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A. High cost of delisting deters owners. At current price, it will cost the Cheng family > S$800m to privatize the company (for the c.50% stake that they do not own) while it costs only S$35m to pay the QC (qualifying certificate) for both projects to obtain a one year extension.
B. De-listing to avoid QC charges for Nouvel 18 is not a straightforward route. Most of its unsold inventory is under (i) 100%-owned Le Nouvel Ardmore (only 3 out of 43 units sold) and (ii) Nouvel 18 (un-launched, 157 units). The latter is a JV with City Developments, another listed company.
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Hence, a de-listing will not enable the company to avoid QC penalties, if any. Any transaction between both listed entities is not likely to be easy and straightforward, in our view.
C. Block sale of its unsold inventory? A plausible catalyst is the potential block-sale of its unsold property units at Le Nouvel Ardmore and/or Nouvel 18 to private equity funds/investors (eg. Blackstone has been active in buying up luxury residential properties in Singapore recently and is in the consortium that acquired a stake in the Quayside Collection from City Developments).
This will remove an overhang from having unsold inventory on its books. Removing a discount to RNAV for these two projects would potentially raise our TP for Wing Tai to S$2.45-2.50 (based on a 35% discount to RNAV).
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