Healthy Balance Sheet. Balance sheet stayed strong, with gearing at 0.44x and minimal refinancing required over the next 12 months.
Limited Catalysts. The company expects the property market to remain challenging in 2009 and will continue to be prudent in its financial management. Any potential launch is likely to be at its Ascentia Sky (Alexandra Road) project (40% stake), which has a relatively high breakeven cost of around S$1,050-1,100 psf. We expect a negative NPV for the project if launched at current market conditions. The remainder of its landbank is mainly high-end in nature, and we do not expect to see a recovery in this segment within the year.
Downgrade to Fully Valued, TP S$1.07. Share price has surged 78% since we upgraded the stock to a BUY on 18 Mar, outperforming the STI and FSTREH Index by 34% and 29% respectively. Taking into account an eye on recovery, we are now narrowing our RNAV discount further to the stock’s historical average (see next page) of 30%, from 35% previously. Our new TP is S$1.07, based on an RNAV of S$1.53 (from S$1.48). We believe the stock has overshot current market fundamentals and advise investors to take profit. Downgrade to Fully Valued.
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