Wing Tai

Kim Eng on 3 Apr 2013

The sale that caught the eye. Wing Tai sold one more unit at Le Nouvel Ardmore in February at a month-high unit price of SGD4,372 psf, suggesting that Wing Tai is not compromising on pricing just to move inventory. Our ASP assumptions for its two upcoming project launches may also be a tad conservative. At current valuation of 0.64x P/B, we maintain that Wing Tai is a bargain. Reiterate BUY with a Street-high target price of SGD2.55.

Taking the slow high-end market in stride. The latest transaction suggests that Wing Tai remains steadfast in its pricing strategies. We do not foresee any immediate need to adopt a more aggressive pricing strategy particularly for Le Nouvel Ardmore, given its low estimated breakeven of SGD2,160 psf. In terms of timing, Wing Tai has a little over two years to finish selling the remaining 41 units, as we expect the project to obtain its TOP in the coming months.

Impending new launches. We expect The Tembusu to be launched sometime this quarter, which should be met with healthy demand given its proximity to Kovan MRT station. That is likely to be shortly followed by the launch of the Prince Charles Crescent (PCC) site possibly around June. Considering that SingLand is looking to price Mon Jervois nearby at ~SGD2,000 psf, our ASP assumption of SGD1,750psf for the PCC site would appear a tad conservative. Should Wing Tai manage to achieve SGD2,000 psf, its RNAV could be raised by 5 cents/share.

What’s in the price, and what’s not? Wing Tai is trading at a deep 34% discount to its NAV/share of SGD2.95. From its Enterprise Value (see Figure 1), the implied GDV of its attractive Singapore residential landbank including the two prime Armore Park sites is as low as SGD1,562 psf, while valuing its investment properties and growing retail business at next to nothing!

Better shape than ever. Wing Tai still trades below its ten-year average P/B of 0.84x despite having reduced its net gearing position to a ten-year low of ~16%. We believe the current steep discount severely undervalues the stock. Reiterate BUY with a target price of SGD2.55, valuing the stock at 0.86x P/B and 0.7x P/RNAV.