Wing Tai: beats 8 other bidders (including Sim Lian, City Dev, Allgreen, JV btwn Frasers Centrepoint & Far East) with its top offer of $177.4m, or $345 psf ppr, for a 99-yr residential site on Petir Road. The large number of bids surprised some, possibly due to better location. But bids were slightly below mkt expectations of $350-400 psf ppr, and the closeness of the bid prices suggests no one is 'chasing' sites. Analysts tip project to sell for around $750-800 psf or more if Wing Tai chooses to pitch it as a mid-tier product. This compares with nearby 99-yr Tree House launched at avg $830 psf in Apr ’10, and 99-yr Mi Casa at Chua Chu Kang Ave 3 which sold for $700-850 psf btwn Jul-Sep. Based on est breakeven cost of $650-700, Wing Tai could still derive decent margins (~15% pretax) from the development…
It has been some time since Wing Tai featured as a top bidder for land sites. Supported by a cash hoard of $600m, we see Wing Tai making use of the opportunity to replenish its depleting landbank on the cheap, following the recent property measures.
Nomura reiterates Buy, with $2.12 target.
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