Wing Tai

Wing Tai: Reported in line results with high end segment still sluggish; 2QFY14 net profit halved y/y to $48.4m (-45%) mainly from the absence of one-off disposal gains in associate income and lower operating profit (-26%) due to lower contributions from development properties. Revenue dipped 23% to $247.6m from lower contribution of L'VIV after it obtained its temporary occupation permit in the quarter. Wing Tai's net gearing remains comfortable at 0.2x with cash of $663.7m, which should allow the company to tide over headwinds in the Singapore residential sector. DB believe that the second half of FY14 should be stronger as the company recognizes earnings from its Tembusu project which has sold 256 out of 337 units at an estimated 39% gross margin. Maybank-KE estimates Wing Tai to sustain a dividend of 7¢/share, which implies an attractive yield of 4% per annum. Valuations are reasonable at 0.5x P/B and 47% discount to RNAV/share of $3.37 given sustained weakness in the high end residential market. Latest broker recommendations: Maybank-KE maintains Buy with TP $2.60 DB maintains Hold with TP $2.02 CIMB maintains Hold with TP $1.88