Wing Tai

Wing Tai: UOB Kay Hian maintains Buy with $1.30 TP. House note that price has corrected 41% yoy against a 17% yoy fall in the STI. At current price levels, the stock is trading at a P/B of 0.4x (vs the longterm average of about 1.0x) and close to the 2009 global financial crisis’s (GFC) low of about 0.33x P/B.

Add that mkt pricing in over 50% fall in asset prices, which is unjustified. WingTai’s net gearing level currently stands at 0.24x, way below past crises’ gearing levels of about 40% (GFC) and 82% (Asian financial crisis) and mgt is on the lookout for attractive acquisition opportunities in its core focus markets of SG, Msia and China.
Expect FY12 dividend yield of about 5% as house expect mgt to maintain similar payout ratio levels, translating into a yield of about 5%.