The Singapore property market has stirred slightly from its slumber since February. The Alexis @ Alexandra was sold out soon after launch, while the Caspian is more than 70% pre-sold. Over the past weekend, UOL also reportedly sold more than 80 of the 250 units released at Double Bay Residences during its private preview.

Based on recent launches, it appears that the main consideration is affordability (either smaller units of about 500 sq ft or lower ASP of about $600 psf). Hence, the market may not be ready to absorb Wing Tai’s (WT) projects, catered mainly to the mid-to-high end. The most affordable of WT’s projects is Ascentia Sky, with an expected ASP of about $900psf.

We estimate that at an ASP of $900 psf for Ascentia Sky, WT may have to book in an attributable pre-tax loss of $16.6m, even though construction costs may have come off and WT benefits from having United Engineers as one of the joint venture partners. Furthermore, we estimate a market value of $2,200 psf for its Ardmore Park projects, which may require WT to write-down its Anderson 18 stake by $26.8m.

Despite the potential need for provisions of nearly $50m for the projects mentioned earlier, WT’s other projects should remain profitable due to the low historical land costs. At the current shareprice, we estimate the implied GDV of WT’s attributable landbank is only $800 psf, grossly undervaluing its prime land parcels.

Despite our caution over the mid-to-high end segments, we believe that WT is trading at very attractive valuations. Its net gearing is a low of 0.4x and cashflows from past sales remain strong even if no new projects are launched before 2011. We maintain our BUY recommendation with a target price of $0.97, pegged to a 50% discount to RNAV.