Wing Tai surges on privatisation talk

Singapore

THE stock of property developer Wing Tai Holdings shot up in active trading on Monday on speculation that the company could be a potential privatisation candidate. It surged to S$2.12 before closing at S$2.11, for a net S$0.185 or 9.6 per cent gain. The volume of 13.5 million shares worth S$27.5 million made it the day's fourth active stock by trading value.

Focusing the spotlight on the stock was a report by RHB Research, which noted that the group could benefit significantly from a privatisation amid extremely challenging market conditions. In his report, released at the end of last week, analyst Goh Han Peng noted that an unlisted Wing Tai would be exempted from Qualifying Certificate penalties on its luxury unsold projects such as Le Nouvel Ardmore and Nouvel 18. "However, the group has a robust balance sheet with net gearing below 0.2x, and has a diversified property business, both geographically and sector-wise," he wrote. "Major shareholder, the Cheung family, made a successful partial offer in 2012, at S$1.39 per share, to bring its stake above 50 per cent."

The report noted that with the stock trading at a deep discount of 55 per cent (based on last week's close) to its latest book value of S$3.90, the group had been doing active share buybacks and the Cheung family may yet pounce again in a privatisation bid. SGX data shows it has coughed up some S$9 million to buy back some 7.3 million of its shares in the first quarter. It has a buyback mandate for some 78.8 million shares. The RHB report on potential privatisation candidates featured five other property plays - UIC, Great Eastern, Wheelock, Ho Bee, and Hong Fok. But for some reason, the market appears to believe that Wing Tai could be the top candidate.