Wing Tai: Cautiously positioned and awaiting opportunities

Shawn Sng  |   04 May 2022  |    90 views

-Equipped with sturdy financials and has a strong liquidity position. The group is able to pivot its strategies swiftly to respond to the changes in business climate.

 

Company background

With a market capitalization of S$1.337bn as at 5th May 2022, Wing Tai Holdings Limited is a property developer for both residential and commercial properties in Singapore. The group also has an established chain of upmarket serviced residences and established brands such as Adidas, Uniqlo, Cath Kidston and G2000 under its retail service.

 

Financial Highlights in 1H 2022

In 1H2022, the company generated a revenue of S$306.6m. This was up by almost 26% YoY as compared with S$243.4m in 1H2021. The higher contribution in revenue from its development properties was largely attributable to more units taken up in Le Nouvel Ardmore (90% sold as at 30 Jun 2021) and the progressive sales recognized from The M at Middle Road in Singapore (over 85% sold as at 30 Jun 2021).

 

+ Liquidity Position and Credit Metrics

Wing Tai has a healthy and strong credit profile with its debt ratio = 17.68% and an interest coverage of 2.3x, compared to its peers such as Hotel Properties Limited (45.94% and -0.4x) and GuocoLand Limited (56.30% and 3.51x). This shows that the group is conservatively leveraged with an ample amount of headroom.

 

+ High Cash Position

As at 30 Jun 2021, the group’s cash and cash equivalent amount to S$772.9m with total debt of S$937m (ST = S$298.8m, LT= S$638.2m). Thus, the group have a cash position of 82.4% which prompts that the group is in a well position in terms of meeting their short terms obligations.

 

Things to Note:

Though Wing Tai did not mention any new Singapore acquisition, on the 31 March 2022, Wingspring Trust, which is an indirect subsidiary of Wing Tai, said it is acquiring the remaining 50% interest interest in 464 St Kilda Road Melbourne Australia, from its co-owner of the office building property Abacus 464 St Kilda Road Trust for A$49.4m. The total consideration for the acquisition was valued at A$95.4m in 2018.

 

Mr Cheung Wai Keung whom is the chairman, managing director and the major shareholder of the group (60.15% as at Jul 21) is also currently the deputy chairman of Temasek Holdings. According to Forbes on 10 Aug 21, Mr Cheung has a net worth of S$760m and is #48 in rank list for “Singapore’s 50 Richest 2021”.

 

Summary

Overall, despite the latest cooling measures announced in mid-December 2021, which may cause the market sentiment for private properties to decline, the company should not face much problems in selling the remainder of its projects due to the consistent demand for properties in Singapore. The estimate for the 1Q 2022 by URA shows the Property Price Index (PPI) for private property has increased by 0.7 from 173.6 points (4Q 2021) to 174.3 points (1Q2022). Though the increase has slightly lowered by 0.4%, this still reflects the level of optimism in the property market. Additionally with its strong credit metrics, Wing Tai is in a comfortable position to take on more debt to finance new value accretive opportunities, which could generate new cash-flows for the company.

 

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