SINGAPORE (Aug 29): Wing Tai reported 4Q18 earnings of $129.8 million versus $9.5 million in 4Q17 on an 80% increase in turnover to $105.8 million.
See: Wing Tai's FY18 earnings surge 11-fold to $218.8 mil on higher property-related gains
The surge in bottomline was mainly due to higher than projected associate contributions of $115.3 million and a $12.6 million fair value gain on investment properties.
The jump in associate income was largely due to higher contribution from its 33.4% stake in Wing Tai Properties in Hongkong.
Although management did not provide further breakdown, it said the improvement was due to share of gains recognised by its associate for the disposal of two investment properties – Winner Godown Building and W Square.
Separately, Wing Tai Properties HK also reported a 130% surge in its 1H18 earnings to HK$1.04 billion ($181 million), largely due to recognition of HK$693.3 million disposal gain. Handover of residential units at Malaren Gardens Shanghai also added to profits.
Residential revenue jumped 152% to $192.2 million, thanks to higher sales in Singapore and contributions from BM Mahkota in Penang. Given a more buoyant residential market in Singapore in 1H, it sold a further 16% of Le Nouvel Ardmore, bringing takeup rate for the development to 35% to date.
In addition, sales at 40%-owned The Crest in Singapore also improved, with a further 31% of the project transacted in FY18. The recent launch of The Garden Residences garnered a 40% sell-through rate for the 156 units launched so far. Contributions from the latter should be felt from FY19F onwards. Management expects the private residential market to remain subdued post cooling measures and will be selective on its land banking activities.
In FY18, Wing Tai generated $35.9 million of rental income -- or 10% of topline -- from its office and serviced residence properties in Singapore. With a healthy balance sheet and at net cash position, the group said it will explore acquisition opportunities for income yielding assets, particularly in Australia and Japan.
Together with Abacus Property Group, it had jointly acquired an office building at 464 St Kilda in Melbourne for A$95.4 million in April. This should provide a small boost to its recurrent income base going forward.
For FY18, the group reported earnings of $218.8 million, or earnings per share of 27.47 cents, compared to $20.1 million a year ago. FY18 core net profit was 1,039% above Bloomberg consensus forecasts. Its proposed total DPS of 8 cents -- consisting 3 cents final and 5 cents special -- translated o a yield of 4%.
In a Tuesday report, CGS-CIMB Securities raised its FY19-20F EPS by 17.2-63.1% as the research house slows down its residential sales projections due to the subdued residential market in the near term. However, forecast target price remained relatively unchanged at $1.97, pegged at 45% discount to RNAV of $3.58.
CGS-CIMB is maintaining its "hold" with $1.97 target price as it anticipates the stock to perform in tandem with the broader market, supported by dividend yield of 4%.
Year to date, shares in Wing Tai are down 9.1% to $2.09 as at 2.12pm.
