Michelle Zhu

SINGAPORE (Aug 23): Maybank Kim Eng is maintaining its &ldquo hold&rdquo call on Wing Tai Holdings with an unchanged price target of $1.71, while UOB Kay Hian is keeping its &ldquo buy&rdquo recommendation with a target price of $2.37.

On Monday, Wing Tai announced full-year earnings of $7.08 million, 95% down from $150.3 million in FY15.

(See  Wing Tai&rsquo s full-year earnings plunge 95% to $7.1 mil)

The property and retail group&rsquo s latest set of results came in below the expectations of both research houses.

Maybank has cut FY16-18 earnings per share (EPS) estimates by 32% to factor in higher corporate expenses which led to the profit miss. Even with &ldquo cheap valuation&rdquo of 0.4x P/BV, the analyst thinks the stock is not likely to re-rate due to poor earnings visibility.

Wing Tai announced a special dividend payout of 3 cents with proceeds from the sale of its 50%-stake in Nouvel 18 to shareholders, bringing the total dividend for the year to 6 cents.

The impending final DPS could provide share price support, he adds.

On the other hand, UOB analysts Vikrant Pandey and Derek Chang maintain their optimism on the stock with the possibility of the group&rsquo s growth being bolstered by its &ldquo sizeable&rdquo debt headroom.

&ldquo With some $2 billion in debt headroom (assuming comfortable net gearing level of 50%), we reckon Wing Tai could be well poised to take full advantage of acquisition opportunities in China and Malaysia,&rdquo assert Pandey and Chang.

They also suggest that acquisition opportunities could even extend to Australia as a potential market, following the group&rsquo s A$31.5 million ($32.5 million) acquisition of a seven-storey carpark on Melbourne&rsquo s Flinders Street.

On the retail front, Pandey and Chang highlight that the group closed 30-40 stores over the past year though.  

&ldquo Interestingly, [Wing Tai] attributes challenges in the retail scene to overall market weakness and sees threats from online as overplayed,&rdquo says Maybank analyst Derrick Heng.

Shares of Wing Tai closed at $1.78.