YANLORD LAND GROUP LIMITED (SGX:Z25)
Yanlord Land Group - Still In A Quagmire
- Yanlord Land's FY20 results came in slightly below expectations on lower-than-expected contributions from JV/associate projects.
- FY21 presales target set at RMB70bn, down 11% y-o-y.
- Fine-tuned Yanlord Land's FY21/22F earnings forecast by 1%/-10% to factor in a more front-end tilted delivery schedule and lower margins.
- Maintain HOLD with a slightly higher target price of S$1.25.
Yanlord Land's FY20 result summary
- See report attached below for details of Yanlord Land Group (SGX:Z25)'s FY20 result highlights and comments.
Investment Thesis
- Challenging margin outlook ahead, alongside gradual recognition of its lower-margin projects (GPM of unbooked sales at ~25% vs recognised GPM of 36.4% in FY20).
- Presales growth to take an unexpected step back, with FY21F presales target set at RMB70bn, down 11% y-o-y from RMB78.5bn in FY20.
- Better to stay on the sidelines for now, with
- potential to catch up in construction and delivery pace – especially for its JV and associate projects; and
- signs of stabilisation in margins as key turnaround indicator.
Valuation:
- Our new target price of S$1.25 for Yanlord Land is based on an unchanged 4.4x FY21F P/E, which is equivalent to the average small-cap average 1-year forward P/E in 2019, a year which we believe shares similar qualities with 2021.
- See Yanlord Share Price; Yanlord Target Price; Yanlord Analyst Reports; Yanlord Dividend History; Yanlord Announcements; Yanlord Latest News.
Where we differ:
- Critical factors to trend further south and weigh on near-term performance. Factors that would typically drive its performance (i.e. gross margin and presales growth) will likely continue to head south. We therefore expect Yanlord Land to post relatively stagnant performance in the near term. This is despite a seemingly decent recovery in core earnings growth for FY21-22 upon recognition of its ~Rmb106bn of gross unbooked sales as at Dec-20.
Danielle WANG CFA
DBS Group Research
|
Ken HE CFA
DBS Research
|
Jason LAM
DBS Research
|
https://www.dbsvickers.com/
2021-03-08
SGX Stock
Analyst Report
1.25
UP
1.100
