Yanlord Land : Making A New Mark

Another Strong Month. It was another good month of sales for Yanlord, as it managed to register about RMB1.4bn of pre-sales for May. While this was down on a m-o-m basis (RMB1.9bn in April), it was still a better result than any month in 1Q09. With this, 5M09 sales revenue has hit RMB5.3bn, which exceeds the RMB5bn achieved for the whole of FY08.

Shifting to Tianjin and Nanjing. With the excellent performance YTD still largely attributed to Yanlord Riverside City in Shanghai, we believe the company may choose to slow on the launch momentum for this project, saving the remainder of the GFA for 2010-11, whereupon higher ASPs could potentially be achieved. Instead, it is likely to shift its focus in 2H09 to its Tianjin and Nanjing projects instead. We remain confident on the company’s execution ability, particularly for Nanjing where it already has brand presence.

Maintain BUY, TP S$2.78. With improved fundamentals for the sector, we have adjusted our ASP assumptions for the Chinese property market, pricing in a 0% price change for 2009 and a 10% price increase for 2010. We continue to like Yanlord, given its strong management and proven execution as well as lowered cashflow risks given recent improvements in balance sheet. It continues to trade at a discount to its HK-listed mid-cap peers. Maintain BUY, TP of S$2.78 based on a 10% discount (from 30% previously) to RNAV of S$3.09 (from S$2.99).

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