Yanlord Land Group - DBS Research 2022-03-02: Onset Of An Upcycle?

• Yanlord (SGX:Z25)’s FY21 results was below expectations on the back of
  1. larger than expected margin compression; and
  2. higher than expected selling expenses.
• FY21 GPM stood at 25.6% after witnessing three consecutive years of sharp margin declines, and is now close to its unbooked presales margin of ~25%. This indicates that most of the company’s earnings pressure arising from margin deterioration should finally end.
• - Read this at SGinvestors.io -

Solid FY22 presales outlook…

• Yanlord’s FY21 presales declined by 24% y-o-y on the back of
  1. - Read this at SGinvestors.io -
  2. the company intentionally saving its bullet in light of a moderating physical market.
• Yanlord should see solid presales recovery this year, made possible by its decent land acquisition pace in 2021 that is equivalent to ~91% of the average land premium spent in FY18-20, and its decent liquidity position (reflected by its bond price of nearest maturity) that allows Yanlord to maintain a relatively good construction pace.
• Yanlord targets to launch ~Rmb120bn of saleable resources (vs ~Rmb85bn in FY21) this year with a full-year presales target of RMB75bn (+26% y-o-y), implying a relatively conservative sell-through rate assumption of 62.5% (vs 70% in FY21). This would place Yanlord in the “outperformer” category under our land acquisition and liquidity analysis and well ahead of most of its small-and mid-cap peers who are still dealing with liquidity stress.

…with good potential to exceed presales targets.

• Read more at SGinvestors.io.

Danielle WANG DBS Group Research | Ken HE DBS Research | Jason LAM DBS Research | https://www.dbs.com/insightsdirect/ 2022-03-02 SGinvestors.io

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