Wing Tai - Skewed by revaluation gains (DBSVickers)

BUY S$1.255

Price Target : S$ 1.94

At a Glance

• Results lifted by revaluation gains

• Selective landbanking in Singapore, more upbeatin Malaysia

• Maintain Buy, S$1.94 TP

Comment on Results

Boosted by revaluations. Wing Tai reported 4Q net profit of S$170.6m(+148% y-o-y), and FY earnings of S$314.2m (+95% yo-y) despite lower revenue thanks to S$149m (pre-tax) of fair value gains from investment properties. The group revalued up its S’pore commercial assets by S$74.6m while associate contributions also enjoyed a strong uplift from revaluation surplus at Wing Tai HK. Otherwise, earnings would have been only marginally better as higher leasing income offset the slight dip in residential profits. The group has proposed a total DPS of 7Scts (vs 5Scts last year). During the year, Wing Tai raked in S$899m sales from its residential projects in S’pore (Floridian, Belle Vue Residences, Foresque Residences and Ascentia Sky) and higher profit recognition from Helios Residences as well as Malaysia. Leasing income was lifted by contributions from its portfolio in HK while retailing EBIT grew 27% yoy boosted by addition of new brands and more stores.

Selective in S’pore, upbeat on M’sia. Going forward, the group remains relatively more upbeat on the high-end residential market and plans to market the 100%-owned Le Nouvel Ardmore at average ASPs of >S$4000psf as well as schedule to sell launch Nouvel 18 and releasing more units from Foresque Residence (36% of total sold). In terms of landbanking strategy and geographic diversification, it will remain selective given its cautious stance in S’pore, with a relatively more upbeat view on the high-end vs the mass market segment, while looking to increase its exposure in Malaysia (through Wing Tai Msia) and China.

Recommendation

Maintain Buy. Wing Tai is currently trading at 53% below its RNAV of S$2.77, which is > -1SD to its historical discount and at 0.5x P/bk. While near term catalysts remain muted, we believe the stock offers value and progressive sale of its residential projects should focus investor attention back to the stock.