Wing Tai Holdings

Maybank Kim Eng Research, Aug 28

WING Tai reported a 102 per cent y-o-y rise in headline FY13 PATMI (profit after tax and minority interest) to S$531.1 million. Excluding revaluation gains, core PATMI is estimated at S$294 million, up 94 per cent yo-y and in line with expectations. The recent launch of The Tembusu is met with encouraging response, with the estimated ASP (average selling price) at a better-than-expected S$1,500 psf (per sq foot). A bumper dividend of 12 cents/share is proposed, implying an attractive 5.9 per cent yield. Reiterate "buy".

Wing Tai's strong earnings were partly contributed by the completion of the Verticas Residences in KL in Q3 FY13. Throughout the FY, Wing Tai managed to achieve S$885 million of residential property sales, mainly from 318 units in Singapore valued at S$725 million and 169 units in Malaysia, valued at S$130 million. UNIQLO, its fast-fashion JV in Singapore and Malaysia, also saw its EBIT contribution grow by a robust 36 per cent y-o-y to S$11.1 million.

In mid-August, Wing Tai launched its 337-unit freehold development The Tembusu, which was met with good response. Options-to-purchase have been issued for 220 units, with ASPs at a creditable ~S$1,500 psf. Wing Tai is in the midst of preparing the Prince Charles Crescent site for launch by Q4 2013.

Meanwhile, we understand that piling works have begun at the Guangzhou Knowledge City site, while the Luodian site in Shanghai is in the planning stage.

Management reiterated that the probability of the Singapore property market turning down is ever increasing and will be selective in land acquisitions. Malaysia is deemed as its most attractive market in the near-term, while it will continue to explore opportunities in China (Tier 1 cities) and in Hong Kong.

We reiterate our "buy" recommendation with a TP of S$2.78, pegged to a 30 per cent discount to RNAV (revalued net asset value). We like Wing Tai for its low gearing and attractive valuations of 0.56x P/B and 0.51x P/RNAV. FYJun13's high yield may be a one-off, but we believe a base yield of 3.4 per cent is still sustainable.

BUY