Riding the Singapore high-end residential market upswing. High-end residential
property prices entered a new frontier with a unit at The Marq at Paterson Hill
project exceeding the S$5,000psf mark for the first time in Singapore. Wing Tai
is a major beneficiary of this upswing, with nearly 73.2% of its residential
development profits expected to come from development properties with selling
prices of at least S$2,400 in the prime districts 9, 10 and 11.
New high-end project launches to drive earnings forward. Wing Tai has a
strong line-up of high-end residential projects to be launched this year, namely
Helios Residences, the Newton Meadows site and the Belle Vue site. It is expected
to launch luxury collections at Ardmore Point and Anderson 18 next year, which
places it in a favourable position to ride on the upswing in the high-end segment
of the property market.
Riding the booming Malaysian residential market. The recent liberalisation of
policies by the Malaysian government has brought about a boom in the property
market, especially in the high-end segment. In comparison to Singapore, the
Malaysian high-end segment is still in the early stages of an upswing, which will
benefit early entrants. Through its 55% owned subsidiary DNP Holdings, Wing
Tai is well positioned to gain from the Malaysian property upcycle. DNP Holdings'
target price of RM4.30 (current RM2.88) represents 50% upside.
Maintain BUY, target price raised to S$4.57. We have revalued Wing Tai's
portfolio and estimate FY07 and FY08 RNAV at S$3.67 and S$3.98 respectively.
We raise our target price from S$2.22 to S$4.57 based on a 15% premium on
FY08 RNAV. Maintain BUY. Key risks: Any anti-speculative measures by the
government, reduced foreign interest and an economic slowdown could prevent
Wing Tai from achieving our target price.
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