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Another thing to smile at ...

http://info.sgx.com/webcorannc.nsf/Annou...endocument

Cheap financing - WING TAI PROPERTIES (FINANCE) LIMITED - S$170,000,000 4.25% Notes due 2022
Tapping the markets for cheap money for the next 10 years, very shrewd businessman here!

November 12 Sale Result

L'Viv
TOP: 2012
Total Number of Units 147
Number of units sold 136
Percentage of sale 92.52%
2 Units sold this month with median price of $2,428


FORESQUE RESIDENCES
TOP: 2015
Total Number of Units 496
Number of units sold 430
Percentage of sale 86.69%
18 Units sold this month with median price of $1,259

Dec 12 Sale Result

L'Viv
TOP: 2013
Total Number of Units 147
Number of units sold 140
Percentage of sale 95.24%
4 Units sold this month with median price of $2,442


FORESQUE RESIDENCES
TOP: 2015
Total Number of Units 496
Number of units sold 442
Percentage of sale 89.11%
12 Units sold this month with median price of $1,183

Wingtai is one of the most heavily punished property counters in this round of property curbs. Which really left me puzzled. It is trading at a discount to NAV not RNAV, its one of the lowest geared property counters around, have a retail arm (while margin is low), but to me help balanced the lumpiness of property earnings. Its recent launches are doing well, didn't bid too agressively for any land recently, what doesn't market like it? I could easily identify many more risks with other property companies but they didn't seem to do as badly? Any comments anyone??

Wing Tai's discount to NAV partially because its associate valuation in Wing Tai HK and its slow sale of high end properties. The market value of Wing Tai HK is much lower than the book value. Also, its balance sheet is not that healthy, because it has certain debts hiding in its associates and joint ventures.

(16-01-2013, 10:55 AM)freedom Wrote: [ -> ]Wing Tai's discount to NAV partially because its associate valuation in Wing Tai HK and its slow sale of high end properties. The market value of Wing Tai HK is much lower than the book value. Also, its balance sheet is not that healthy, because it has certain debts hiding in its associates and joint ventures.

Hi freedom, any way I can get a sense of the real picture of the debt? Sorry, I am not accounting trained, if wingtai borrow to finance a jv development, shouldn't it be recorded too?? That means loans of subsidiaries are not loans of holding company, and if the subsidiary or jv is not listed, how do 1 get a clear picture of its balance sheet?

(16-01-2013, 01:12 PM)Greenrookie Wrote: [ -> ]

(16-01-2013, 10:55 AM)freedom Wrote: [ -> ]Wing Tai's discount to NAV partially because its associate valuation in Wing Tai HK and its slow sale of high end properties. The market value of Wing Tai HK is much lower than the book value. Also, its balance sheet is not that healthy, because it has certain debts hiding in its associates and joint ventures.

Hi freedom, any way I can get a sense of the real picture of the debt? Sorry, I am not accounting trained, if wingtai borrow to finance a jv development, shouldn't it be recorded too?? That means loans of subsidiaries are not loans of holding company, and if the subsidiary or jv is not listed, how do 1 get a clear picture of its balance sheet?

loans in a subsidiary are consolidated, those would appear in the balance sheet of the group.

but loans in a joint-ventures or associates are not consolidated, they are shown in one line of non-current asset only, so it is difficult to know how much debt the joint-ventures or associates have from the group balance sheet. example such that if a joint-venture has equity of S$2(50-50 joint venture), but loans from financial institutions of $200 million, it still appears as $1 in non-current asset in the group balance sheet. it certainly does not reflect the real liabilities of the group.

to find out more about the leverage in the joint-ventures or associates level, I would look into the notes to financial statements in annual report. In the example of Wing Tai Holidngs from AR 2012, as such,

for associates, item 18, "investment in an associated company",

it showed in 2012, the associates(not adjusted for the proportionate ownership interest held by the Group) have assets of 3,646,401,000 and liabilities of 1,390,107,000. Since Wing Tai HK is the main associates, and the ownership is 33.6%, we can estimate how much assets/liabilities should be reflected in the balance sheet of Wing Tai, rather than one line of equity accounting.

the same for joint-ventures, item 19 "investments in joint venture companies",

it showed in 2012, joint-ventures(adjusted for the proportionate ownership interest held by the Group) has assets of 790,466,000, liabilities of 629,034,000. we can easily understand the high leverage in the joint ventures level(equity of 161 million vs liabilities of 629 million)

It is also important to know how much liabilities from the associates and joint ventures are from the company. in AR 2012, item 17 "trade and other receivables – non-current", we can know that among the liabilities of the joint ventures, around 200 million is from Wing Tai. these 200 million can cancel each other in the group balance sheet by remove the 200 million receivables from the assets and 200 million liabilities from the joint ventures to better reflect the capital structure of Wing Tai Holdings.

(16-01-2013, 01:26 PM)freedom Wrote: [ -> ]

(16-01-2013, 01:12 PM)Greenrookie Wrote: [ -> ]

(16-01-2013, 10:55 AM)freedom Wrote: [ -> ]Wing Tai's discount to NAV partially because its associate valuation in Wing Tai HK and its slow sale of high end properties. The market value of Wing Tai HK is much lower than the book value. Also, its balance sheet is not that healthy, because it has certain debts hiding in its associates and joint ventures.

Hi freedom, any way I can get a sense of the real picture of the debt? Sorry, I am not accounting trained, if wingtai borrow to finance a jv development, shouldn't it be recorded too?? That means loans of subsidiaries are not loans of holding company, and if the subsidiary or jv is not listed, how do 1 get a clear picture of its balance sheet?

loans in a subsidiary are consolidated, those would appear in the balance sheet of the group.

but loans in a joint-ventures or associates are not consolidated, they are shown in one line of non-current asset only, so it is difficult to know how much debt the joint-ventures or associates have from the group balance sheet. example such that if a joint-venture has equity of S$2(50-50 joint venture), but loans from financial institutions of $200 million, it still appears as $1 in non-current asset in the group balance sheet. it certainly does not reflect the real liabilities of the group.

to find out more about the leverage in the joint-ventures or associates level, I would look into the notes to financial statements in annual report. In the example of Wing Tai Holidngs from AR 2012, as such,

for associates, item 18, "investment in an associated company",

it showed in 2012, the associates(not adjusted for the proportionate ownership interest held by the Group) have assets of 3,646,401,000 and liabilities of 1,390,107,000. Since Wing Tai HK is the main associates, and the ownership is 33.6%, we can estimate how much assets/liabilities should be reflected in the balance sheet of Wing Tai, rather than one line of equity accounting.

the same for joint-ventures, item 19 "investments in joint venture companies",

it showed in 2012, joint-ventures(adjusted for the proportionate ownership interest held by the Group) has assets of 790,466,000, liabilities of 629,034,000. we can easily understand the high leverage in the joint ventures level(equity of 161 million vs liabilities of 629 million)

It is also important to know how much liabilities from the associates and joint ventures are from the company. in AR 2012, item 17 "trade and other receivables – non-current", we can know that among the liabilities of the joint ventures, around 200 million is from Wing Tai. these 200 million can cancel each other in the group balance sheet by remove the 200 million receivables from the assets and 200 million liabilities from the joint ventures to better reflect the capital structure of Wing Tai Holdings.

Thanks, that is really helpful advice

1H FY2013 result is out this evening. The following is a short summary of the result:
Revenue('000): $568,908
Net Profit attributable to shareholders('000): $160,739
EPS: $0.2053
NAV: $2.95
Net Gearing increase from last 1Q: 0.145 to 0.16
Price to Book based on closing price of S$1.9: 0.6456
dividend Yield (7 cents): 3.67%

Forward statement:
In January 2013, the government imposed additional cooling measures for the residential property market
which were designed to be more stringent on property ownership for investment and on foreign buyers. To
discourage over-borrowing, financing conditions for housing loans have also been tightened.

In November 2012, the Group was awarded the tender of a residential land in Shanghai Baoshan District.
The Group will continue to explore investment opportunities in the markets it operates.
The Group will continue to monitor the property market closely and will at appropriate times launch new
residential projects for sale in the current year.

http://info.sgx.com/webcoranncatth.nsf/V...800326957/$file/AnnouncementDec12.pdf?openelement

Vested

K.E. report on Wing Tai.

Wing Tai Holdings
A Sterling First Half
Strong first-half showing. Wing Tai reported a 1HFY Jun13 PATMI of
SGD160.7m, coming in at 99% and 97% of our and consensus full-year
estimates respectively, far-exceeding expectations. While we do not
expect the performance to be replicated in the second half, it was still a
creditable showing, with current valuations remaining very attractive.

Reiterate BUY.
Contributions from Hong Kong and completed projects. Much of
the 1HFY Jun13 outperformance came on the back of higher-thanexpected
contributions from its Hong Kong-listed associate. In addition,
profits from units sold at the already-completed Belle Vue Residences
and Helios Residences also flowed straight to the bottom-line.
Progressive profit recognition from the substantially-sold Foresque
Residences and L’VIV are expected to underpin earnings in 2H.
Launches possible in 2H CY13. On the back of the latest round of
cooling measures, management will continue to monitor the market for
appropriate windows of opportunity for new launches. We expect the
redevelopment of its old corporate HQ at Tampines Road, now known
as The Tembusu, to be launched in mid-2013, while the Prince Charles
Crescent site could be launched in 2H CY13.

Maintaining financial discipline. Wing Tai’s balance sheet remains
strong, with net gearing marginally reduced to 0.16x and just under
SGD1b in cash. We like that management has not overextended the
balance sheet, providing it with ample ammunition should more
attractive acquisition opportunities arise. Potentially, there is also scope
to expand in China, where it currently has two projects in the pipeline,
namely Guangzhou Knowledge City and in Luodian, Shanghai.
Undeserving of its steep discount. Despite its 59% rise in the past
one year, Wing Tai still trades at 0.65x P/B and 0.5x P/RNAV. We
believe that the large discounts are unjustified given Wing Tai’s strong
balance sheet and its relatively low-cost landbank. Maintain BUY with a
target price of SGD2.55, pegged to a 30% discount to RNAV.

http://www.maybank-keresearch.com.sg/Dow...050213.pdf