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Why Market is not reacting to the ''good fundamentals'' ?
Buoyed by strong upgrader market
• Strong 10M15 sales momentum continued in Nov; full-year
sales may reach Rmb25-26bn
• Management is looking to raise ASP further for upcoming new
launches
• Seeking to replenish land through JV
• Maintain BUY, TP S$1.35
FY15 sales may hit Rmb25-26bn. Yanlord achieved strong sales of
Rmb22.2bn in 10M15 which was 183% higher y-o-y and exceeded
its sales target. Nov sales should come in strong with Rmb3.4bn sales
locked in from the new launches in Shanghai and Nanjing in the first
week of Nov. As such, FY15 sales will likely hit Rmb25-26bn which is
better than the market expected. Management is still finalising the
sales plan for 2016, we believe its 2016 sales growth will be
supported by later phases of existing projects. Riding on the strong
upgrader market in Shanghai, the brand new project, Yanlord On the
Park, was well received with 82% units sold on the first day. With an
ASP of Rmb86.3k/sm, we expect its GP margins to reach close to
50%. Management is also seeking to raise ASP in its coming launches
which may support margins in FY16/17.
More active in land replenishment. Management is putting more
focus on land replenishment in existing cities and is looking at
projects in Suzhou and Tianjin. Management will keep its high-end
focus and is targeting above 30% GP margins for new projects. It
also plans to improve efficiency by shortening development cycle and
forming JV for new projects. We believe the quality of the new
projects will be key for sales growth beyond 2016.
9M15 results above expectations with better financial strength.
Revenue and core earnings increased by 49%/53% from the low
base last year, locking in 47%/34% of our full-year estimates (vs
36%/32% lock-in last year). GP margin was 30.9% which is in line
with our full-year estimate. Net gearing dropped by 10ppts from Jun-
15 to 22% and cash-on-hand also went up by 52% to Rmb12bn,
giving it a deeper war chest for new land acquisitions.
Maintain BUY. Yanlord is trading at 46% NAV discount, 7.0x 16 PE
and 0.5x P/BV (vs its historical 10.5x PE and 1.2x P/BV). We believe
the valuation is undemanding given the good sales outlook for its
upgrader products. We maintain BUY, TP S$1.35 based on
unchanged 9x FY16 PE.
BUY
Last Traded Price: S$1.05 (STI : 2,959)
Price Target: S$1.35 (29% upside) (Prev S$1.34)
Potential Catalyst: Better-than-expected sales in Nov/Dec
Where we differ: Our earnings estimates for FY16/17 are slightly
equityresearch@dbs.com
Buoyed by strong upgrader market
• Strong 10M15 sales momentum continued in Nov; full-year
sales may reach Rmb25-26bn
• Management is looking to raise ASP further for upcoming new
launches
• Seeking to replenish land through JV
• Maintain BUY, TP S$1.35
FY15 sales may hit Rmb25-26bn. Yanlord achieved strong sales of
Rmb22.2bn in 10M15 which was 183% higher y-o-y and exceeded
its sales target. Nov sales should come in strong with Rmb3.4bn sales
locked in from the new launches in Shanghai and Nanjing in the first
week of Nov. As such, FY15 sales will likely hit Rmb25-26bn which is
better than the market expected. Management is still finalising the
sales plan for 2016, we believe its 2016 sales growth will be
supported by later phases of existing projects. Riding on the strong
upgrader market in Shanghai, the brand new project, Yanlord On the
Park, was well received with 82% units sold on the first day. With an
ASP of Rmb86.3k/sm, we expect its GP margins to reach close to
50%. Management is also seeking to raise ASP in its coming launches
which may support margins in FY16/17.
More active in land replenishment. Management is putting more
focus on land replenishment in existing cities and is looking at
projects in Suzhou and Tianjin. Management will keep its high-end
focus and is targeting above 30% GP margins for new projects. It
also plans to improve efficiency by shortening development cycle and
forming JV for new projects. We believe the quality of the new
projects will be key for sales growth beyond 2016.
9M15 results above expectations with better financial strength.
Revenue and core earnings increased by 49%/53% from the low
base last year, locking in 47%/34% of our full-year estimates (vs
36%/32% lock-in last year). GP margin was 30.9% which is in line
with our full-year estimate. Net gearing dropped by 10ppts from Jun-
15 to 22% and cash-on-hand also went up by 52% to Rmb12bn,
giving it a deeper war chest for new land acquisitions.
Maintain BUY. Yanlord is trading at 46% NAV discount, 7.0x 16 PE
and 0.5x P/BV (vs its historical 10.5x PE and 1.2x P/BV). We believe
the valuation is undemanding given the good sales outlook for its
upgrader products. We maintain BUY, TP S$1.35 based on
unchanged 9x FY16 PE.
BUY
Last Traded Price: S$1.05 (STI : 2,959)
Price Target: S$1.35 (29% upside) (Prev S$1.34)
Potential Catalyst: Better-than-expected sales in Nov/Dec
Where we differ: Our earnings estimates for FY16/17 are slightly
equityresearch@dbs.com
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.