Yanlord Land

[winston]

not vested

Yanlord Land Group reported muted 9M14 results with sales delivery skewed to 4Q.

We expect significant sales improvement in Nov/Dec, given more new launches.

FY14 contracted sales is also expected to reach c.Rmb11-13bn (i.e. 13-27% lower y-o-y).

Maintain HOLD with revised TP of S$1.10 (Prev S$ 1.13).

Source: DBS

[winston]

not vested

Yanlord outlook revised to negative by S&P on slower-than-expected sales and revenue recognition; 'BB-' rating affirmed

HONG KONG (Nov 19): Standard & Poor's Ratings Services said today that it had revised its outlook on Yanlord Land Group ( Financial Dashboard) to negative from stable.

At the same time, it jas affirmed its 'BB-' long-term corporate credit rating on the China-based property developer and its 'BB-' long-term issue rating on the company's outstanding senior unsecured notes.

As a result of the outlook revision, it has lowered its long-term Greater China regional scale ratings on Yanlord and the notes to 'cnBB' from 'cnBB+'.

"We revised the outlook because Yanlord's high-end product positioning casts uncertainty over the company's recovery prospects in 2015, and we believe this could weaken its cash flow adequacy and leverage," said Standard & Poor's credit analyst Dennis Lee.

In S&P’s view, the correction in China's property market will continue over the next 12 months, which would drive the demand for mass-market products and not favor Yanlord's product positioning.

In addition, S&P expects the company's sales and revenue recognition to be lower than its projection this year. As a result, its credit protection metrics will weaken and key ratios such as EBITDA interest coverage will drop below S&P’s downgrade trigger of 3x in 2014.

“We expect Yanlord to miss its 2014 contracted sales target of Chinese renminbi (RMB) 16 billion. In our base case, we estimate the company's contracted sales to be about RMB13 billion, which is about 13% lower than its sales in 2013,” said S&P.

Yanlord's contracted sales were RMB6.3 billion in the first three quarters of this year. S&P factored in a sales recovery in the fourth quarter as the company launches more projects during this time. It attributes Yanlord's lower-than-expected sales performance to a weakened market sentiment and tightened credit conditions during the year.

“We expect the company's contracted sales to grow 15% in 2015, to reflect higher construction expenditure for new projects in 2014. However, Yanlord's mid-to-high-end product positioning will remain a challenge for sales under the current market condition where end-users dominate demand,” the ratings agency added.

We lowered our estimate of Yanlord's revenue recognition to about RMB12 billion. The company recognized revenue of RMB4.25 billion in the first three quarters of 2014, down 35% from the same period last year. We note that the company has about RMB11.8 billion of unrecognized sales as of the end of September, of which it expects to recognize about 60% in this year. However, Yanlord's key credit protection metrics could be weaker than what we expect if the company experiences any delivery slippage.

S&P expects Yanlord's profitability will gradually decline in 2014 and 2015. In its view, the company's change in business strategy and product mix to increase sales for end-user demand and adopt a more competitive pricing strategy to increase asset churn would pressure its margin.

In its base-case scenario, S&P expects Yanlord to manage its borrowings with discipline. It estimates that the company's debt will moderately increase to about RMB19.5 billion in 2014 and RMB22 billion in 2015, from RMB18 billion in 2013. However, S&P is forecasting that Yanlord's EBITDA interest coverage will drop to 2.5x-3x in 2014, from 3.2x in 2013, because of lower-than-expected sales and revenue recognition and declining profitability. At the same time, the company's debt-to-EBITDA ratio will also weaken to 5x-5.5x, from 4.7x.

Yanlord's credit metrics could slightly improve in 2015, given our expectation of higher sales. However, we estimate that EBITDA interest coverage will remain less than 3x and the debt-to-EBITDA ratio will stay about 5x. S&P has therefore revised the company's financial risk profile to "aggressive" from "significant”.

Yanlord closed 1.4% lower at $1.085 today.

Source: The Edge

[winston]

not vested

Yanlord Land Group (YLLG SP, Z25)
Technical BUY with 19.9% potential returns
Last price: S$1.08
Target price: S$1.295
Protective stop: S$1.01

BUY with a target price of S$1.295 with stops placed at S$1.01.

The stock is likely to rebound as it could be forming a potential bullish wedge with immediate support at S$1.14.

The 14-day Stochastics indicator could move out of the oversold region after forming a bullish crossover.

Watch to see if the stock can close above S$1.14 first.

Expected timeframe: 2 weeks to 2 months


Source: UOBKH

[tonylim]

As of 27-03 , Major controlling share holder Zhong Shen Jian bought 3.7 million shares in open market since early march 15.

[behappyalways]

Negative operating cashflow (positive operative cashflow for 4Q2014 though) and increased revaluation gain for FY2014. (Not vested)


FY2014 Result
http://infopub.sgx.com/FileOpen/25-02-2 ... eID=336127

[winston]

not vested

Yanlord Land ($0.98, up 2.5 cents) announced that Standard & Poor’s Ratings Services had lowered the company’s corporate credit rating to ‘B+’ from ‘BB-’. The outlook is stable.

S&P also lowered its issue rating on the company’s outstanding senior unsecured notes to ‘B+’ from ‘BB-’.

At the same time, the ratings agency affirmed its ‘cnBB’ long-term Greater China regional scale ratings on the company and its notes.

S&P added that they lowered their rating on Yanlord to reflect their expectations that the company’s leverage and interest coverage are unlikely to materially improve in the next 12 months.

Also, the ratings agency opines that Yanlord’s revenue growth and scale expansion in 2015 will not be sufficient to offset its declining profitability and expected debt increase.

They expect Yanlord’s margins to continue weakening over the next 12 months, and also believe the negative impact from the market downturn in 2014 and increasing land and construction costs have not been fully reflected in Yanlord’s revenue and margins.

The company will gradually recognize the sales contracted in 2014 over the next two years.

S&P is of the view that Yanlord’s profitability in the long run will largely be constrained by its limited land reserves, particularly its depleting land reserves in its core market, Shanghai.

Yanlord’s existing land reserve of 4.3mln square meters is small when compared with peers, and it is not sufficient to support the company’s expansion. They also expect Yanlord to increase debt, given higher construction expenditure and land acquisitions in the next two years.

Source: Lim & Tan

[winston]

not vested

Yanlord Land (YLLG SP)

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

[tonylim]

vested

Yanlord Land Group: Reversed to Buy call !

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.


Source: DBS Group

[tonylim]

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.


Source: GS

[winston]

not vested

Yanlord (Z25.SG) (BUY, TP $1.49) is riding on a buoyant upgrader market.

It has a high portion of saleable resources in Shanghai, Nanjing and Shenzhen, and is likely to benefit from the recent mortgage loosening as its products are mostly targeted at upgraders.

Yanlord targets 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 on strong demand.

At current level, Yanlord is trading at c.40% discount to NAV and 0.6x P/BV.

It has underperformed China property peers by about 27% YTD.

Due to improving outlook for the sector and better-than-expected sales, we believe the company’s share price may play catch up.

source: Barron's Asia