23-04-2015, 05:20 PM
15-05-2015, 03:33 PM
Reversed to Buy call !
DBS Group, 14 May 2015
Riding on a buoyant upgrader market
Contracted sales came in faster than expected with YTD
sales target hit rate better than peers at 25%
Target to lock in Rmb10bn sales by end-May, as the
recent loosening has unleashed upgrader demand in Tier
1/2 cities.
Management has raised ASPs in recent launches in
Shanghai and Nanjing with strong demand
Upgrade to BUY with new TP at S$1.49
Strong sales pick-up since Mar is likely to continue in May/June.
Yanlord has achieved over Rmb1bn sales in Mar/Apr and locked in
Rmb4.4bn in 4M15 (+54% y-o-y and represents 25% of sales target).
Sales momentum remained strong in May with c.Rmb900m sales
locked in during 1W15. There is another Rmb3.7bn subscribed sales
outstanding (as in first week of May) to be contracted in coming
months.
Better chance to hit full year target after recent launches in Shanghai.
It may be able to hit Rmb10bn subscription sales by end-May,
accounting for 55% of its full year sales target. Its sales progress is
better than our expectation, benefiting from the policy loosening
since end Mar. The company also plans to raise ASP in recent
launches in Shanghai and Nanjing due to strong response to
prelaunch marketing which might help margins recovery.
1Q15 results declined y-o-y with 2%/8% earnings and revenue lockin
due to back-end loaded delivery schedule. Core earnings dropped
by 94% y-o-y to Rmb19m, locking in 2.1% of our full-year estimates
(vs. 16% lock-in in 1Q14). GP margin was 42.3%, higher than our
full-year estimate due to the planned delivery of high-margin projects
in this quarter. No dividend was declared for 1Q, as usual. Net
gearing remained largely flat from end-14 at 46%. Yanlord had
Rmb12.5bn unrecognised sales outstanding as at end-Mar. As 70%
of full-year delivery is planned in 4Q, we expect poor quarterly results
to come in 2Q and 3Q.
Upgrade to BUY on better sales outlook. Yanlord is trading at
S$1.165, 42% discount to NAV, 11.8x FY15 PE and 0.6x PB. It
underperformed China property peers by 27% YTD. Due to
improving outlook for the sector and better-than-expected sales, we
believe the company’s share price may be able to catch up. Upgrade
to BUY, with new TP of S$1.49 based on 15x FY15PE, benchmarked
to its 2012 peak PE.
DBS Group, 14 May 2015
Riding on a buoyant upgrader market
Contracted sales came in faster than expected with YTD
sales target hit rate better than peers at 25%
Target to lock in Rmb10bn sales by end-May, as the
recent loosening has unleashed upgrader demand in Tier
1/2 cities.
Management has raised ASPs in recent launches in
Shanghai and Nanjing with strong demand
Upgrade to BUY with new TP at S$1.49
Strong sales pick-up since Mar is likely to continue in May/June.
Yanlord has achieved over Rmb1bn sales in Mar/Apr and locked in
Rmb4.4bn in 4M15 (+54% y-o-y and represents 25% of sales target).
Sales momentum remained strong in May with c.Rmb900m sales
locked in during 1W15. There is another Rmb3.7bn subscribed sales
outstanding (as in first week of May) to be contracted in coming
months.
Better chance to hit full year target after recent launches in Shanghai.
It may be able to hit Rmb10bn subscription sales by end-May,
accounting for 55% of its full year sales target. Its sales progress is
better than our expectation, benefiting from the policy loosening
since end Mar. The company also plans to raise ASP in recent
launches in Shanghai and Nanjing due to strong response to
prelaunch marketing which might help margins recovery.
1Q15 results declined y-o-y with 2%/8% earnings and revenue lockin
due to back-end loaded delivery schedule. Core earnings dropped
by 94% y-o-y to Rmb19m, locking in 2.1% of our full-year estimates
(vs. 16% lock-in in 1Q14). GP margin was 42.3%, higher than our
full-year estimate due to the planned delivery of high-margin projects
in this quarter. No dividend was declared for 1Q, as usual. Net
gearing remained largely flat from end-14 at 46%. Yanlord had
Rmb12.5bn unrecognised sales outstanding as at end-Mar. As 70%
of full-year delivery is planned in 4Q, we expect poor quarterly results
to come in 2Q and 3Q.
Upgrade to BUY on better sales outlook. Yanlord is trading at
S$1.165, 42% discount to NAV, 11.8x FY15 PE and 0.6x PB. It
underperformed China property peers by 27% YTD. Due to
improving outlook for the sector and better-than-expected sales, we
believe the company’s share price may be able to catch up. Upgrade
to BUY, with new TP of S$1.49 based on 15x FY15PE, benchmarked
to its 2012 peak PE.
17-05-2015, 12:34 AM
We hosted Yanlord Group to an investors’ presentation yesterday. Yanlord focused on mid to high-end property development in China. Starting from its base in Shanghai in the 1990s, the group branched out and built a market presence in 10 high-growth cities in China.
Yanlord commands premium pricing for its residential developments in cities it is present in due to its established brand and reputation for high-quality developments.
Following a soft 2014 due to policy measures, Yanlord is starting 2015 on a strong note. The group achieved RMB2.8bn in contract sales for 1Q15, which was up 40% yoy, due to strong take-ups for its launches in Shanghai, Tianjin, Nanjing, Suzhou and Zhuhai.
This was followed by another RMB1.5bn in contract sales for April. Yanlord has set a sales target of RMB18bn for 2015, up 40% on last year, and current sales trajectory puts it to track to achieve this number.
This is aided by the government’s relaxation of measures on the residential market, reducing downpayment requirements for 1st time buyers from 30% to 20%, and second-time buyers from 60% to 40%.
1Q15 should represent a trough in earnings, following which a series of new launches during the summer months to October and delivery of existing pipeline should enable the group to post a steady growth in sales over the next 2-3 years.
The group has typically achieved strong sell-through for its projects in cities like Nanjing, Tianjin, Shanghai and Suzhou, and is able to raise selling prices in subsequent phases of launches to achieve higher gross margins.
Yanlord maintains a strong balance sheet with net gearing at 45%, one of the lowest among peers.
The stock currently trades at 0.6x P/BV, and any pullbacks towards the SGD1.10 level would represent an attractive entry level.
Source: RHB
Yanlord commands premium pricing for its residential developments in cities it is present in due to its established brand and reputation for high-quality developments.
Following a soft 2014 due to policy measures, Yanlord is starting 2015 on a strong note. The group achieved RMB2.8bn in contract sales for 1Q15, which was up 40% yoy, due to strong take-ups for its launches in Shanghai, Tianjin, Nanjing, Suzhou and Zhuhai.
This was followed by another RMB1.5bn in contract sales for April. Yanlord has set a sales target of RMB18bn for 2015, up 40% on last year, and current sales trajectory puts it to track to achieve this number.
This is aided by the government’s relaxation of measures on the residential market, reducing downpayment requirements for 1st time buyers from 30% to 20%, and second-time buyers from 60% to 40%.
1Q15 should represent a trough in earnings, following which a series of new launches during the summer months to October and delivery of existing pipeline should enable the group to post a steady growth in sales over the next 2-3 years.
The group has typically achieved strong sell-through for its projects in cities like Nanjing, Tianjin, Shanghai and Suzhou, and is able to raise selling prices in subsequent phases of launches to achieve higher gross margins.
Yanlord maintains a strong balance sheet with net gearing at 45%, one of the lowest among peers.
The stock currently trades at 0.6x P/BV, and any pullbacks towards the SGD1.10 level would represent an attractive entry level.
Source: RHB
19-05-2015, 09:26 PM
May 10, 2015 by Goldman Sachs
Yanlord: Strong project pipeline, better asset churn up to Buy
Source of opportunity
We upgrade Yanlord to Buy from Neutral. We believe its asset turnover
will improve on concentrated launches of its Shanghai projects in 2015.
We estimate its four Shanghai projects (three in Pudong and one in
Qingpu) will contribute 40% of our 2015 contract sales estimate of
RMb16bn, about 12% below management guidance. Among the four
tier-1 cities, we expect property prices in Shanghai/Shenzhen are more
likely to see strong increases on the back of relatively tighter supply and
the wealth effect from strong stock markets in Shanghai/Shenzhen. We
raise our 12-m NAV based price target to S$1.60 (from S$1.14) by
narrowing TP NAV disc. to 30% from previous 50%, implying 0.9X 2015E
P/B (excl. revaluation gains). This is largely in line with the average
during the period between the last industry recovery to the early
expansion phases (2012-1H2013), with end-2015E gearing of 44% similar
to the average of 39% during 2012-2013. Our TP implies 29% potential
upside from the last closing price.
Catalyst
1. Yanlord has strong brand attractiveness in its home market Shanghai
and Nanjing. Its projects in both locations consistently attract the most
affluent buyers given its better product quality, customer focused design
and best-in-class property management over past two decades. In
addition to a high sales contribution from Shanghai, the Nanjing market
should also contribute another 15% of our estimated contract sales in
2015.
2. We expect profitability to finally bottom out in 2015 and we
subsequently see better asset turnover amid an overall market recovery,
especially in its home markets, where we might see an earlier price
recovery.
3. With only two acquisitions during the past three years, we expect its
acquisition pace to finally pick up, likely through partnerships with other
developers in its core market such as Nanjing, Shanghai and Tianjin.
Valuation
We keep 2015E-2017E underlying EPS unchanged but raise our 12-m
NAV-based TP by 41% to S$1.60 from S$1.14 (change in methodology
from purely NAV discount based to 50% NAV discount and 50% PB vs.
ROE, leading to a narrower NAV discount), which implies a 0.9X 2015E
P/B vs. the 1.4X implied offshore sector average. Yanlord is trading at
45% discount to its end-2015E NAV and at a 2015E P/E & P/B of
14.5X/0.7X) vs. the peer averages of 29%/9.8X/1.3X.
Key risks
Unexpected delay of key project launches aggressive land bank
expansion that leads to a weaker balance sheet macro hard landing.
Yanlord: Strong project pipeline, better asset churn up to Buy
Source of opportunity
We upgrade Yanlord to Buy from Neutral. We believe its asset turnover
will improve on concentrated launches of its Shanghai projects in 2015.
We estimate its four Shanghai projects (three in Pudong and one in
Qingpu) will contribute 40% of our 2015 contract sales estimate of
RMb16bn, about 12% below management guidance. Among the four
tier-1 cities, we expect property prices in Shanghai/Shenzhen are more
likely to see strong increases on the back of relatively tighter supply and
the wealth effect from strong stock markets in Shanghai/Shenzhen. We
raise our 12-m NAV based price target to S$1.60 (from S$1.14) by
narrowing TP NAV disc. to 30% from previous 50%, implying 0.9X 2015E
P/B (excl. revaluation gains). This is largely in line with the average
during the period between the last industry recovery to the early
expansion phases (2012-1H2013), with end-2015E gearing of 44% similar
to the average of 39% during 2012-2013. Our TP implies 29% potential
upside from the last closing price.
Catalyst
1. Yanlord has strong brand attractiveness in its home market Shanghai
and Nanjing. Its projects in both locations consistently attract the most
affluent buyers given its better product quality, customer focused design
and best-in-class property management over past two decades. In
addition to a high sales contribution from Shanghai, the Nanjing market
should also contribute another 15% of our estimated contract sales in
2015.
2. We expect profitability to finally bottom out in 2015 and we
subsequently see better asset turnover amid an overall market recovery,
especially in its home markets, where we might see an earlier price
recovery.
3. With only two acquisitions during the past three years, we expect its
acquisition pace to finally pick up, likely through partnerships with other
developers in its core market such as Nanjing, Shanghai and Tianjin.
Valuation
We keep 2015E-2017E underlying EPS unchanged but raise our 12-m
NAV-based TP by 41% to S$1.60 from S$1.14 (change in methodology
from purely NAV discount based to 50% NAV discount and 50% PB vs.
ROE, leading to a narrower NAV discount), which implies a 0.9X 2015E
P/B vs. the 1.4X implied offshore sector average. Yanlord is trading at
45% discount to its end-2015E NAV and at a 2015E P/E & P/B of
14.5X/0.7X) vs. the peer averages of 29%/9.8X/1.3X.
Key risks
Unexpected delay of key project launches aggressive land bank
expansion that leads to a weaker balance sheet macro hard landing.
20-05-2015, 12:14 AM
Big run up for this one , another delisting candidate ?
29-05-2015, 08:38 PM
Aberdeen G bought the shares in year 2012 , but they only declared after 3 years .
Thought they should declare within 48 hours ? Any friends here can help to enlighten, thanks.
http://infopub.sgx.com/Apps?A=COW_CorpAn...abfca54f49
Thought they should declare within 48 hours ? Any friends here can help to enlighten, thanks.
http://infopub.sgx.com/Apps?A=COW_CorpAn...abfca54f49
27-07-2015, 09:00 AM
All these analyst that cover this stock needs to be given the sack
(15-05-2015, 03:33 PM)Stocker Wrote: [ -> ]Reversed to Buy call !
DBS Group, 14 May 2015
Riding on a buoyant upgrader market
Contracted sales came in faster than expected with YTD
sales target hit rate better than peers at 25%
Target to lock in Rmb10bn sales by end-May, as the
recent loosening has unleashed upgrader demand in Tier
1/2 cities.
Management has raised ASPs in recent launches in
Shanghai and Nanjing with strong demand
Upgrade to BUY with new TP at S$1.49
Strong sales pick-up since Mar is likely to continue in May/June.
Yanlord has achieved over Rmb1bn sales in Mar/Apr and locked in
Rmb4.4bn in 4M15 (+54% y-o-y and represents 25% of sales target).
Sales momentum remained strong in May with c.Rmb900m sales
locked in during 1W15. There is another Rmb3.7bn subscribed sales
outstanding (as in first week of May) to be contracted in coming
months.
Better chance to hit full year target after recent launches in Shanghai.
It may be able to hit Rmb10bn subscription sales by end-May,
accounting for 55% of its full year sales target. Its sales progress is
better than our expectation, benefiting from the policy loosening
since end Mar. The company also plans to raise ASP in recent
launches in Shanghai and Nanjing due to strong response to
prelaunch marketing which might help margins recovery.
1Q15 results declined y-o-y with 2%/8% earnings and revenue lockin
due to back-end loaded delivery schedule. Core earnings dropped
by 94% y-o-y to Rmb19m, locking in 2.1% of our full-year estimates
(vs. 16% lock-in in 1Q14). GP margin was 42.3%, higher than our
full-year estimate due to the planned delivery of high-margin projects
in this quarter. No dividend was declared for 1Q, as usual. Net
gearing remained largely flat from end-14 at 46%. Yanlord had
Rmb12.5bn unrecognised sales outstanding as at end-Mar. As 70%
of full-year delivery is planned in 4Q, we expect poor quarterly results
to come in 2Q and 3Q.
Upgrade to BUY on better sales outlook. Yanlord is trading at
S$1.165, 42% discount to NAV, 11.8x FY15 PE and 0.6x PB. It
underperformed China property peers by 27% YTD. Due to
improving outlook for the sector and better-than-expected sales, we
believe the company’s share price may be able to catch up. Upgrade
to BUY, with new TP of S$1.49 based on 15x FY15PE, benchmarked
to its 2012 peak PE.
27-07-2015, 09:13 AM
Could u pls elaboorate?
(27-07-2015, 09:00 AM)propertyinvestor Wrote: [ -> ]All these analyst that cover this stock needs to be given the sack
(15-05-2015, 03:33 PM)Stocker Wrote: [ -> ]Reversed to Buy call !
DBS Group, 14 May 2015
Riding on a buoyant upgrader market
Contracted sales came in faster than expected with YTD
sales target hit rate better than peers at 25%
Target to lock in Rmb10bn sales by end-May, as the
recent loosening has unleashed upgrader demand in Tier
1/2 cities.
Management has raised ASPs in recent launches in
Shanghai and Nanjing with strong demand
Upgrade to BUY with new TP at S$1.49
Strong sales pick-up since Mar is likely to continue in May/June.
Yanlord has achieved over Rmb1bn sales in Mar/Apr and locked in
Rmb4.4bn in 4M15 (+54% y-o-y and represents 25% of sales target).
Sales momentum remained strong in May with c.Rmb900m sales
locked in during 1W15. There is another Rmb3.7bn subscribed sales
outstanding (as in first week of May) to be contracted in coming
months.
Better chance to hit full year target after recent launches in Shanghai.
It may be able to hit Rmb10bn subscription sales by end-May,
accounting for 55% of its full year sales target. Its sales progress is
better than our expectation, benefiting from the policy loosening
since end Mar. The company also plans to raise ASP in recent
launches in Shanghai and Nanjing due to strong response to
prelaunch marketing which might help margins recovery.
1Q15 results declined y-o-y with 2%/8% earnings and revenue lockin
due to back-end loaded delivery schedule. Core earnings dropped
by 94% y-o-y to Rmb19m, locking in 2.1% of our full-year estimates
(vs. 16% lock-in in 1Q14). GP margin was 42.3%, higher than our
full-year estimate due to the planned delivery of high-margin projects
in this quarter. No dividend was declared for 1Q, as usual. Net
gearing remained largely flat from end-14 at 46%. Yanlord had
Rmb12.5bn unrecognised sales outstanding as at end-Mar. As 70%
of full-year delivery is planned in 4Q, we expect poor quarterly results
to come in 2Q and 3Q.
Upgrade to BUY on better sales outlook. Yanlord is trading at
S$1.165, 42% discount to NAV, 11.8x FY15 PE and 0.6x PB. It
underperformed China property peers by 27% YTD. Due to
improving outlook for the sector and better-than-expected sales, we
believe the company’s share price may be able to catch up. Upgrade
to BUY, with new TP of S$1.49 based on 15x FY15PE, benchmarked
to its 2012 peak PE.
15-08-2015, 11:46 AM
On 12 August 2015, Yanlord Land (YLLGSP rated Ba3/B+) announced a strong set of
1H15 results. Driven by the delivery of Nanjing Yanlord Yangtze Riverbay Town (Phase
3), which generated gross margin of 50% and accounts for 57% of the group&rsquo s recognised
property sales its profitability as reflected by gross and EBITDA margin stood at one of
the highest among peers- at 37% and 25% respectively, in 1H15. Contracted sales of the
group were up by more than 150% y-o-y to RMB11bn in 1H15, representing 61% of its
full year contracted sales target of RMB18bn. This, together with lack of new land
purchases, led to meaningful balance sheet de-leveraging. To be specific, the group&rsquo s net
debt was down 13% from end 2014 level to RMB11.5bn with net gearing down to 39%
as of end June 2015 from 45% as of end 2014. Cash on hand reached all time high level of
RMB8bn, which comfortably covers short-term debt of RMB4.5bn, inclusive of RMB2bn
YLLGSP&rsquo 16 (due in May 2016). Debt-to-capitalisation was held steady at 40%.
Looking into 2H15e, Yanlord Land has various new launches in Shanghai and Nanjing, and should
continue to capitalise on the strong sales momentum in these cities. On 8 August 2015, the group
launched the latest batch of apartment units for sale at Nanjing Yangtze Riverbay Town (Phase 4), and
fetched RMB2.3bn subscription sales (on gross floor area 58,600 sq m or average selling price
RMB40,000 per sq m) on the launch project day. These shall bring the group&rsquo s subscription sales pending
conversion to RMB4.7bn, in addition to RMB13bn contracted sales from January to July 2015.
With new batches of units to be launched from Shanghai Yanlord Sunland Garden, Eastern Garden and
Western Garden Nanjing Yanlord Yangtze Riverbay Town as well as debut launch of Shanghai Yanlord
on the Park and Nanjing Eco Hi-Tech Island project, we expect Yanlord Land&rsquo s contracted sales for 2015
to reach RMB28-30bn, substantially above its RMB18bn contracted sales target for the year. In such
context, we expect the group to actively look for land replenishment opportunities in 2H15e. In our base
case, we assume the group to earmark RMB10bn for land activities, which is substantially above the
RMB4-5bn guidance. That said, the group should still be free cash flow breakeven in 2015e (see Table 3).
With the delivery of Phase 1 for Shenzhen Yanlord Yosemite and Tianjin Yanlord projects, which
generated lower gross margin, we expect the group&rsquo s gross margin normalising to 30% towards 2015e.
1H15 results. Driven by the delivery of Nanjing Yanlord Yangtze Riverbay Town (Phase
3), which generated gross margin of 50% and accounts for 57% of the group&rsquo s recognised
property sales its profitability as reflected by gross and EBITDA margin stood at one of
the highest among peers- at 37% and 25% respectively, in 1H15. Contracted sales of the
group were up by more than 150% y-o-y to RMB11bn in 1H15, representing 61% of its
full year contracted sales target of RMB18bn. This, together with lack of new land
purchases, led to meaningful balance sheet de-leveraging. To be specific, the group&rsquo s net
debt was down 13% from end 2014 level to RMB11.5bn with net gearing down to 39%
as of end June 2015 from 45% as of end 2014. Cash on hand reached all time high level of
RMB8bn, which comfortably covers short-term debt of RMB4.5bn, inclusive of RMB2bn
YLLGSP&rsquo 16 (due in May 2016). Debt-to-capitalisation was held steady at 40%.
Looking into 2H15e, Yanlord Land has various new launches in Shanghai and Nanjing, and should
continue to capitalise on the strong sales momentum in these cities. On 8 August 2015, the group
launched the latest batch of apartment units for sale at Nanjing Yangtze Riverbay Town (Phase 4), and
fetched RMB2.3bn subscription sales (on gross floor area 58,600 sq m or average selling price
RMB40,000 per sq m) on the launch project day. These shall bring the group&rsquo s subscription sales pending
conversion to RMB4.7bn, in addition to RMB13bn contracted sales from January to July 2015.
With new batches of units to be launched from Shanghai Yanlord Sunland Garden, Eastern Garden and
Western Garden Nanjing Yanlord Yangtze Riverbay Town as well as debut launch of Shanghai Yanlord
on the Park and Nanjing Eco Hi-Tech Island project, we expect Yanlord Land&rsquo s contracted sales for 2015
to reach RMB28-30bn, substantially above its RMB18bn contracted sales target for the year. In such
context, we expect the group to actively look for land replenishment opportunities in 2H15e. In our base
case, we assume the group to earmark RMB10bn for land activities, which is substantially above the
RMB4-5bn guidance. That said, the group should still be free cash flow breakeven in 2015e (see Table 3).
With the delivery of Phase 1 for Shenzhen Yanlord Yosemite and Tianjin Yanlord projects, which
generated lower gross margin, we expect the group&rsquo s gross margin normalising to 30% towards 2015e.
15-08-2015, 01:16 PM
DB:
Margins saw stabilising signs, but
growth outlook remains soft; Sell
Reuters Bloomberg Exchange Ticker
YNLG.SI YLLG SP SES YNLG
ADR Ticker ISIN
YLDGY US98482L1044
Forecasts And Ratios
Year End Dec 31 2013A 2014A 2015E 2016E 2017E
Sales (CNYm) 11,280.1 11,733.3 12,794.0 14,025.7 15,306.6
EBITDA(CNYm) 3,247.4 2,666.6 3,018.5 3,247.7 3,593.0
Reported NPAT(CNYm) 1,473.8 1,359.4 635.3 690.5 753.5
DB EPS FD (CNY) 0.50 0.25 0.33 0.35 0.39
PER (x) 13.2 21.8 14.1 13.0 11.9
DPS (net) (CNY) 0.01 0.01 0.01 0.01 0.01
Yield (net) (%) 0.2 0.2 0.3 0.3 0.3
Source: Deutsche Bank estimates, company data
Maintain Sell on weak earnings growth despite margins seeing stabilizing trend
________________________________________________________________________________________________________________
Deutsche Bank AG/Hong Kong
Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should
be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should
consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST
CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 124/04/2015.
Price at 13 Aug 2015 (SGD) 1.00
Price target - 12mth (SGD) 0.80
52-week range (SGD) 1.30 - 0.91
Straits Times Index 3,061
Jason Ching, CFA
Research Analyst
(+852) 2203 6205
jason.ching@db.com
Tony Tsang
Research Analyst
(+852) 2203 6256
tony.tsang@db.com
Price/price relative
0.9
1.05
1.2
1.35
1.5
8/13 2/14 8/14 2/15
Yanlord Land
Straits Times Index (Rebased)
Performance (%) 1m 3m 12m
Absolute -3.8 -16.0 -16.3
Straits Times Index -7.5 -11.3 -7.3
Source: Deutsche Bank
In our view, a key highlight in 1H15 was the 155% YoY increase in contracted
sales achieved, boosted by the strong recovery in upgrading demand following
the various policy relaxations. However, while gross margin saw a marked
recovery in 1H15, it was merely driven by bookings of a few high-margin
projects, and it could be difficult to sustain given land prices are rising at a
faster pace than ASP. Hence, we believe earnings growth is still being capped
by its slow acquisition pace in recent years. Moreover, in our opinion, current
valuation is not attractive, with shares trading at 14x/13x 2015E/16E PER
versus the industry average of 9x/8x. Maintain Sell.
Core profit in 1H15 -74% YoY to Rmb37mn; dragged by lower JV projects
Yanlord reported 1H15 revenue of Rmb3,350mn (+2% YoY), driven mostly by
higher delivery ASP at Rmb25,461/sqm (+9.6% YoY) on bookings of highmargin
projects including Yanlord Yangtze Riverbay Town in Nangjin. GFA
delivery actually declined by 8% YoY to 116,061 sqm. Meanwhile, gross
margin saw a marked recovery of 6.2 percentage points to 37.3%. However,
core net profit was down a sharp 74% YoY to just Rmb37mn, dragged by a
66% YoY decline in contribution from JV and a 76% YoY increase in minority
interests. No interim dividend was declared in 2015 (nil in 2014).
Financial position remains solid; net gearing declined to 39% as of mid-2015
As of mid-2015, total gross debt stood at Rmb19,514mn (down slightly from
Rmb19,806mn at end-2014) and cash on hand was Rmb8,030mn (+21% from
Rmb6,620mn at end-2014). The stronger financial position was boosted by
robust contracted sales in 1H15, with approximately Rmb9bn in cash proceeds
received. Net gearing improved to 39% as of mid-2015 from 45% at end-2014,
being one of the lowest among privately owned peers. Meanwhile, average
funding costs stood at 6.5% for onshore loans and 4.9% for offshore loans.
Target price at a 50% discount to our NAV estimate of S$1.6/share
Our target price is based on a 50% discount to our NAV estimate of
S$1.6/share, implying a 2015E/16E PER of 12x/11x. This discount is higher
than most comparable peers’, such as KWG, with similar scale and strategies,
which we believe is appropriate; it reflects Yanlord’s soft outlook in terms of
earnings growth. Key upside risks: acceleration in asset turnover and strong
market recovery leading to surging ASP.
Nomura:
Maintain Reduce with TP raised to SGD0.91
Poor interim results, but improving fundamentals; valuation remains expensive
Strong sales continue in 2H; likely to beat full-year sales target with abundant saleable resources
Global Markets Research
Rating
Remains
Reduce
Target price
Increased from 0.89
SGD 0.91
Closing price
13 August 2015
SGD 1.00
Potential downside
-9%
Anchor themes
We expect big developers to maintain ~15% y-y property sales growth in 2015F, vs. 5-10% for the broader sector. We expect valuation expansion due to supportive policy/credit relaxation, and improving balance sheets with slower growth targets.
Nomura vs consensus
Our FY15F/16F core EPS estimates are higher than consensus.
Research analysts
China Property
Stephen Cheung, CFA - NIHK
stephen.cheung@nomura.com
+852 2252 1559
Jeffrey Gao, CFA - NIHK
jeffrey.gao@nomura.com
+852 2252 1569
Elly Chen - NIHK
elly.chen@nomura.com
+852 2252 2181
Yanlord achieved CNY12.9bn contracted sales in 7M15 (+168% y-y, implies 72% completion of its CNY18bn full-year sales target). Adding the CNY2.3bn subscription sales from Nanjing Yangtze Riverbay Town – Phase 4 (???????) launched in early August, we believe Yanlord is likely to beat its sales target, considering there are at least CNY20bn of saleable resources for 2H, mostly from Shanghai and Nanjing projects.
More land acquisitions in 2H needed to sustain current strong growth
Yanlord did not acquire any projects in 7M15 although management has budgeted a total of CNY4-5bn for land acquisitions in the existing cities to fuel the company’s growth. Considering Yanlord has only acquired two plots in Nanjing and Suzhou in FY13-14, we believe its current land bank can only support low-teen sales growth in FY16-17F.
Disappointing 1H15 results but gearing and gross margin improved
Yanlord reported disappointing 1H15 results, with revenue up 2% y-y to CNY3.4bn and core profit down 41% y-y to CNY120mn, mainly due to less profit sharing of JV projects and larger share of minority interests. Gross margin improved to 37.3% from 29.2%/31.1% in FY14/1H14 (mainly due to the delivery of the high-margin project in Nanjing, which accounts for 56.9% of 1H15 property sales revenue). Net gearing on attributable equity also reduced to 60% from 69% in end-FY14, with completed inventory declining 8.6%.
Maintain Reduce, but raise TP to SGD0.91; valuation remains expensive
We cut our FY15-17F earnings by 0-7%, but raise TP to SGD0.91 (based on a 50% discount to end-FY15F NAV of SGD1.82), after factoring in the 1H15 results, increase in ASP growth assumption to 10% from 5% for T1 cities, and lower WACC for loosened credit. However, we maintain Reduce rating on Yanlord in view of its vague growth outlook and relatively expensive valuation compared to other small caps (5.7x FY16F P/E vs. peers at 4.2x).
GS:
Yanlord Land (YNLG.SI)
Buy Equity Research
Above expectations on sell-through rate; raise 2015E contract sales 25%
What surprised us
Yanlord’s 2Q15 underlying profit (excluding revaluation gain) of
Rmb171mn is substantially improved from net loss of Rmb79mn in 1Q15
and Rmb15mn in 2Q14. Highlights: 1) The strong yoy profit growth is
partly due to Rmb59mn FX gain recorded during 2Q15 vs. only Rmb5mn in
2Q14; 2) GPM of 35% is also better than 25% in 2Q14, thanks to higher
contribution from Shanghai projects. But on qoq basis, ASP booked during
the period is 7% lower (except Suzhou Lakeview Bay A2 parcel that is 8%
higher), which led to 8pp drop in GPM from the 1Q level; 3) For contracted
sales, not only ASP in general is 10% higher for Shanghai projects but also
the run-rate up to July is already 72% of its full-year target of Rmb18bn vs.
our coverage avg. of 50%, on the back of 70%-80% sell-through rate in 1H;
4) Net gearing lowered to 39% by end-2Q15 from 46% in 1Q15 and mgmt.
expects the ratio will be contained within 50% before the year-end, with no
more than Rmb5bn new land acquisition before the year-end.
What to do with the stock
We reiterate our Buy rating on the company as we believe strong
Shanghai and Nanjing property markets will benefit the company as the
two markets contribute almost 60% of its sales this year. We revise up our
2015E contract sales estimate by 25% to Rmb20bn and correspondingly
raise our 2015E-2017E underlying EPS by 2%-5% and our end-2015E NAV/
12-m NAV-based target price by 6% each to S$2.5/S$1.7 (still at 30% NAV
discount). Key risks: Unexpected strong sales performance/policy easing in
high-end market.
Macquarie:
Yanlord
The best is yet to come
Event
YANL surprised investors earlier this year with an ambitious sales target of
Rmb18bn, representing 40% YoY growth, versus peers at only 7%. This led to
our upgrade from Underperform to Outperform (The forgotten developer 17
April 2015). It surprised us again with 1H15 sales of Rmb11bn, representing
156% YoY growth and 61% achievement rate of its full-year target, one of the
highest among peers. We expect the company to surprise the street once
more time later this year to exceed it sales target significantly, due to strong
sales in almost all of its cities: Shanghai, Nanjing, Tianjin and Shenzhen. We
reiterate our Outperform rating on the stock.
We now expect contracted sales of Rmb23bn for 2015, versus our previous
target of Rmb17bn. We also revise our 2016 and 2017 sales to Rmb23bn and
Rmb23bn from Rmb22bn and Rmb24bn, respectively. On August 8, despite
stock market volatilities, a new phase of Nanjing Yangtze Riverbay Town
achieved Rmb2.4bn sales on the first day of launch at a high price of
Rmb35k psm. This shows that market sentiment remains very strong and
YANL continue command both volume and premium for its quality products.
Impact
The company has abundant and enviable saleable resources in Shanghai and
Nanjing to support sales next two years, but a lack of material acquisition last
two years and an improving balance sheet should allow YANL to the land
market. Management has purchased overly expensive land in the past and is
not too stringent in cost control. On the other hand, its quality products
continue to command premium pricing, but only in T1 or top T2 cities. Thus,
further stock catalysts should be land bank replenishment at reasonable cost
in Shanghai, Nanjing, Tianjin and Shenzhen.
At the current exchange rate, the two offshore senior notes incurred
Rmb384m interest expenses per year. Assuming net margin of 8% and
contracted sales of Rmb23bn, every 5% swing in exchange rate can result in
1% impact on net cash earnings. NAV impact should be mainly translational.
Earnings and target price revision
We revise up the selling price of several projects based on their latest launch
price and speed up their sales. Gross margin increases by about one
percentage point for next three years. As a result, 2015F earnings increase by
11% and 2016F earnings increase by 16%. This led to NAV increase by 8% to
S$1.57 and TP increase by 1% to S$1.22.
Price catalyst
12-month price target: S$1.22 based on a DCF methodology.
Catalyst: strong sales in 2H
Action and recommendation
We continue to favour T1/2 cities, which will be most sensitive to credit easing
and continued improvement in market sentiment. The best project to launch
will be Shanghai Yanlord on the Park in Pudong, which will likely surprise the
market in terms of both sales and selling price.
Margins saw stabilising signs, but
growth outlook remains soft; Sell
Reuters Bloomberg Exchange Ticker
YNLG.SI YLLG SP SES YNLG
ADR Ticker ISIN
YLDGY US98482L1044
Forecasts And Ratios
Year End Dec 31 2013A 2014A 2015E 2016E 2017E
Sales (CNYm) 11,280.1 11,733.3 12,794.0 14,025.7 15,306.6
EBITDA(CNYm) 3,247.4 2,666.6 3,018.5 3,247.7 3,593.0
Reported NPAT(CNYm) 1,473.8 1,359.4 635.3 690.5 753.5
DB EPS FD (CNY) 0.50 0.25 0.33 0.35 0.39
PER (x) 13.2 21.8 14.1 13.0 11.9
DPS (net) (CNY) 0.01 0.01 0.01 0.01 0.01
Yield (net) (%) 0.2 0.2 0.3 0.3 0.3
Source: Deutsche Bank estimates, company data
Maintain Sell on weak earnings growth despite margins seeing stabilizing trend
________________________________________________________________________________________________________________
Deutsche Bank AG/Hong Kong
Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should
be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should
consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST
CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 124/04/2015.
Price at 13 Aug 2015 (SGD) 1.00
Price target - 12mth (SGD) 0.80
52-week range (SGD) 1.30 - 0.91
Straits Times Index 3,061
Jason Ching, CFA
Research Analyst
(+852) 2203 6205
jason.ching@db.com
Tony Tsang
Research Analyst
(+852) 2203 6256
tony.tsang@db.com
Price/price relative
0.9
1.05
1.2
1.35
1.5
8/13 2/14 8/14 2/15
Yanlord Land
Straits Times Index (Rebased)
Performance (%) 1m 3m 12m
Absolute -3.8 -16.0 -16.3
Straits Times Index -7.5 -11.3 -7.3
Source: Deutsche Bank
In our view, a key highlight in 1H15 was the 155% YoY increase in contracted
sales achieved, boosted by the strong recovery in upgrading demand following
the various policy relaxations. However, while gross margin saw a marked
recovery in 1H15, it was merely driven by bookings of a few high-margin
projects, and it could be difficult to sustain given land prices are rising at a
faster pace than ASP. Hence, we believe earnings growth is still being capped
by its slow acquisition pace in recent years. Moreover, in our opinion, current
valuation is not attractive, with shares trading at 14x/13x 2015E/16E PER
versus the industry average of 9x/8x. Maintain Sell.
Core profit in 1H15 -74% YoY to Rmb37mn; dragged by lower JV projects
Yanlord reported 1H15 revenue of Rmb3,350mn (+2% YoY), driven mostly by
higher delivery ASP at Rmb25,461/sqm (+9.6% YoY) on bookings of highmargin
projects including Yanlord Yangtze Riverbay Town in Nangjin. GFA
delivery actually declined by 8% YoY to 116,061 sqm. Meanwhile, gross
margin saw a marked recovery of 6.2 percentage points to 37.3%. However,
core net profit was down a sharp 74% YoY to just Rmb37mn, dragged by a
66% YoY decline in contribution from JV and a 76% YoY increase in minority
interests. No interim dividend was declared in 2015 (nil in 2014).
Financial position remains solid; net gearing declined to 39% as of mid-2015
As of mid-2015, total gross debt stood at Rmb19,514mn (down slightly from
Rmb19,806mn at end-2014) and cash on hand was Rmb8,030mn (+21% from
Rmb6,620mn at end-2014). The stronger financial position was boosted by
robust contracted sales in 1H15, with approximately Rmb9bn in cash proceeds
received. Net gearing improved to 39% as of mid-2015 from 45% at end-2014,
being one of the lowest among privately owned peers. Meanwhile, average
funding costs stood at 6.5% for onshore loans and 4.9% for offshore loans.
Target price at a 50% discount to our NAV estimate of S$1.6/share
Our target price is based on a 50% discount to our NAV estimate of
S$1.6/share, implying a 2015E/16E PER of 12x/11x. This discount is higher
than most comparable peers’, such as KWG, with similar scale and strategies,
which we believe is appropriate; it reflects Yanlord’s soft outlook in terms of
earnings growth. Key upside risks: acceleration in asset turnover and strong
market recovery leading to surging ASP.
Nomura:
Maintain Reduce with TP raised to SGD0.91
Poor interim results, but improving fundamentals; valuation remains expensive
Strong sales continue in 2H; likely to beat full-year sales target with abundant saleable resources
Global Markets Research
Rating
Remains
Reduce
Target price
Increased from 0.89
SGD 0.91
Closing price
13 August 2015
SGD 1.00
Potential downside
-9%
Anchor themes
We expect big developers to maintain ~15% y-y property sales growth in 2015F, vs. 5-10% for the broader sector. We expect valuation expansion due to supportive policy/credit relaxation, and improving balance sheets with slower growth targets.
Nomura vs consensus
Our FY15F/16F core EPS estimates are higher than consensus.
Research analysts
China Property
Stephen Cheung, CFA - NIHK
stephen.cheung@nomura.com
+852 2252 1559
Jeffrey Gao, CFA - NIHK
jeffrey.gao@nomura.com
+852 2252 1569
Elly Chen - NIHK
elly.chen@nomura.com
+852 2252 2181
Yanlord achieved CNY12.9bn contracted sales in 7M15 (+168% y-y, implies 72% completion of its CNY18bn full-year sales target). Adding the CNY2.3bn subscription sales from Nanjing Yangtze Riverbay Town – Phase 4 (???????) launched in early August, we believe Yanlord is likely to beat its sales target, considering there are at least CNY20bn of saleable resources for 2H, mostly from Shanghai and Nanjing projects.
More land acquisitions in 2H needed to sustain current strong growth
Yanlord did not acquire any projects in 7M15 although management has budgeted a total of CNY4-5bn for land acquisitions in the existing cities to fuel the company’s growth. Considering Yanlord has only acquired two plots in Nanjing and Suzhou in FY13-14, we believe its current land bank can only support low-teen sales growth in FY16-17F.
Disappointing 1H15 results but gearing and gross margin improved
Yanlord reported disappointing 1H15 results, with revenue up 2% y-y to CNY3.4bn and core profit down 41% y-y to CNY120mn, mainly due to less profit sharing of JV projects and larger share of minority interests. Gross margin improved to 37.3% from 29.2%/31.1% in FY14/1H14 (mainly due to the delivery of the high-margin project in Nanjing, which accounts for 56.9% of 1H15 property sales revenue). Net gearing on attributable equity also reduced to 60% from 69% in end-FY14, with completed inventory declining 8.6%.
Maintain Reduce, but raise TP to SGD0.91; valuation remains expensive
We cut our FY15-17F earnings by 0-7%, but raise TP to SGD0.91 (based on a 50% discount to end-FY15F NAV of SGD1.82), after factoring in the 1H15 results, increase in ASP growth assumption to 10% from 5% for T1 cities, and lower WACC for loosened credit. However, we maintain Reduce rating on Yanlord in view of its vague growth outlook and relatively expensive valuation compared to other small caps (5.7x FY16F P/E vs. peers at 4.2x).
GS:
Yanlord Land (YNLG.SI)
Buy Equity Research
Above expectations on sell-through rate; raise 2015E contract sales 25%
What surprised us
Yanlord’s 2Q15 underlying profit (excluding revaluation gain) of
Rmb171mn is substantially improved from net loss of Rmb79mn in 1Q15
and Rmb15mn in 2Q14. Highlights: 1) The strong yoy profit growth is
partly due to Rmb59mn FX gain recorded during 2Q15 vs. only Rmb5mn in
2Q14; 2) GPM of 35% is also better than 25% in 2Q14, thanks to higher
contribution from Shanghai projects. But on qoq basis, ASP booked during
the period is 7% lower (except Suzhou Lakeview Bay A2 parcel that is 8%
higher), which led to 8pp drop in GPM from the 1Q level; 3) For contracted
sales, not only ASP in general is 10% higher for Shanghai projects but also
the run-rate up to July is already 72% of its full-year target of Rmb18bn vs.
our coverage avg. of 50%, on the back of 70%-80% sell-through rate in 1H;
4) Net gearing lowered to 39% by end-2Q15 from 46% in 1Q15 and mgmt.
expects the ratio will be contained within 50% before the year-end, with no
more than Rmb5bn new land acquisition before the year-end.
What to do with the stock
We reiterate our Buy rating on the company as we believe strong
Shanghai and Nanjing property markets will benefit the company as the
two markets contribute almost 60% of its sales this year. We revise up our
2015E contract sales estimate by 25% to Rmb20bn and correspondingly
raise our 2015E-2017E underlying EPS by 2%-5% and our end-2015E NAV/
12-m NAV-based target price by 6% each to S$2.5/S$1.7 (still at 30% NAV
discount). Key risks: Unexpected strong sales performance/policy easing in
high-end market.
Macquarie:
Yanlord
The best is yet to come
Event
YANL surprised investors earlier this year with an ambitious sales target of
Rmb18bn, representing 40% YoY growth, versus peers at only 7%. This led to
our upgrade from Underperform to Outperform (The forgotten developer 17
April 2015). It surprised us again with 1H15 sales of Rmb11bn, representing
156% YoY growth and 61% achievement rate of its full-year target, one of the
highest among peers. We expect the company to surprise the street once
more time later this year to exceed it sales target significantly, due to strong
sales in almost all of its cities: Shanghai, Nanjing, Tianjin and Shenzhen. We
reiterate our Outperform rating on the stock.
We now expect contracted sales of Rmb23bn for 2015, versus our previous
target of Rmb17bn. We also revise our 2016 and 2017 sales to Rmb23bn and
Rmb23bn from Rmb22bn and Rmb24bn, respectively. On August 8, despite
stock market volatilities, a new phase of Nanjing Yangtze Riverbay Town
achieved Rmb2.4bn sales on the first day of launch at a high price of
Rmb35k psm. This shows that market sentiment remains very strong and
YANL continue command both volume and premium for its quality products.
Impact
The company has abundant and enviable saleable resources in Shanghai and
Nanjing to support sales next two years, but a lack of material acquisition last
two years and an improving balance sheet should allow YANL to the land
market. Management has purchased overly expensive land in the past and is
not too stringent in cost control. On the other hand, its quality products
continue to command premium pricing, but only in T1 or top T2 cities. Thus,
further stock catalysts should be land bank replenishment at reasonable cost
in Shanghai, Nanjing, Tianjin and Shenzhen.
At the current exchange rate, the two offshore senior notes incurred
Rmb384m interest expenses per year. Assuming net margin of 8% and
contracted sales of Rmb23bn, every 5% swing in exchange rate can result in
1% impact on net cash earnings. NAV impact should be mainly translational.
Earnings and target price revision
We revise up the selling price of several projects based on their latest launch
price and speed up their sales. Gross margin increases by about one
percentage point for next three years. As a result, 2015F earnings increase by
11% and 2016F earnings increase by 16%. This led to NAV increase by 8% to
S$1.57 and TP increase by 1% to S$1.22.
Price catalyst
12-month price target: S$1.22 based on a DCF methodology.
Catalyst: strong sales in 2H
Action and recommendation
We continue to favour T1/2 cities, which will be most sensitive to credit easing
and continued improvement in market sentiment. The best project to launch
will be Shanghai Yanlord on the Park in Pudong, which will likely surprise the
market in terms of both sales and selling price.