Wingtai was first purchased as it has a strong foothold in both the mid to high end residential segment, as well as the retail sector, including brands like G2000, Topman etc. I see this as a good opportunity for me to invest in the residential sector, especially when Wingtai's share price has decreased substantially, with no substantial change in fundamentals.
However, things did not go too well after the purchase. This is caused by the series of cooling measures implemented by the Singapore Government to prevent any possible bubbles from forming in the housing sector. This creates a huge selling pressure on property counters as investors fear the possible negative effects these cooling measures will bring to property prices.
As observed, Wingtai's share price plunged by a massive 44% to $0.92 over the course of the year, before the reversal sets in. It was a very depressing period for me, as holding on to this counter seems as if there was no light at the end of the tunnel at that time, as the price just keep on moving southwards. But with a high NAV, I believe the company will not go bust, and even if it does, it has more than enough value to liquidate to compensate and hence protect my capital investments.
Hence I took the plunge as an opportunity to purchase more shares to average down my holding. However, as it declined further, my emotions set in and the fear that it will end up like First Ship Lease Trust deterred me from buying further when it went below $1.00 per share. I am glad that during the course of this 2 year period, I made a couple of purchases and sales to average down my buying price, because soon, the reversal sets in.
To help the recovery, Wingtai announced that Chairman is buying back 15% of the floating shares at $1.39 per share. This announcement boosted the share price to above $1.30 levels and thus allowing me to erase all loses as I managed to breakeven at that price. In addition, as I am holding 7 lots of Wingtai at that time, I decided to sell 15% of my shares back to the company to reduce my holdings, in case the price support fails and decline again. After the sale, I ended up with odd lots of shares, which caused me to purchase back some shares to make it a complete lot.
After all the buying and selling comes to an end, I am rewarded with a consistent continual rise in Wingtai's share price as the market sees minimal impact in the cooling measures introduced by the Singapore Government, as up till this point, it only resulted in the stabilisation of property prices, instead of a price correction as feared previously. This boosted market's confidence and at the second half of the year, the rally for property developer counters arrived with much anticipation.
At a high of $1.77, it seems like the rally for Wingtai is coming to an end as it lacks the strength to push to higher prices. The price booster soon came as SC Global, another high-end residential property developer announced the privatisation of the shares with an offer of $1.80, which is a 49% premium over the last closing price. This news boosted the shares of Wingtai to breakup to $1.80 as well. With this, I made the decision to sell all my holdings at $1.82.
My thoughts at that time: Looking at the rally, I was a little hesitant to sell as there may still be possible upside after the recent breakthrough. However, with the issue of the US 'fiscal cliff' looming and remains unsolved, I concluded that the risk : reward ratio may have become too much to bear at this juncture. Since the next announcement of any possible huge dividend payout (which could possibly act as another price catalyst) is at least 6 months away, I shall lock in my profits before the new year, and enjoy my December holidays.
Lessons learnt: For quality stocks, it is just a matter of time that the true value of the stock gets unlock. Just as waiting for the right opportunity to buy requires patience, waiting for the true potential to be unlocked also requires much patience.
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