Yanlord Land Group: Cashed Up

Strong 2Q09. Yanlord's 2Q09 revenue was up 56% yoy to S$616m as its PATMI rose 36% to S$92m. This brought 1H09 PATMI to S$116m, or c.40% of our and consensus FY09 forecasts. The higher revenue was attributed to higher ASPs achieved, +54% yoy to RMB23,500/sm, as 80% of 1H09 revenue was from its high-profit margin Riverside City project in Shanghai.

S$800m of pre-sales yet to be recognised. The company still has S$800m of pre-sales that have yet to be recognised, and this will underpin earnings over the next few quarters going into FY10. Further success at its new Nanjing and Tianjin projects in 3Q09 continues to underpin its strong earnings visibility into FY10.

Cashed up, Ready to gear up. Following its share placement in 2Q09, coupled with a strong operating cashflow of S$528m in 2Q09, its cash position is up to c.S$1.3bn, bringing gearing ratio down to 0.1x. Further proceeds of c.S$369m from its convertible bond issue were received in Jul 09, and places Yanlord in a good position to be opportunistic with land acquisitions.

Building for the future. Yanlord plans to commence construction for up to 8 projects across 5 cities in 2H09, allowing it to diversify its revenue base whilst launching new projects in the future.

Maintain BUY, TP S$2.80. We believe RNAV-accretive acquisitions will be catalyst for Yanlord going forward. Maintain BUY, TP of S$2.80 (from S$2.81) based on 10% discount to RNAV of S$3.11.

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