Yanlord - Encouraging 1Q09 Result and YTD Sales Performance

1Q09 net profit up 161% yoy – Yanlord reported its FY09 first quarter result with net profit surging 161% yoy to S$24.3mn, compared to S$9.3mn a year earlier. While turnover increased only 60%yoy, the recognition of the highly profitable Shanghai Yanlord Riverside City Ph 2 & 3 in 1Q09 resulted in the robust bottom line growth. Gross profit margin was up 26.6% pts, from 37.5% in 1Q08 to 64.1% in 1Q09, while the net profit margin rose to 21.3% during the period, versus 8.7% in 1Q08.

High earning visibility on the back of strong contracted sales – Yanlord has achieved around RMB3.9bn (RMB2.4bn in Apr 09) contracted sales in the YTD period to end-Apr 09, already representing around 80% of the RMB5bn sales made in FY08. Aggregating with the RMB1.1bn unrecognized sales brought forward from FY08, Yanlord possessed around RMB5bn property sales that can be recognized in FY09 or afterwards. On our analysis, assuming 80% of the RMB3.9bn contracted sales will be booked in FY09, Yanlord has already locked in about 72% of our estimated property salesrevenue for 2009.

Improved financial position – Thanks to the strong cash inflow from property sales, Yanlord's cash balance increased from S$375.7mn at Dec 08 to S$579.6mn as at 1Q09 while the net gearing ratio was lowered from 64% at end-08 to the latest of 56.3%, which remains comfortable, in our view.

Reiterate Buy (1S) – The strong 1Q09 result and sales performance reaffirm our view that Yanlord should be able to take advantage of the recent recovery in the China property market. Reiterate Buy with TP of S$2.09/sh.

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