Spreading Wings on Upcoming Tenders
- Diversified real estate portfolio across Asia Pacific valued at c.S$2.7bn, with a premium retail franchise
- High % of inventory sold, shielding Wing Tai from a moderating property market as it builds its landbank, whilst Uniqlo JVs bring steady recurring income
- Attractive valuation at -1SD of pre-COVID P/NAV ratios
- Initiate with BUY recommendation and a TP of S$2.05
Adding to landbank as property projects are substantially sold. Wing Tai has substantially sold off its landbank in Singapore with a 95% sell-through rate, which, in our view, could shield the group against the moderation in Singapore’s property sales volume in CY22/23 post property measures. Wing Tai remains on the hunt to replenish its landbank and will be selective in the upcoming government land sales (GLS)/en bloc tenders, following its recent successful tender for the collective sale of Lakeside Apartments. We anticipate Wing Tai to continue to build its development pipeline, catalysing an upside to its RNAV.
Premium retail franchise to bring recurring income. Uniqlo is a leading player within Southeast Asia’s apparel industry, bringing ROEs of 20%-30% to Wing Tai. We estimate associate & JV income to grow at a CAGR of 9% by FY25F, which could bring recurring earnings as Wing Tai ramps up its property business.
Attractive valuation relative to pre-COVID ratios. Wing Tai is currently trading at a P/NAV ratio of 0.44x, which is at -1SD of its pre-COVID P/NAV ratios. Catalysts to take flight. Successful GLS/en bloc tenders could catalyse a further upside to RNAVs. Potential M&As could also act as a positive catalyst, with c.S$0.7bn in acquisition firepower based on a gearing ratio of 30%. Lastly, the group’s privatisation story could be a longer term catalyst, with similar observations made vis-à-vis the partial offer in 2012.
Valuation: Our valuation is based on SOTP with a 50% holdings discount.
Key Risks to Our View: Sharp slowdown in property market