Wing tai will hold prices steady amidst falling sales
As Developer Wing Tai Holdings records the biggest slide of revenue in its core business in development property, investors are to brace themselves for disappointing results in the form of lower total dividend of six cents per share, down from 12 cents per share last year
With slumping sales and increased buyer caution, disappointing sale figures were experienced in the property sector; a core business of Wing Tai Holdings. Net profit for the fourth quarter to 30 June declined 48 percent year on year to $143 million, with revenue dropping 42 percent to $180 million over the same period.
Net profit for the 12 months plummeted by 52 percent to $254 million, on the back of a 40 percent drop in revenue to $803 million. Despite having poor sales, Wing Tai Holdings has announced that they will not slash prices to shift its high-end properties in order to meet the designated sales period.
Chairman Cheng Wai Keung affirmed that high valued properties alike luxury goods, are not seen to carry out fire sales in a bid to sell for utility. Rather, it is the image and brand that’s of utmost importance to the company.
Chief financial officer Ng Kim Huat expressed his regret for the drop in property development turnover. He explained that despite having high contributions from L’Viv condo, it was still unable to fully offset the low contributions from other properties such as Foreseque Residences, Helios Residences and Belle Vue Residences in Singapore, and Verticas Residences in Malaysia.
Earnings per share fell to 16.6 cents from 37.5 cents while net asset value increased to $3.78 in June 30 from $3.62, both over the course of a year.
Mr Cheng assured that the company will hold its prices steady for luxury condo project, Le Nouvel Ardmore, which has only sold three of the 43 units launched. Under Qualifying Certificate (QC) rules, Wing Tai Holdings has until April 2016 to sell all units in the block. No additional details were released regarding the 156 unit Nouvel-18 at Anderson Road; a joint venture with City Developments. Similarly, the developer must obtain its Temporary Occupation Permit by Dec 17, meaning all units of Nouvel-18 must be sold by late 2016.
The company’s current gearing ratio is 0.16. Mr Cheng was optimistic that it will not hit 0.5 even if all properties are on hold. He added that the company will relook into its strategies at a closer date to combat ailing sales.Wing Tai shares closed at $1.87 yesterday, up 0.5 cents.
(Adapted from ST 29 Aug 2014)
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