WingTai

WingTai: Announced 2Q12 results, which was broadly in-line with average street consensus. Rev at $185.6m, +18% yoy and +71% qoq, while net profit at $34.2m, +1% yoy and +31% qoq. Gross margins however fell, at 44.1% vs 54.7% yoy. Result brings 1H12 rev to $294.6m, +31% yoy and net profit to $59.3m, +46% yoy. (Note that FY11 results were restated, without which, developer would have posted lower yoy earnings)

Strong rev attributed to recognition from progressive sales of Foresque Residences and L’VIV and additional units sold in Helios Residences and Belle Vue Residences. Profits of associates and JVs also saw an increase of $19.2m to $50.1m in the current period, primarily attributable to higher contributions from The Floridian and Ascentia Sky by Tanglin projects in SG and also from Wing Tai Properties in HK.

Going forward, grp remains cautious of outlook, noting that growth in private residential property prices continues to moderate for nine consecutive qtrs, while number of new residential units sold islandwide in 2011 was 15,904 units, slightly less than the 16,292 units yoy. With the imposition of the additional buyer’s stamp duty in Dec, the property market is consolidating and Grp will keep a close watch on the ppty market and will at the appropriate times release more residential units for sale in the current yr.

We note that grp’s fundamentals remain strong, with net gearing at 26%, down from 36% yoy, while at current price, valuations are very compelling, with grp trading at 0.52x P/B.

Ratings as follow:
Cimb neutral with $1.33 TP
Citi maintains Sell with $1.10 TP.
Deutsche maintains Hold with $1.14 TP.
Kim Eng maintans Hold with $1.12 TP.