Wing Tai

Wing Tai: While 1QFY14 core earnings dipped to $24.5m (-66% y/y, -92% q/q), Maybank KE sees it as a non-event with fairly successful launch of The Tembusu yet to contribute to earnings. Shareholders are still eligible for the 12 cts/sh dividend (3 cts ordinary, 9 cts special) before the stock goes ex-div on 5 Nov. The house also estimates that of the 217/337 units sold at The Tembusu, another 10-15 units may have been sold since then, with ASP remaining at around $1,500 - 1,600 psf. Due to the early stages of construction, Maybank KE expects The Tembusu to begin earnings contribution only in late FYJun14. Wing Tai’s Prince Charles Crescent (PCC) site is expected to be launched in 4Q13 or 1Q14. At an estimated breakeven cost of ~$1,450 psf, house estimates an ASP of $1,750 psf. Meanwhile, SingLand is likely to launch its own 495-unit project nearby called Alex Residences in the coming weeks with a slightly lower estimated breakeven of $1,400 psf. The pricing and demand for Alex Residences will provide further benchmarks for Wing Tai to price the PCC project. Maybank KE remains Buy with higher TP: $2.80 (previously $2.78), pegged to a 30% discount to RNAV. Balance sheet remains remains rock solid with a net gearing of just 0.13x, and the house firmly believes that its 0.6x P/B valuation is unjustified