Saturday, 25 August 2012

Review of FY2012 results: Wing Tai Holdings

Good day to all! This will be my first post on Wing Tai and what a time to post it~!
Coincidentally, Wing Tai just announced its FY2012 results and it was the last developer to announce results for the Apr-Jun quarter.

Wing Tai is a company with generally 3 core businesses.

(1) High-end Property development
(2) Rental from Investment properties
(3) Retail / F&B 

Its largest shareholders are the Cheng Brothers at slighty > 50%.

Some key numbers (based on FY2012 financial statement & presentation slides) 

Number of shares issued (including treasury shares): ~794m
Current share price: S$1.51
NAV: S$2.69
Ppty development EBIT:$194.3m
Investment Property EBIT: S$33.9m
Retail EBIT: S$29.7m

Full year EPS: ~$0.31

My analysis

Truth be told, I only spotted Wing Tai in March this year and it is not a company I am very familiar with.
This explains why I do not have a large position in it yet.
Thus I prefer to give a simple and general analysis on it rather than a detailed one.

I bought it for only a few reasons. To put it simply:
A) Huge discount to NAV - high margin of safety
B) For a property developer, it gives a very high dividend protection versus my buy px of $1.28 
     (Historically gave $0.04 to $0.07 in recent years). Compared to others like CityDev/SC Global, it
     seems a value-for-money.
C) Its Balance Sheet is damn strong (Gearing 18%, flush with cash)
D) Its Cashflow Statement is damn healthy (Net Operations + investments + financing = +ve)
E) Diversification of income source including involvement in retail of major brands like G2000 and 
    Uniqlo (though not a high % of income, this segment had been consistently growing)
F) Key Risk factor though is if there is going to be a protracted downturn to the high-end property market. But given its strong balance sheet, Wing Tai should be able to weather any downturn due to its holding power, or even take advantage of it in a big way.

My concluding thoughts

This seems to be a very good company though and I initiated a small position purely on these glaring positives as it seems too good to be missed when I saw it at $1.28.
I will research more about this company in due course and just might add on if the price falls.


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