Achieved Rmb6.3bn June 2009 YTD sales. We believe our full-year FY09 cash sales target for Yanlord of Rmb7.5bn is likely to be exceeded given the strong sales achieved up to June YTD. Yanlord has achieved ~84% of our full year target already. We understand that Yanlord’s YTD contracted sales have also generally exceeded market expectations, which range from Rmb6 to 8bn for the full year. Shanghai is still the key driver, contributing ~75% of contracted sales achieved so far. On top of Rmb1.1bn in contracted sales carried forward from FY08, we understand Yanlord should have locked in around Rmb7.4bn in sales to be booked in FY09, representing >95% of our FY09 revenue booking target already. Despite no indication as such, we believe management may lift future completion targets at the interim results to reflect the more positive overall China property market. Market should focus on new launches in Tianjin and Nanjing. Yanlord expects to launch the first phases of Tianjin Riverside Plaza and Nanjing Riverside City during 3Q09. The impending new project launches should help reduce Yanlord’s focus on Shanghai property sales to drive revenue, which currently comprises ~75% of total cash sales (as at June 2009 YTD) to around 60-65% for the full year FY09. We believe the successful launch of these two projects should help Yanlord in striving to expand out of Shanghai as well.
Raised S$603.8m from new shares and CB. Yanlord raised S$228.8m from issuing 110m new shares (~6% of the expanded share base) and S$375m from a new five-year, 5.85% CB maturing in July 2014. The CB conversion price is S$2.62/sh, which if fully exercised should result in ~143m new shares. CB bondholders have the option of ‘putting’ the CB back to Yanlord in 2012. We understand management intends to use the new funds primarily to buy new sites and working capital. It identified several sites for acquisition already. We believe 3–6% earnings dilution and 3% reduction in NAV results from the new shares issued.
12-month price target: S$3.10 based on a PER methodology. We will revisit our full-year cash sales target when Yanlord launches new projects and reports its 2Q09 results – likely to be mid-August. The CBRC’s increased focus on enforcing existing second mortgage rules may slow Yanlord’s sales going forward given high investor demand for its projects. To date, we believe the impact of the changed stance has been limited. We maintain Yanlord as one of our preferred China developers and have an NAV of S$2.9/sh with a target price of S$3.1/sh based on a PER methodology.
Sponsored Links
No comments:
Post a Comment