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Wing Tai Malaysia takeover positive for Wing Tai Holdings

SINGAPORE (May 24): OCBC is maintaining its ‘buy’ on Wing Tai Holdings (Wing Tai) after the latter made an unconditional voluntary takeover offer for Wing Tai Malaysia Bhd (WTM).

Wing Tai, together with its subsidiaries, yesterday announced an unconditional voluntary takeover offer to acquire all issued ordinary shares of WTM not already owned by the joint offerors for a cash offer price of RM1.80 per share (58 Singapore cents per share).

The offer price represents a premium to the following last traded price of RM1.18 per WTM share on Monday, the last full trading day prior to the offer.

The joint offerers now directly hold over 50% of the voting shares in WTM – 66% – and hence the offer is not subject to any minimum level of acceptances.

Wing Tai has indicated that they intend to take WTM private by offering the minority shareholders of WTM the opportunity to exit and realise their investments for cash at the offer price.

“The offer will allow Wing Tai to further explore synergies and integrate their financial and operational resources, which could result in cost savings and improved operational efficiencies,” says lead analyst Eli Lee in a Wednesday report.

“Given the benefits of a potential WTM privatisation and the reasonable offer price, we see this development as a positive one,” Lee concludes.

To recap, Wing Tai reported a firm set of 3QFY17 results with PATMI increasing to S$7.4 million from S$2.1 million in the same period last year mainly due to lower rental and depreciation from retail outlets in Singapore and stronger share of profits of associated and JV companies, partially offset by lower contributions from development profits.

In terms of the topline, 3QFY17 revenues dipped 35% y-o-y to S$73.5 million similarly due to lower income recognition from development projects. 9MFY17 PATMI cumulated to S$10.6 million, again up significantly versus S$5.2 million in 9MFY16, and we deem the latest results to be broadly within expectations.

Shares of Wing Tai are trading 7 Singapore cents higher at S$1.92. — theedgemarkets.com.sg

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