Wing Tai Holdings Ltd

Wing Tai Holdings Ltd

Home : Singapore Stock Exchange  (www.sgx.com)

Wing Tai Holdings Ltd

Stock Code : W05

Homepage : www.wingtaiasia.com.com

Wing Tai Holdings Ltd is a Singapore Stock Exchange mainboard listed property development company. Wing Tai Holdings Ltd operates primarily in Singapore with more than 81% of revenue contribution from property portfolios in Singapore, 18% from Malaysia and remainder contribution from PRC/Hong Kong SAR (FY2012). 

It has business presence in the following 4 segments of property market that are classified as Residential, Commercial, Hospitality and Retail properties.

The information below is a snapshot of the health of the company based on financial statements publicly available.

Wing Tai Holdings Ltd, Margins 

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Wing Tai Holdings Ltd, expectations after latest cooling measures

I included an estimation of Wing Tai Holdings’ possibles financial ratios for the current finacial year. It corresponds with government’s introduction of additional curbs on property speculations. 

      FY 13 FY 12 FY 11 FY 10 FY 09 FY 08
Revenue     988.5 624.9 751.1 821.9 507.3 428.2
Cost of Sales   (559.1) (319.5) (311.8) (430.5) (234.0) (204.1)
Gross Profit   429.4 305.4 439.3 391.4 273.4 224.1

I dare not put on my transition lens to peer too far into the future like attempting to fortune tell.

(Margin) FY 13 FY 12 FY 11 FY 10 FY 09 FY 08
             
Profit to shareholders 0.29 0.39 0.49 0.20 0.04 0.54
Revenue

However, based on my project of increase revenue, due to higher sales value of projects (higher price per square foot), together with lowered transaction volume due to market, the profit margin of Wing Tai is expected to be squeezed as show in the above table.

Concluding Analysis

Wing Tai Holdings is expected to face headwinds just to prevent aggressive erosion to the stellar performance of the past 2 financial years. If we look at the valuation based on the profit margin, it appears good, however, its declining as we projects. Time will tell if this is true in this financial year.

The current price of Wing Tai Holdings Ltd trades at $1.85 (22 Jan 2013) that gives a price to earnings ratio of about 5. If we consider the a projected historical free cash flow to firm the ratio to earnings is even better at about 4. The jury is still out there if this is time to buy cheap as valuation appears so or because risked were not sufficiently priced in yet. Property is a capital goods which could be bought and keep in advance.

My take is as long as rates are low the party should continue but rates trend up, the door to selling would be too narrow for many to squeeze through to safety.

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