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A nibble at Wing Tai Holdings Limited.

Thursday, December 11, 2014

On 22 October, I did an incomplete analysis of Wing Tai Holdings Limited to arrive at what I thought would be a nice entry price. Any reader who might have missed that and would like to read it, please see the related post at the end of this blog.


Today, I became a shareholder of Wing Tai Holdings Limited. Entry price is $1.655, a 56% discount to NAV and a few bids higher than the $1.64 per share that I mentioned on 22 October.

At this price, I am basically paying for their investment properties at book value, their development properties at a huge discount to valuation and I am basically getting their retail businesses for free. I shared some of these numbers in my incomplete analysis mentioned earlier.


Technically, the downtrend is intact but the momentum oscillators are forming higher lows. So, it seems that the stock could be forming a base and further downside could be limited. The chart shows stronger supports are to be found at $1.59 and $1.55 a share.

$1.55 also happens to coincide with the low formed more than 2 years ago on 15 November 2012.

Related post:
An incomplete analysis of Wing Tai Holdings.

19 comments:

boonchin.ng said...

Hi AK,

Welcome to Wing Tai ;)

AK71 said...

Hi boonchin,

Oh, you are already a shareholder? Please take good care of me, senpai. ;p

boonchin.ng said...

Hi AK,

I'm just a "penny" investor trying to nibble here and there. Should be AK前辈 to give me some tender loving care ;)

AK71 said...

Hi boonchin,

Aiyoh. Don't say like that lah.

I am just trying to "wan sek" (Cantonese).

Let us all share what we know and hope we "fatt". ;)

钢铁侠 said...

Hi AK

I am the shareholder too...haha ...but is a small peanut shareholders

AK71 said...

Hi Gregg,

I assure you that this is really a small nibble for me. I am still somewhat concerned about their unsold properties and the eventual penalties they are faced with if these remain unsold.

Getting their retail businesses for free is attractive but I have the feeling that the retail businesses will have to face their own set of problems.

Well, all in all, I think I got in with a margin of safety. So, will wait and see how things go from here. :)

boonchin.ng said...

Hi AK,

Like the idea, buy property and get Uniqlo & G2000 for free ;)

What about its associate / subsidiary in Hong Kong and Malaysia? You paid for it or is complementary? ;)

AK71 said...

Hi boonchin,

I like your questions. LOL. ;p

I think they are all lumped together in the heavily discounted section, if I remember correctly. ;p

B said...

Hi AK

I see you have been nibbling into property counters recently :)

Wingtai does have the one of the most value P/BV at the moment but with most residential play on the portfolio.

Definitely a gem when property play bounces back. It does gives quite decent yield too isnt it??

Chua Poh Huat said...

Ak,

I think at this price($1,655) it is fair. But because the property market is entering winter seasons. Price might have down another 10 to 20 percent...(about 70% discount to NAV should be best).....Just my thought...

PH

AK71 said...

Hi B,

I like to think that I am being selective. For example, I don't have a position in Ho Bee. I will need a lower price to entice me to invest in Ho Bee, for example. ;)

I am not sure that Wing Tai will be able to pay the same level of dividends it did in recent years. Well, not unless its development properties start selling well again. So, realistically, investors should expect a lower DPS.

However, at the current price, I think Mr. Market has marked down its development properties quite aggressively. Of course, share price could go lower but I think if that should happen, it would only become more undervalued. :)

AK71 said...

Hi PH,

Well, there are many types of properties and Wing Tai is mostly exposed to the worst type to be in now, development residential properties and the luxurious type too.

So, I agree that things could get worse from here. 70% below NAV? Theoretically, that would mean that market prices of properties must decline by another 30% from the current level. I feel that it would have to take a really bad recession for this to happen. Then again, Mr. Market is not known to be rational. ;)

inquisit0 said...

Hi AK,

Would you consider Wing Tai more attractive than OUE which is also below NAV?

AK71 said...

Hi inquisit0,

They are both companies in the real estate sector but different enough. You might want to read the related post at the end of this blog for my view on this. :)

Wei Xiong How said...

burst through 2 bucks today! seems like there are speculations over it being privatize. any target price range in mind ak?

AK71 said...

Hi Wei Xiong,

This was totally unexpected, honestly. I have no sell price in mind at the moment.

Maybe, I will post this on my FB wall too and see what others think. :)

AK71 said...

Wing Tai Holdings reported a 41 per cent drop in full-year net profit, hurt by weak sales of residential apartments. The firm is planning to close some of its retail outlets in Singapore.

Wing Tai's net profit came in at S$150.3 million for the financial year ended June, while revenue fell 16 per cent to S$676.7 million. Wing Tai said Singapore's private residential property is expected to remain subdued for the rest of this year, while conditions in the retail sector have become tougher.

Wing Tai, whose brands include G2000 and Topshop, currently operates about 100 stores in Singapore.

"The retail sector in Singapore is becoming increasingly more challenging and difficult. So for Wing Tai, we're in the process of consolidating our business and we're focusing on generating positive shop contribution,” said Wing Tai’s executive director Tan Hwee Bin.


Source:
http://www.channelnewsasia.com/news/singapore/wing-tai-plans-to-close/2048626.html

Wei Xiong How said...

Thanks AK for the update! I read through the annual results, management does not seem to discuss or mention about the potential extension charges.

AK71 said...

Hi Wei Xiong,

Wing Tai is trying to capitalise on the HSR to sell some of their projects in K.L. That could help earnings in future.

Their high end projects in Singapore will continue to face headwinds.

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