SINGAPORE (Feb 5): Maybank Kim Eng is maintaining its “buy” call on Wing Tai with an unchanged target price of $1.91 despite weak first half results.

In a Friday report, analyst Derrick Heng continues to see Wing Tai well-positioned to weather Singapore’s residential property downcycle.

“Its conservative gearing should allow it to replenish land bank on the cheap. Our RNAV of $2.28 is conservative as it incorporates the depressed market value of its listed units,” says Heng.

In 1H, Wing Tai reported earnings of $3.1 million which was just 3% of Maybank’s full-year estimates, dragged down by weaker than expected profit margins, higher tax rates and compared to higher base due to a one-off gain booked a year ago.

Lee says Wing Tai’s management continues to guide for weaker performance in Singapore and Malaysia, but expect China operations to benefit from policy relaxation in the country.

He also notes that its high-end projects Le Nouvel Ardmore and Nouvel 18 remain substantially unsold. Meanwhile, sales for The Crest, its mid-range project, were also slow with only 10 units sold over the quarter.

“Despite the soft showing, we see the challenging market conditions largely priced-in and expect a bottom for Singapore’s residential market in the year ahead,” says Lee.

As at 11.49am, Wing Tai is trading flat at $1.52.