CIMB Research, May 6
WING Tai reported Q3 FY2014 core net profit of S$39 million, down 59 per cent y-o-y and 20 per cent q-o-q. This was slightly below our expectations, with Q3/nine-months forming 20 per cent/59 per cent of our full-year forecast, as weak residential sales continue to be a drag on earnings.
While mass market projects Tembusu and Foresque Residences should help to underpin its development earnings in FY2014-16, its high-end projects in Singapore (~23 per cent of gross asset value) remains the weak spot. Despite its cheap valuations and low gearing, we believe there are limited re-rating catalysts at the moment.
Maintain "hold", with higher RNAV-based target price of S$2.00 (discount: 30 per cent) as we update rent and cost estimates for the China project. FY2014-16 EPS drops by 5-16 per cent, as we push back our high-end residential sales estimates.
HOLD
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