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Author: kimeng   |   Latest post: Wed, 20 Nov 2019, 5:50 PM

 

Yanlord Land Group: Dip in 2Q19 Earnings Within Expectations

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Yanlord Land Group Limited (Yanlord) reported 2Q19 revenue of RMB4,089.0m, which was a decline of 57.7% YoY due to a 65.7% dip in GFA delivered, but partially offset by a higher ASP of RMB28,496 psm (+11.1%).

Gross profit fell by a smaller magnitude of 46.8% to RMB2,038.6m as a result of a higher gross profit margin of 49.9% (+10.2 ppt). PATMI slipped 41.5% YoY to RMB865.3m, as the lower gross profit and higher expenses and finance costs was partially offset by a boost from a fair value gain of RMB791.0m on investment properties. 2Q19 PATMI formed 28.8% of our FY19 forecast.

For 1H19, revenue and PATMI declined by 54.2% and 47.8% to RMB7,711.9m and RMB1,188.4m, respectively. Results were within our expectations. Yanlord highlighted that a larger portion of its pre-sales are expected to be recognised in 2H19, which implies a backend loaded year.

On a positive note, Yanlord’s net gearing ratio came down sharply from 103.9% (as at end-1Q19) to 65.2%. This was driven by healthy pre-sales and cash collection in 2Q19.

Yanlord’s accumulated contracted pre-sales and subscription sales (including JVs and associates) had jumped 77.9% YoY to RMB20.7b in 1H19. We will provide more details after speaking with management.

We currently have a BUY rating and S$1.68 fair value estimate..

Source: OCBC Research - 14 Aug 2019

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