Holdings&rsquo wholly owned unit, Wing Tai China (WTC) has acquired the remaining 50 per cent stake in Winnoma Investment from its joint venture partners for around US$18.27 million, Wing Tai said in a filing to the Singapore bourse on Wednesday (Aug 31).

 

Winnoma is a joint venture company that has developed a residential project in Shanghai, China. Wing Tai&rsquo s joint venture partners are Savills IM Asian Property II SICAV-SIF (in liquidation) and Inica Holding.

 

The consideration was paid in cash upon completion of the deal, namely with the inking of the share sale agreement. With the acquisition, Winnoma will become a wholly owned subsidiary of WTC.

 

Wing Tai said: &ldquo The acquisition is carried out in the ordinary course of business. It is not expected to have any material impact on the group&rsquo s net asset value.&rdquo

 

PROPERTY and retail company Wing Tai Holdings on Thursday (Aug 25) reported full-year net profit of S$140.2 million for FY2022, a jump of 222 per cent from S$43.6 million full-year net profit in the previous financial year.

 

Revenue for the full year ended Jun 30 came in at S$514.6 million, a 12 per cent increase from S$461.4 million a year ago, Wing Tai announced in a bourse filing.

 

Earnings per share for FY2022 was 16.6 cents, compared to 3.99 cents in FY2021.

 

Wing Tai declared a final dividend of 3 cents per share and a special dividend of 3 cents per share, subject to shareholders&rsquo approval in the upcoming annual general meeting.

 

The company said the jump in net profit is largely attributable to higher contributions from its associated and joint-venture companies. Their share of profits rose to S$112.2 million in FY2022, compared to S$36.3 million in the previous financial year.

 

This increase primarily came from higher contributions from Wing Tai Properties Limited in Hong Kong, as well as Uniqlo in Singapore and Malaysia. 

 

Turning to revenue growth, Wing Tai said this is mainly due to its development properties. The revenue from development properties largely came from progressive sales recognised from residential developments The M at Middle Road and the additional units sold in Le Nouvel Ardmore.

 

As for its outlook, the group expects property cooling measures announced in December 2021, the rising interest rate environment, heightened inflation as well as geopolitical tensions to have an impact on the buying sentiment for private residential property in Singapore.

WING Tai Holdings' Malaysian subsidiary has sold its property at 166A Rifle Range Road in Penang for RM17.5 million (S$5.6 million).

 

The aggregate consideration for the disposal of the property, which comprises a leasehold land and a 5-storey factory building, is higher than RM13.7 million net book value as at Monday (Apr 4), Wing Tai said in a bourse filing on Monday.

 

The buyers are Dapper Corporation and Chiao Huat, which are not related to Wing Tai, its subsidiaries nor its controlling shareholders.

 

Wing Tai pointed out that they paid the consideration - which was arrived at on a willing-buyer and willing-seller basis - in cash with an initial deposit of 10 per cent, followed by the balance upon completion of the transaction.

 

Wing Tai, meanwhile, noted that the disposal of the property was done in the " ordinary course of business" . " It is not expected to have a material impact on the group' s net asset value," it said, while declaring that none of its directors or controlling shareholders has any direct or indirect interest in the transaction.

WING Tai Holdings' net profit for the six months ended Dec 31 declined 5 per cent year on year to S$53.8 million.

 

Revenue rose 26 per cent to S$306.6 million on the back of higher contributions from development properties. In a filing to the Singapore Exchange, Wing Tai said: " Revenue for the current period was largely attributable to the additional units sold in Le Nouvel Ardmore and the progressive sales recognised from The M at Middle Road in Singapore."

 

However, in the wake of the latest property cooling measures last December, Wing Tai warned that " buying sentiment for private residential property in Singapore may weaken in the current year" .

 

Among the curbs rolled out were higher Additional Buyer' s Stamp Duty (ABSD) rates for Singaporeans and Permanent Residents purchasing their second and subsequent properties. Foreign buyers were also hit: They now pay a stiffer ABSD of 30 per cent on any residential property purchase, up from 20 per cent.

 

During the period under review, Wing Tai recorded a 44 per cent drop in share of profits of associated and joint venture companies to about S$21.5 million, from S$38.5 million previously, owing to lower contributions from Wing Tai Properties in Hong Kong.

 

Earnings per share worked out to around 6.2 Singapore cents, slightly lower than 6.5 cents in the corresponding period a year ago.

 

The group recorded an operating profit of S$51 million, up slightly from S$50.5 million in H1 FY21, lifted by higher contribution from the development properties.

 

The group' s net asset value per share as at Dec 31, 2021 was S$4.18, up slightly from S$4.14 as at June 30, 2021.

 

No dividend was recommended for the period under review, as was the case last year.

LAST week, two established property groups reported decent results for the financial year ended June 30, 2021 (FY 2021).

 

Minority shareholders of GuocoLand and Wing Tai Holdings, while probably thankful that the groups are performing fine in spite of the pandemic, may wonder if more can be done to improve the values of their shares.

 

GuocoLand posted a 48 per cent year on year (yoy) increase in net profit to S$169.1 million, despite a 9 per cent fall in revenue.

 

Helped in part by valuation gains - including from flagship Guoco Tower in Tanjong Pagar, which saw valuation rise to S$2.55 billion as at June 30 from S$2.50 billion a year ago - GuocoLand' s net asset value (NAV) per share rose 4 per cent yoy to S$3.60 as at end-June.

 

GuocoLand is proposing to pay a dividend of six Singapore cents per share for FY 2021, unchanged from that paid for the previous financial year.

 

Wing Tai, which also has a retail business, reported net profit of S$43.6 million for FY 2021, up 173 per cent yoy. Helped mainly by higher contribution from its development properties, full-year revenue rose 24 per cent yoy.

 

Wing Tai' s NAV per share fell 1 per cent from a year ago to S$4.14 as at end-June. The group is proposing a dividend of five cents per share for the latest FY, up from three cents per share for FY 2020.

 

While GuocoLand and Wing Tai are active in residential development in Singapore, with strong track records in the high-end segment, their businesses do differ. The former has significant exposure to Grade A offices in Singapore' s Central Business District while the latter has exposure to serviced residences and the Hong Kong market.

 

The two also have slightly different capital structures. Wing Tai was in a net cash position as of end-June while GuocoLand has gearing of approximately one time.

 

But both companies have directors who hold large stakes. Wing Tai' s chairman Cheng Wai Keung has a direct and deemed interest of around 60 per cent in Wing Tai.

 

Quek Leng Chan, who heads Hong Leong Group of Malaysia, has a direct and deemed interest of around 72 per cent in GuocoLand.

 

And, minorities of both companies are probably of the opinion they have been dealt a bad hand when it comes to the share price. The two stocks are trading at less than half of their respective book values.

 

Should the boards of these companies do more to narrow the yawning gap between the share price and the NAV per share?

 

Importance of board intervention

 

Last week, Singapore Exchange Regulation issued consultation papers that look to enhance its sustainability reporting regime amid a growing focus on environmental, social and governance (ESG) factors worldwide.

 

Listed companies in Singapore could be required to make mandatory climate-related disclosures and provide details on their board diversity policy in the coming years. Issuers would also need to subject their sustainability reports to assurance in future.

 

This increased emphasis on ESG, however, risks distracting boards from a topic that is just as important: business strategy and how that links to long-term value creation.

 

The boards of GuocoLand and Wing Tai tick important check boxes in the governance frameworks. Independent directors constitute a majority, and GuocoLand even has an independent chairman.

 

These two groups do not have the scale of CapitaLand' s asset and fund management business, so it is not possible for them to restructure and improve valuations as CapitaLand is doing - by splitting its property development arm from its asset management arm. That does not, however, mean the boards of Wing Tai and GuocoLand have no other options.

 

The takeaway for directors of property groups from CapitaLand' s move is that corporate restructuring can add huge value to shareholders.

 

CapitaLand was trading at more than a 20 per cent discount to book value prior to announcing its restructuring in March. The share price has rallied by more than 20 per cent post announcement of the restructuring.

 

Options available

 

One option would be to improve stock liquidity by increasing free floats. This might help narrow the discount to NAV.

 

Separately, boards should actively explore ways to realise some of their existing book value for the benefit of all shareholders.

 

GuocoLand, for instance, could consider using Guoco Tower to start a real estate investment trust (Reit). On the local bourse, Mapletree Commercial Trust is a Reit with Singapore commercial assets that trades at a premium to its last reported book value.

 

Another possibility for both GuocoLand and Wing Tai is to actively divest investment properties and hospitality assets in their entirety or partially to Reits, private funds or whoever can offer the best price, and then return such proceeds to shareholders.

 

Alternatively, listed property groups may want to mimic private real estate funds. Some of these funds invest in a portfolio of assets for between five and seven years, after which the fund can be liquidated and investors reap the growth in value of the fund if any.

 

All shareholders could stand to gain if the entire business of a listed property group were sold for say book value after a certain number of years.

 

Over a 10-year time frame, GuocoLand' s equity attributable to ordinary shareholders grew 67 per cent from S$2.4 billion as at end-FY 2012 to S$4.0 billion as at end-FY 2021. Wing Tai' s equity attributable to ordinary shareholders rose 43 per cent from S$2.2 billion as at end-FY 2012 to S$3.2 billion as at end-FY 2021.

 

But both groups achieved returns on equity in the low single digits in FY 2021.

 

Both companies show some definite potential, but their boards need to wake up to the need to boost returns on stock valuations in order to earn their keep.

PROPERTY and retail player Wing Tai Holdings has reported a net profit of S$43.6 million for the full year ended June 30, a 173 per cent jump compared with its previous financial year.

 

This came despite a net loss of S$13.2 million for the first six months of 2021. For the same half-year period in 2020, net loss amounted to S$16.8 million, according to the mainboard-listed company' s full-year financial statement released on Thursday.

 

Its revenue for the full year rose 24 per cent to S$461.4 million, with H1 reporting a 16 per cent increase in revenue to S$218 million.

 

Wing Tai said the increase in revenue is mainly due to higher contribution from its development properties.

 

" The current year revenue from development properties was largely attributable to the additional units sold in Le Nouvel Ardmore and the progressive sales recognised from The M at Middle Road in Singapore," the company said.

 

The group' s net asset value per share as at June 30 was S$4.14, almost on par with the S$4.18 it recorded during the same period last year.

 

Earnings per share stood at 3.99 cents, up from 0.40 cent in FY2020.

 

The company has declared an ordinary dividend of 3 cents per share and special dividend at 2 cents per share. In FY2020, the final dividend was 3 cents per share.

 

Looking ahead, while the residential property market is likely to remain stable, the construction industry is facing rising costs due to manpower shortage and reduced productivity as a result of safe-management measures at worksites, Wing Tai said, adding that it will exercise prudence in liquidity and capital management to ride through the market uncertainties.

 

MAINBOARD-LISTED property and retail player Wing Tai Holdings' saw its net profit rise by 73.1 per cent to S$56.8 million for the half year ended Dec 31, 2020, thanks to higher contribution from its development properties.

 

Its bottom line jumped to S$56.8 million from S$32.8 million for the corresponding period a year ago, on the back of a 32.7 per cent increase in revenue.

 

Revenue rose to S$243.4 million, up from S$183.5 million a year earlier, mainly attributable to the additional units sold in Le Nouvel Ardmore and the progressive sales recognised from The M @ Middle Road. Both are condominium projects in Singapore. It did not elaborate on the total or additional units moved.

 

Consequently, its earnings per share was 6.54 Singapore cents as at Dec 31, compared to 3.43 cents for the year ago period.

 

It did not declare a dividend for the first half year.

 

Cost of sales was 60.0 per cent higher, rising to S$143.5 million from S$89.7 million a year earlier, resulting in a 6.5 per cent increase in gross profit to S$99.9 million.

 

Wing Tai' s other gains increased by 268.5 per cent to S$12.8 million, from S$3.5 million a year before, while its share of profits of associated and joint-venture companies increased by 7.7 per cent to S$38.5 million for the six months ended Dec 31.

 

Wing Tai recorded a 64.4 per cent decrease in the group' s current trade and other receivables from S$111.6 million half a year ago to S$39.7 million in the first half year ended Dec 31, largely due to the repayment of loan by a joint-venture company.

 

Net asset value per share as at Dec 31 dropped to S$4.15, from S$4.18 as at June 30. The group was in a net cash position as at Dec 31.

 

Wing Tai said in a statement: " While the buying sentiments for the residential property is likely to remain stable in the current year, the group will continue to exercise prudence in liquidity and capital management to ride through the uncertainties in the market."

WING Tai Holdings is proposing to repurchase up to S$85 million worth of notes originally issued under its S$1 billion medium-term note programme.

 

The property developer said on Tuesday that it wants to buy back up to S$30 million in aggregate principal amount of its 4 per cent notes due 2021, S$25 million of its 4.5 per cent notes due 2022 S$15 million of its 4.25 per cent notes due 2023, and S$15 million of its 4.7 per cent notes due 2024.

 

Wing Tai will repurchase the notes at prices ranging from 102.55 to 106 per cent of the principal amount, depending on the series. The 4 per cent notes will be repurchased at 102.55 per cent, the 4.5 and 4.25 per cent notes at 103.85 per cent and the 4.7 per cent notes at 106 per cent.

 

The proposed repurchase exercise will start on Sept 9 and end on Sept 18, with DBS acting as the buy-back agent.

 

WING Tai Properties, the Hong Kong associate of Singapore-listed Wing Tai Holdings, has reported a net loss of HK$485.7 million (S$85.2 million) for the six months ended June 30 - compared with a HK$212.2 million net profit in the year-ago period.

 

This is despite its revenue more than quadrupling to HK$1.96 billion from HK$423.9 million in the year-ago period.

 

A filing in the Singapore Exchange on Friday, made after the market close, indicated that the core consolidated profit attributable to shareholders - which excludes change in fair value on investment properties and financial instruments - was HK$287 million, up from HK$239 million in the year-ago period.

 

Loss per share was HK$0.36, compared to earnings per share of HK$0.16 in the year-ago period.

 

An interim dividend of HK$0.06 per share was recommended, the same as a year ago.

 

Hong Kong' s residential property market, already weakened from unrest last year, received another blow from the Covid-19 pandemic, said Wing Tai Properties.

 

Still, launches have been " well-received by the market" , with around 93 per cent of wholly-owned project The Carmel having been sold, and over 83 per cent of wholly-owned project OMA OMA having been pre-sold.

 

It said: " While the group will monitor the development of the residential property market in Hong Kong, we believe the pent-up demand of local first-time home buyers and low interest rates will form a stable support level for the residential property market."

 

The leasing market for corporate tenants in Hong Kong and London has also been hit by the pandemic, as has the hospitality sector. Wing Tai Properties expects the commercial properties to continue providing steady recurring income and cash flows, but lease renewal, occupancy and rentals will be under pressure. Hotel operations are expected to remain weak until the pandemic is under control.

 

Wing Tai Properties said: " The uncertain outlook on the pandemic and economic recovery in the near term may further affect the valuation of our investment properties towards the end of 2020, and may make a further impact on full-year reporting profit, despite their having no cash-flow impact on our financials."

 

The pandemic' s impact on business performance and cash flow " will be a critical factor to consider when recommending the 2020 final dividend payment" , said Wing Tai Properties chairman Christopher Cheng.