SINGAPORE (Feb 13): OCBC Investment Research is keeping Wing Tai Holdings on “buy” on the back of attractive valuations following the recent market correction.
“Wing Tai currently trades at a consensus blended forward P/B of 0.50x, which is 0.4 SD (standard deviation) below the 10-year mean,” says lead analyst Joseph Ng in a Tuesday report.
“In our opinion, the tide continues to be in the favour of local property developers like Wing Tai,” he adds.
The report comes a day after Wing Tai reported a sixfold increase in its earnings to $12.6 million for the 2Q ended December, on higher contributions from development properties.
2Q18 revenue more than doubled to $130.0 million, from $60.9 million a year ago.
This was aided by the contribution from additional units sold in Le Nouvel Ardmore in Singapore, Le Nouvel KLCC in Kuala Lumpur, as well as contribution from BM Mahkota in Penang.
See: Wing Tai records sixfold rise in 2Q earnings to $12.6 mil
“Looking forward, we believe that Singapore home prices in 2018 should appreciate between 3% and 8%,” says Ng. “In our view, Wing Tai should be suitably positioned to ride on this upturn, given that the group’s balance sheet remains robust.”
Ng notes that Wing Tai continues to be in a net cash position, with $840.0 million in cash and cash equivalents.
OCBC has a fair value estimate of $2.64 for Wing Tai, lowered from $2.77 previously due to adjustments in its assumptions with a change in the covering analyst.
As at 2.04pm, shares of Wing Tai are trading 4 cents higher at $2.17, implying an estimated price-to-earnings ratio of 28.3 times and a dividend yield of 2.6% for FY18.