Results Right In Line. Yanlord reported FY08 net profit of S$226m (+2% yoy) on revenue of S$1,007m (-18% yoy) due mainly to improved margins/ASPs and a fair value gain on an investment property that obtained completion in FY08 and was revalued up from cost. Stripping out the S$81m revaluation gain, core earnings would have been S$144m, in line with our estimate of S$141m ? which was c.35% below consensus. Dividend of 1.23 ct/shr was declared (FY07: 1.21 ct/shr) and company looks to maintain its 10% payout ratio.
Less GFA Delivered, But Higher ASPs. GFA delivered fell 41% yoy to 286,000 sqm, but this was offset by higher ASPs achieved ? a 33% increase to RMB17,300 psm on average. However, c.55% of revenue was from its Shanghai projects; and the challenge going ahead is to bring its brand equity to other cities. This it plans to do in 2009, with two high-end projects in Tianjin and Nanjing to be launched in 1H09 and 2H09 respectively.
Maintain HOLD, TP S$0.96. Though recent stimulus measures seem to have returned some stability to the market, supply overhang is still a concern. We expect the high-end market to be weak in 2009, and have reduced our GFA delivery assumptions for FY09. We maintain our 25-30% price cut assumptions for first-tier cities. Our RNAV is adjusted to S$2.40 (from S$2.36). We maintain our 60% discount, with TP of S$0.96 (prev S$0.94). Maintain HOLD due to a lack of substantial catalysts for the high-end market at this point.
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