YANLORD LAND GROUP LIMITED (SGX:Z25)
Yanlord Land Group - Some Blips But Sound Overall
- Yanlord’s 3Q18 PATMI +61.3% y-o-y.
- Lower contracted sales target for FY18.
- Addressing its higher gearing ratio.
Recent 3Q18 PATMI beat our expectations
- Yanlord Land Group Limited’s (Yanlord) recent 3Q18 results were solid, with PATMI beating our expectations. Revenue jumped 51.7% y-o-y to RMB5,711.6m, underpinned by a 40.1% increase in GFA delivered (147.1k sqm) and 3.1% increase in ASP to RMB33,758 psm. PATMI increased 61.3% y-o-y RMB1,012.4m.
- For 9M18, Yanlord’s revenue rose 57.1% to RMB22,562.6m, forming 75.5% of our FY18 forecast. PATMI of RMB3,287.7m represented an increase of 62.4% and this accounted for 87.8% of our full-year projection due largely to lower-than-expected non-controlling interests (PAT accounted for 78.4% of our FY18 forecast).
Some delay in project launches; contracted sales target lowered
- Looking ahead, Yanlord has RMB11.3b of accumulated pre-sales pending recognition, as at 30 Sep 2018, with advances received amounting to RMB9.0b.
- Yanlord has a land bank of 7.79m sqm, which is sustainable for development for approximately five years.
- Yanlord highlighted that it had encountered some pre-sales permit delays for two projects in Shenzhen, with a push back to early next year. As such, management signalled that a more feasible contracted sales target for 2018 would be RMB27b, versus RMB30b previously.
- For 2019, including the delayed projects, Yanlord would have ~RMB80b of saleable resources. We believe a sell-through rate of ~50%-60% is achievable.
- In Singapore, Yanlord is hopeful of obtaining Provisional Permission from the authorities by 17 Jan 2019 for its Tulip Garden en-bloc project.
Rising gearing a concern, but seeking to address this
- One of the negatives in 3Q18 was the increase in Yanlord’s net gearing ratio from 78.3% in 2Q18 to 91.2%. Management acknowledged that that this was above its comfort zone, and highlighted that it will continue to be more prudent in its land acquisition.
- The push back in the delayed projects in Shenzhen will also eventually translate into cash inflows once they are launched, thus alleviating the situation (typical cash collection rate is > 90%).
- After fine-tuning our assumptions and lowering our target P/E peg to 5x from 5.5x to take into account Yanlord’s higher gearing ratio, we derive a lower fair value estimate of S$2.04 (previously S$2.13).
Wong Teck Ching Andy CFA
OCBC Investment Research
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https://www.iocbc.com/
2018-11-21
SGX Stock
Analyst Report
2.04
DOWN
2.130
