Yanlord Land Group Ltd - Positives priced in

Yanlord achieved Rmb960m sales in June, down 31.4% from a high base in May. But 1H09 sales stayed encouraging at Rmb6.2bn, double the sales in 1H08. Cash flow has improved after a recent share placement and convertible bond offering. Higher-than-expected ASPs and sales in 1H09 prompt us to upgrade our core earnings and RNAV estimates, but our fully-diluted EPS estimates have been cut to reflect dilution. Sales are expected to slow down in 2H09 as the bulk of its available stock had been sold in 1H. Current valuations also appear unappealing. Maintain NEUTRAL despite a higher target price of S$2.19 (from S$2.06, still pegged at a 20% discount to RNAV) following adjustments to our RNAV.

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