YANLORD LAND GROUP LIMITED (SGX:Z25)
Yanlord Land Group - Disappointing Start But Improvement To Come
- Yanlord Land's 1Q19 PATMI fell 59.5% y-o-y.
- Momentum to gather pace.
- Keeping to RMB40b contracted sales target.
1Q19 results missed expectations
- YANLORD LAND GROUP LIMITED (SGX:Z25) reported a weak set of 1Q19 results which fell short of ours and the street’s estimates. Gross revenue and gross profit dipped 49.6% and 61.4% y-o-y to RMB3,622.9m and RMB1,546.0m, respectively, with the latter forming 14.2% of our FY19 forecast.
- The weaker performance was attributed to both a decline in GFA delivered (-18.0% to 68.7k sqm) and ASP (-44.4% to RMB44,550 psm). The lower ASP was partly due to a change in product mix, as 1Q18 included a significant amount of GFA delivered for its Shanghai Yanlord on the Park project, which commands ASPs of close to RMB100k psm.
- Yanlord Land's 1Q19 PATMI came in at RMB323.1m, representing a dip of 59.5% y-o-y, and this constituted 9.6% and 10.1% of ours and Bloomberg consensus’ full-year forecasts, respectively.
More launches to come; RMB40b pre-sales target intact
- Looking ahead, Yanlord Land has RMB11.8b of accumulated pre-sales still pending recognition (as at 31 Mar 2019), of which ~90% is expected to be recognised in FY19. Hence we are expecting an improvement for the rest of the financial year.
- Yanlord Land achieved pre-sales of RMB8.4b for 4M19, with momentum picking up in Mar (RMB3.4b) and Apr (RMB3.2b). As it has more launches lined-up in Jun and Jul, including projects in Shenzhen and Zhuhai which are expected to fetch healthy ASPs, management has reiterated its RMB40b contracted sales target for 2019.
Keeping a close watch on gearing
- In terms of financial position, Yanlord Land’s net gearing ratio rose from 96.8% as at end-FY18 to 103.9% as at 31 Mar 2019. Although it acquired no land bank in 1Q19, the increase was attributed to higher borrowings for the payment of land premium (~RMB2b). Once Yanlord Land’s launch momentum picks up pace, it would be able to bring down its gearing ratio with the cash collection from the sales proceeds.
- We lower our core PATMI forecasts for FY19 and FY20 by 10.4% and 2.7%, respectively, and now base our valuation on 5x blended FY19/20F core EPS. Correspondingly, our fair value estimate moves from S$1.75 to S$1.68.
- Maintain BUY.
Wong Teck Ching Andy CFA
OCBC Investment Research
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https://www.iocbc.com/
2019-05-16
SGX Stock
Analyst Report
1.68
DOWN
1.750
