Will outperforming Wing Tai ever get delisted?

It’s trading at a deep discount but still costly.

Wing Tai’s recent share price surge can partly be blamed to speculation that it might get delisted from the SGX to avoid hefty Qualifying Certificate (QC) charges on its two luxury residential projects, Nouvel 18 and Le Nouvel Ardmore. What are the odds of Wing Tai leaving the SGX?

According to DBS, Wing Tai is unlikely to get delisted because the steep cost of privatisation deters its owners, the Cheng family.

DBS noted that at its current price, it will cost the family above $800m to buy the around 50% stake that they do not own while it costs only $35m to pay the QC for both projects to obtain a one year extension.

“We continue to see value in Wing Tai but remain cautious after its eye-catching share price rally. We wonder if the stock is rising for the right reasons. We believe that the rumoured de-listing of the company will not happen,” DBS stated.

However, RHB argues that the company has been actively buying back shares for the past six months, which could pave the way for another privatisation attempt by the Cheng family.

“The Cheng family made a successful partial offer in 2012, at SGD1.39 per share, to bring its stake above 50%. the Cheng family may yet pounce again in a second privatisation attempt,” noted RHB.

CIMB attributed the share price jump not only to privatisation rumours but also to speculation of a bulk sale at its luxury projects.

“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 (~$899m). 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,” stated CIMB.