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Could we see Wing Tai Holdings' stock price going higher?

Monday, April 6, 2015

Wing Tai Demo. Wow!

There was some excitement today for retail investors who have a stake in Wing Tai Holdings. Share price formed a long white candle, touching a high of $2.12 a share before closing at $2.11 a share. 

The closing price is some 10.18% higher than the closing price last Friday (i.e. $1.915 a share).

Why did Mr. Market chase Wing Tai Holdings' stock to a much higher price level? 

Could it be that privatisation is on the card? 

If so, what might the offer price be? 

These are some questions which people might be asking.

Well, with NAV/share at about $3.80, could we see an offer of about $3.00 a share or a 20% discount to NAV?

Honestly, I don't know.

What I do know is that the white candle formed today is on the back of much higher volume. In fact, it is the highest daily trading volume in years. This suggests that the upmove in price is likely to have momentum.

Could the stock provide more excitement in the days ahead? I am inclined to think so. 

This might not be over yet.

The momentum oscillators have formed higher highs which suggest that the upward price movement could continue too.

Could I hazard a guess as to the next price target? Well, if no one is going to hold me to it, I could always indulge in a bit of crystal bowling ball gazing.

Using Fibo lines, it seems that the high formed about two years ago in 2013 could be challenged. 

Given time, S$2.37, perhaps?

Related posts:
1. A nibble at Wing Tai Holdings Limited.
2. An incomplete analysis of Wing Tai Holdings.

Wing Tai Asia.


AK71 said...

Scenario #1: Privatisation.

Wingtai could face extension premium of S$25m/S$48m for its projects Le Nouvel Ardmore and Nouvel 18 in 2016/2017 if their units remain unsold. The payment of extension premium could be avoided if: 1) Wingtai is taken private, and 2) all of its shareholders are Singaporean. Chairman Cheng Wai Keung is deemed to have 50.3% interest in the company through various private vehicles. We are unable to verify if all the shareholders of the private vehicles are Singaporeans. However, we estimate that taking Wingtai private at 20% discount to RNAV, the historical average for such a move on Singapore developers, could translate into a potential offer price of S$2.30/share (~S$899m) or 9% upside from our current target price.

Scenario #2: Bulk sale of its high-end units.

Blackstone was recently reported to be taking a bet on Singapore luxury properties, having paid ~S$2,100psf for 18 units at Paterson Suites and ~S$1,917psf for a 10-storey building at 21 Anderson. We think a bulk sale of Wingtai’s high-end units is possible, given: 1) Blackstone’s recent transaction with City Development (CDL) on Sentosa Cove, and 2) CDL being Wingtai’s JV partner for Nouvel 18. We value Le Nouvel Ardmore and Nouvel 18 based on ASP of S$2,700psf, and factor in the 2016 extension premium of S$25m. Potential sale of the assets at S$3,000psf and avoidance of extension premium will lift our RNAV by ~4%.

CIMB, 7 April 2015.

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