Yanlord Land Group: Adding To The Bank

An Eye On Acquisitions. We hosted Yanlord Land at our 'Pulse of Asia' conference in Singapore and highlight some key takeaways. Chief among these would be the expected use of the funds from the recent share placement exercise and convertible bond offering. The bulk of funds raised will be used to replenish its landbank, with the focus on Shanghai and Chengdu. We expect that news of land acquisition could be forthcoming within the next few months. Given its development track record, particularly in Shanghai, successful acquisition would very likely be value accretive for the Group, and provide a re-rating catalyst.

From Yangtze to Bohai. Furthermore, we expect that June sales will continue to be strong, with at least RMB500m expected. This would bring 1H09 pre-sales to at least RMB5.8bn. Looking ahead into 2H09, we expect Yanlord to switch its marketing efforts away from Shanghai to its new projects in Nanjing and Tianjin. We expect ASPs of around RMB15,000 psm and RMB16,000 psm respectively. Its maiden foray into Tianjin and the Bohai Rim should see strong interest.

Maintain BUY, TP S$2.81. We remain positive on developers like Yanlord with exposure to luxury inner-city projects as well as presence in Shanghai, where we foresee supply scarcity. We have raised our ASP assumptions slightly for its Shanghai inner-city projects, for a revised RNAV of S$3.13 (prev S$3.02). We maintain our 10% discount for a TP of S$2.81 (prev S$2.72). Reiterate BUY.

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