Wing Tai

Wing Tai: 2QFY15 net profit slumped 85% to $7.3m, bringing 1HFY15 net profit to $31.5m (-57%).

1HFY15 revenue fell 39% to $286.7m. Top line contributions were from the progressive sales recognized from The Tembusu, additional units sold in Helios Residences, as well as that from the LakeView in China.

Though there was a $21.1m one-off gain from the disposal of a subsidiary company, and share of associates and JV’s profits grew 56% to $21.2m, bottom line slump could not be mitigated.

Net gearing narrowed to 11.3% (Jun ’14: 14.9%). which puts it in good stead to weather the challenging environment as demand for properties remain lackluster. Further weakening of the property market would also enable Wing Tai to restock its land bank at less elevated bid prices.
On prospects, Singapore’s outlook is expected to remain weak, while Malaysia’s unexciting as the outlook grows increasingly cautious. China’s outlook should be one characterized as ensuring the stability of the property market, despite some relaxations of home purchase restrictions in some cities.

The luxury property sector had traditionally been a leading indicator for the overall property market. As such, players could be first to rebound when the physical property market recovers.

Wing Tai is trading at 0.47x P/B, approximately -1 SD below the 5 year historical average of 0.6x P/B.

Latest broker rating:
Deutsche Bank maintains Buy with TP $2.15