in 2HFY20, on the back of fair value losses from the investment properties owned by its subsidiaries and associated company.
- For full-year FY20, revenue rose 15% y-o-y to S$371.0m while PATMI declined 66% y-o-y to S$16.0m. The results came in below our expectations but in-line with the Group’s earlier profit guidance of a “significant decrease” in PATMI. Excluding the impact of fair value losses, the underlying PATMI was S$70m (+85% y-o-y).
- A full-year dividend of 3 S cents per share was declared as compared to 5 S cents last year. See Wing Tai Dividend History.
Valuation undemanding
- On a segmental basis, Development Properties recorded a revenue of S$226.8m (+67% y-o-y) for FY20 which was largely attributable to the additional units sold in Le Nouvel Ardmore and progressive sales recognized from The M. As at 30 Jun 2020, more than 70% of The M has been sold.
- Following the strong reported sales of ~70% over the first weekend of public preview in February, sales of The M project appear to have tapered down. This is likely due to the impact of Circuit Breaker and weaker buying sentiment.
- URA reported a 0.3% q-o-q increase in private residential property price index in 2Q20 as compared to 1.0% q-o-q decline in 1Q20, underscoring the resiliency of the property market in Singapore. However, the economic fallout from COVID-19 could weigh on buying sentiment in 2H20.
- Performances of Wing Tai’s Investment Properties and Retail were weighed by COVID-19 as well. FY20 revenue for Investment Properties and Retail segment fell 9% and 32% y-o-y to S$45.2m and S$91.5m respectively.
Maintain BUY
- Wing Tai currently trades at a consensus blended forward P/B of 0.40x, which is near 1 S.D below its 10-year mean of 0.50x.
- See Wing Tai Share Price; Wing Tai Target Price; Wing Tai Analyst Reports; Wing Tai Dividend History; Wing Tai Announcements; Wing Tai Latest News. Factoring in the impact of softer market outlook from a prolonged COVID-19, we fine tune our earnings forecast and increase our RNAV discount to 40%, our fair value estimate hence decreases from S$2.25 to S$2.01.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2020-08-31
SGX Stock
Analyst Report
2.01
DOWN
2.250
