Wing Tai

Wing Tai: Core earnings in line. Rev at $202.2m, +88% yoy and +58% qoq, while core net profit at $50.3m, +41% yoy and +19% qoq. Total dividend surprised slightly on the upside, comprising 3c/share ordinary and 4c special, for a yield of 5%. Property development contributed 53% of Group EBIT, comprising a mix of income from completed properties such as units at Helios Residences, and properties under development at Foresque Residences and L’VIV. Mgt maintained that downside risks remain particularly in the mass market segment, which explains the Group’s lack of participation in the Govt Land Sales program. Mgt announced plans to redevelop its industrial properties at 105 and 107 Tampines Road into a 337-unit freehold condo with GFA of 297,232 sqft. Deutsche estimate breakeven cost to be $870 psf, and assuming an ASP of $1,350 psf, the development could return a healthy pre-tax margin of 36%. Estimate an RNAV accretion of 12 cts/sh. Even as the market remains challenging, Deutsche like Wing Tai’s proactiveness in trying to unlock shareholders’ value. Reckon that Grp can maintain total dividends of 7c/share for the next few yrs, implying an attractive yield of 4.9%. Ratings as follow: CIMB maintains Outperform with $1.68 TP Deutsche upgrades to BUY $1.75 TP. Uob Kay Hian maintains Buy with $1.75 TP