Partial offer by management. It was just announced that the Chairman of Wing Tai, Mr Cheng Wai Keung (through vehicle Ascend Capital) is launching a voluntary conditional cash partial offer to acquire 15% of the outstanding shares of Wing Tai not currently owned by the Cheng family or treasury shares, which translates to c.8.7% of Wing Tai’s share base. The offer price of the partial offer is S$1.39 per share, representing a premium of c.18.3% over the last closing price of S$1.175 before the trading halt. The controlling shareholders would own c.50.6% of Wing Tai subsequent to likely full take-up of the partial offer.

Corporate signalling. While the rationale of the partial offer stated in the offer documents articulate management motivations to gain statutory control of the company, we note that management have been acquiring shares of Wing Tai of late (c.8.5m shares acquired in June 10 in the price range of S$1.52-S$1.62) as well as 975,000 shares acquired in Sept 11 recently at an average price of S$1.366). We believe the management is of the view that the share price is currently under-valued, trading at 0.51*x P/B and is signalling to the market of this view. Management is not likely to seek a delisting or privatisation of the company moving forward.

Near term strength expected, but maintain NEUTRAL. While the share price performance may remain firm in the near term attributed to the partial offer, we are maintaining our TPS$1.16 based on 50% discount to RNAV. This is in view of the gradual moderation in private residential prices moving forward, 41% GAV exposure to the high-end segment in which we are less sanguine, as well as rising policy risks in which sustained share pricing re-rating is unlikely moving forward. However we see limited downside for the stock trading at 0.51*x P/B and 0.55*x P/RNAV. Maintain NEUTRAL.