SINGAPORE (Oct 25): DBS is maintaining its ‘buy’ call on Wing Tai Holdings with higher fair value of $2.77 on 1Q18 results which were broadly within expectations.
In 1Q18, Wing Tai’s PATMI rose to $8.2 million from $1.1 million mainly due to contributions from Le Nouvel Ardmore, Le Nouvel KLCC as well as disposal gains on the Huai Hai project in Shanghai.
In addition, group’s share of profits of associated and joint venture companies also increased 17% y-o-y to $6.7 million given higher contributions from Wing Tai Properties in Hong Kong.
In terms of the topline, however, 1Q18 revenues decreased 4% y-o-y to $67.1 million as the group recorded lower homes sales over the quarter.
To recap, in Aug 2017, the group together with Keppel Land acquired through a government land sales tender a 99-year leasehold residential site in Serangoon North Ave 1.
The site, which has a gross floor area of 462,561 sf in the Serangoon Gardens area, will be redeveloped into a new condominium development with over 600 homes.
As at end Sept, Wing Tai continues to sit on a strong balance sheet in a net cash position with over $1 billion in cash and equivalents.
“We now forecast for Singapore home prices to appreciate 1% in 2017 and 3% to 8% in 2018 and, given the group’s ample dry powder, we believe that Wing Tai is well positioned to benefit from the turnaround in the domestic housing sector,” says analyst Eli Lee in a Wednesday report.
“Notwithstanding a 46% share price appreciation year to date, we see the group’s current price to be relatively undemanding at 0.57x price-to-book.”
As at 2pm, shares in Wing Tai are up 1 cent at $2.34.
