Wing Tai Properties - Result Analysis: Higher asset disposal gains underpin earnings growth
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1H26 core profit rose 64% y/y to HKD177m, driven mainly by higher disposal gains
Pre-leasing at Central Crossing is well underway, positioning the project to benefit from the improving Central office market
Gearing improved, supported by property sales and asset disposals
Maintain BUY with HKD2.59 TP
Boosted by higher disposal gains. Wing Tai Properties recorded a net loss of HKD95m in 1H26 (1H25: HKD1.19bn). Excluding fair value changes on investment properties and financial instruments, core profit increased 64% y/y to HKD177m (1H25: HKD108m), mainly driven by higher disposal gains from its London investment properties. Interim DPS remained unchanged at HKD0.03.
No further property provisions. Pre-tax core segment loss widened slightly to HKD66m (1H25: HKD63m). During 1H26, the company sold five units each at OMA OMA and OMA by the Sea in Tuen Mun. As of Jun-26, OMA OMA was fully sold, while 99% of OMA by the Sea had been sold. Against the backdrop of a recovering Hong Kong residential market, the company recorded no property impairment provision in 1H26, versus HKD432m in 1H25.
Residential sales progressing smoothly. Wing Tai Properties launched its 85%-owned Cloudview in Fanling for pre-sale in Mar-26. To date, 349 units have been pre-sold at an ASP of HKD14,300psf, representing c.46% of the project's 765 units. Located next to Fanling Golf Course, the project has a total GFA of 0.28msf and is scheduled for completion in 1H27. Elsewhere, more than 170 units, or c.71% of the 240 units at UNI Residences in Tai Wai, have been sold for more than HKD927m at an ASP of HKD16,900psf since its launch in Jun-25. The project is an equally owned JV with Vanke Overseas Investment Holding and is expected to be handed over to buyers in 3Q26. Given elevated development costs, the company had previously made provisions for both projects.
Negative rental reversion continues to weigh on the portfolio. Income from property investment and management fell 8% y/y to HKD242m, mainly due to the loss of income following the disposal of two London commercial properties and lower contributions from Landmark East. The Kowloon East office market remained challenging, with Landmark East's occupancy falling to c.80% in Jun-26 from 85% in Dec-25, while rental reversion remained negative. Meanwhile, occupancy at its industrial building, Shui Hing Centre in Kowloon Bay, declined to c.67% from 71% in Dec-25, reflecting softer demand for industrial space in Kowloon East. Le Cap's occupancy fell to 87% in Jun-26 from 100% in Dec-25, while La Vetta remained c.88% let. During 1H26, the company sold one unit and one car parking space at La Vetta, with revenue to be recognized in 2H26.
Monetizing London commercial assets. Following the disposal of 8-12 Brook Street in Jun-25, the company completed the disposal of its two remaining London commercial properties at Berkeley Square and Savile Row/Vigo Street in Mar-26 and Jun-26, respectively. The two properties were sold for a total of HKD604m, generating aggregate disposal gains of HKD142m recognized in 1H26.
Lanson Place Causeway Bay continues to ramp up. Pre-tax loss from hospitality investment and management narrowed to HKD7m in 1H26 (1H25: HKD34m), mainly driven by improving performance at Lanson Place Causeway Bay, which reopened in 2024 following extensive refurbishment. Meanwhile, Lanson Place Waterfront Suites in Sai Wan Ho continued to see improving occupancy.
Capitalizing on improving Central office market conditions. Central Crossing, a 50:50 JV with CSI Properties, is scheduled for completion in 2H26, with office pre-leasing now underway. Located in the heart of Central, the project is well positioned to benefit from improving leasing sentiment in the district. Meanwhile, the 125-room Andaz hotel is targeted to open in mid-2027.
Balance sheet strengthened. Total borrowings fell 3% h/h to HKD6.9bn in Jun-26, with c.42% maturing within one year. Cash and bank balances stood at HKD2.3bn, resulting in net debt of HKD4.6bn, down 4% h/h. Gearing improved slightly to 23.0% from 23.8% in Dec-25, supported by residential sales proceeds and proceeds from the disposal of its London properties.
Maintain BUY with HKD2.59 TP. The stock is trading at an 83% discount to our assessed current NAV, compared with its 10-year average discount of 77%. Continued asset disposals and project monetization should help crystallize value and narrow the valuation gap. An improving Central office market should also support leasing momentum at the upcoming Central Crossing office development. Based on an 80% discount to our Jun-27 NAV estimate, equivalent to 0.5SD below the 10-year average, we set our TP at HKD2.59 and maintain our BUY rating.
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