Wing Tai’s Q2 earnings dip 5% to $120.6m

Blame it on lower contributions and climbing costs.

Battered by tapered property development contributions, climbing tax rates, and increased administrative costs as Singapore retails outlets closed, Wing Tai’s earnings for the second quarter of FY16 crashed 85% YoY to $1.1m. Meanwhile, the group’s topline for Q4 dipped 5% YoY to $120.6m.

According to a report by OCBC, Wing Tai recognised over H1 progressive sales from The Tembusu, Le Nouvel Ardmore, The Lakeview in China and Phase 2 of Jesselton Hills in Penang, Malaysia. Overall, the operating and sales environment for Wing Tai were more challenging than anticipated.

OCBC further notes that in the last quarter of 2015, domestic home prices remained on a downtrend, slipping 0.5% and now tumbling 8.4% cumulatively over nine quarters. Domestic high end sales volume remained subdued over Q4 as well—URA figures show that only 4 out of 43 units have been sold at Le Nouvel Ardmore to date while none have been sold at Nouvel 18, Wing Tai’s JV project with City Developments.

However, Wing Tai has enjoyed stronger responses for its developments outside of the core central region, as well as The Tembusu (Tampines) and The Crest (Prince Charles Crescent) are respectively 93% and 21% sold, respectively.

OCBC asserts that it sees significant value in Wing Tai’s shares, and that Wing Tai is well-positioned to ride out the ongoing current down-cycle with its portfolio of prime residential and investment assets, as well as a low 16% gearing with $594.4m in cash.