YANLORD LAND GROUP LIMITED (SGX:Z25)
Yanlord Land Group - This Year, I’ll Pull Up My Socks
- Yanlord Land's 4Q18 PATMI dipped 78.5% y-o-y.
- Unchanged DPS of 6.8 S cents.
- Aiming for stronger contracted sales.
4Q18 results missed our expectations
- YANLORD LAND GROUP LIMITED (SGX:Z25) reported a subdued set of 4Q18 results which missed ours and the street’s expectations. Revenue slumped 79.4% y-o-y to RMB2,325.4m due to a decrease in GFA delivered (-77.2%) and lower recognised ASP of RMB51,257 psm (-22.6%).
- Coupled with higher operating expenses and finance costs, PATMI for the quarter dipped 78.5% y-o-y to RMB256.9m. This culminated in FY18 revenue and PATMI of RMB24,888.0m and RMB3,544.6m, representing a decline of 2.9% and an increase of 10.2%, respectively. However, PATMI only formed 90.0% and 94.2% of ours and the street’s forecasts, respectively.
- Excluding effects of fair value changes and net foreign exchange effects, core PATMI came in at RMB3,156m, or a slight decline of 1.6%.
- A first and final dividend of 6.8 S cents was declared, unchanged from FY17.
Targeting contracted sales of ~RMB40b in 2019
- Looking ahead, Yanlord Land has RMB12.9b of accumulated pre-sales still pending recognition, of which advances of ~RMB9.9b have already been collected.
- In terms of pre-sales, Yanlord Land is targeting contracted sales of ~RMB40b in 2019 on the back of more abundant saleable resources of RMB84b. This would translate into a sell-through rate of ~48%, which is conservative given that historical sell-through rate for Yanlord Land was 60%- 65%. However, given the volatile market conditions and uncertainties surrounding pre-sale permits given by local governments, we opt to adopt a more conservative stance and are projecting contracted sales of RMB35.2b for 2019.
Monitoring its high net gearing ratio of 96.8%
- Yanlord Land’s net gearing ratio stood at 96.8%, as at end-FY18, versus 91.2% as at 30 Sep 2018. Management acknowledged once again that this was on the high-side relative to historical levels, and thus has an aim on being more prudent on its land acquisitions this year.
- Coupled with cash inflows from more project launches, Yanlord Land is hopeful of bringing down its net gearing ratio by end-2019. We cut our FY19 core PATMI forecasts by 15.6% and introduce our FY20 projections.
- Rolling forward our valuations and applying an unchanged P/E target peg of 5x to our core FY19 EPS forecast, we derive a lower fair value of S$1.75 (previously S$2.04).
Wong Teck Ching Andy CFA
OCBC Investment Research
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https://www.iocbc.com/
2019-03-01
SGX Stock
Analyst Report
1.75
DOWN
2.040
