Wing Tai Holdings - Downgrading to Hold on Valuation Grounds

Raising RNAV to S$1.95, target S$1.56 — We raise our RNAV from S$1.45 to S$1.95 to reflect higher clearing residential prices. We have raised selling prices by 5-15% depending on timing of launches. We expect the high-end segment to decline 10% (instead of 20% assume previously) eventually. We therefore raise our estimates and use a smaller RNAV discount of 20% (vs. 30% used previously) to value the stock. It is our most preferred developer but we are downgrading the stock to Hold as we think it is fairly priced.

Actively capitalizing on improved sentiment — Capitalising on the improved sentiment, Wing Tai soft launched Belle Vue and sold about 35 units at a net price of S$1,600-1,750psf after taking into account the 10% rebate per year for 2 years on the 20% downpayment. Wing Tai is likely to launch Ascentia Sky (Alexandra Rd) in the coming quarter.

Low land cost is a big plus — Although highly exposed largely to the highend segment, Wing Tai’s land cost is relatively low. We also like the group’s strategy in capitalizing the current positive sentiment and launching projects in the upper mid-segment. The group has also been relatively prudent in land acquisitions.

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