The research team states that improved sentiment due to China&rsquo s newly proposed economic policy measures has already been priced in

DBS Group Research downgraded Yanlord Land : Z25 -11.03% to &ldquo hold&rdquo from &ldquo buy&rdquo following the stock&rsquo s share price rally, as the research house believes positive investor sentiment is now priced in.

 

It nonetheless raised its target price on the stock to S$0.70 versus S$0.67 previously, which values Yanlord at 0.2 times the one-year forward price-to-book ratio. 

 

In a report on Monday (Oct 14), DBS analysts noted that this is equivalent to the average level at which Yanlord traded during the third quarter of 2023 &ndash which they consider to be a &ldquo logical reference point for developers&rdquo .

 

This is in view of China&rsquo s new economic policy measures proposed in an Oct 12 meeting, which include increased debt as well as reduced interest rates on existing mortgages. 

 

Noting that Yanlord&rsquo s stock has rallied more than 60 per cent since the end of September, DBS said it believes near-term catalysts are limited considering the counter&rsquo s low flexibility on adjusting project launches.

 

&ldquo Yanlord&rsquo s conservative investment strategy since the property sector downcycle has allowed it to safeguard its cash-flow performance, but came with a disadvantage in its ability to adjust project launches for it to benefit from the potential recovery in market sentiment,&rdquo said the research house. 

 

The window to unlock value in Yanlord&rsquo s asset-heavy business portfolio may be narrowing, added its analysts, as the potential upside &ldquo may not be as attractive&rdquo after the company&rsquo s recent share price rally subsequent to China&rsquo s shift in policy tone.

 

Yanlord Land recently reversed into the red with a loss of 486 million yuan (S$89.3 million) for the six months ended Jun 30, compared with net profit of 1.1 billion yuan in the year-ago period. 

 

Looking ahead, DBS expects the Chinese real estate developer to record net losses for FY2024/25 due to ongoing pressure on its development earnings.

 

Noting continually weak pre-sales performance in the developer&rsquo s latest set of results for the first half-year, DBS believes the group&rsquo s near-term development revenue and margins will remain pressured amid China&rsquo s ongoing property downcycle.

 

The research team further believes that Yanlord&rsquo s ability to capitalise on a potential recovery in market sentiment may be hindered by maintaining a defensive stance.

 

Shares of Yanlord Land were trading down 6.9 per cent or S$0.05 at S$0.675 as at 11.43 am on Tuesday.

CHINESE property developer Yanlord Land Group sank into the red with a net loss of two billion Chinese yuan (S$378.9 million) in the fiscal second half ended Dec 31, 2023, reversing from a net profit of 155.6 million yuan posted the same period a year ago. 

 

The group attributed this to a rise in fair value loss on investment properties, the write-down of completed properties for sale and properties under development for sale, and an increase in net impairment losses on financial assets.

 

The results translate to a loss per share of 1.054 yuan, against earnings per share of 0.0805 yuan in the year-ago period.

 

Revenue was up 64.6 per cent to 28.6 billion yuan, however, driven by higher average selling price per square metre. The group said it achieved this on the back of the delivery of a higher-priced project, Yanlord Arcadia in Shanghai.

 

Meanwhile, the cost of sales &ndash which mainly included land, construction and capitalised borrowing costs &ndash rose 79.1 per cent to 24.5 billion yuan in the half, from 13.7 billion yuan in the year-ago period.

 

Cost of sales included write-down of completed properties for sale and properties under development for sale of 1.453 billion yuan due to the estimated net realisable value was lower than the development costs for projects mainly in Shenzhen, Wuxi, Zhuhai and Chengdu, it noted.

 

For the full year, the group&rsquo s revenue grew 51.1 per cent to 43.4 billion yuan, from 28.7 billion in FY22, as it noted that the gross floor area delivered to customers in FY23 was higher.

 

The projects delivered in FY23 were mainly Yanlord Arcadia, Yanlord Hub City and Riverbay Century Gardens in Nanjing and Moons Villa in Shanghai. They represent 49.8 per cent, 11.2 per cent, 8.4 per cent, and 6.4 per cent of the group&rsquo s gross revenue from sale of properties in FY23, respectively, the group stated.

 

Meanwhile, the group&rsquo s total debt fell 26.4 per cent to 33.4 billion yuan, with cash and cash equivalents of 13 billion yuan. Its net gearing ratio fell as well, by 7.8 percentage points to 46.7 per cent as at Dec 31, 2023, compared to the last financial year end.

 

Zhong Sheng Jian, Yanlord&rsquo s chairman and chief executive officer, said 2023 was &ldquo exceptionally unusual&rdquo as economic recovery remains a challenge, pointing out that China&rsquo s real estate-related credit crisis, which began in the third quarter of 2021, persisted through the year.

 

The country&rsquo s primary property sales have witnessed decline for two consecutive years now, falling by more than a third compared to their peak in 2021, he added.

 

In the year ahead, the group said, it will continue to launch new projects for pre-sales with its joint ventures and associates, in accordance with their development schedule.

 

The board did not propose a dividend for FY23. The company also did not pay out any dividends in FY22.

 

Yanlord Land Group has issued a profit warning ahead of the release of its results for 2HFY2023 and FY2023 ended December. 

 

In a bourse filing on Jan 8, Yanlord&rsquo s board of directors says it expects a net loss due to &ldquo softer&rdquo demand for real estate in China. 

 

&ldquo Against the backdrop of the challenges posed by the real estate market environment in the People&rsquo s Republic of China (PRC), the probable net loss is primarily attributable to the provision for impairment losses on the group&rsquo s certain development properties in the PRC as a result of the lower selling prices due to softer general market demand, as well as potential fair value losses on the group&rsquo s certain investment properties in the PRC,&rdquo reads the statement.

 

Yanlord will release its results by Feb 29. 

 

CHINESE property developer Yanlord Land Group : Z25 -2.63% logged 32.4 billion yuan (S$6.1 billion) in total contracted pre-sales in the financial year ended December 2023. The figure is down 52.5 per cent from the 68.1 billion yuan it recorded a year ago.

 

Based on the group&rsquo s unaudited key operating figures filed on Friday (Jan 5), the pre-sales were for a contracted gross floor area (GFA) of about 1.2 million square metres (sq m), a 13.7 per cent drop from the previous year. 

 

The developer, together with its joint ventures and associates, also recorded around two billion yuan of subscription sales as at Dec 31, 2023. This is expected to turn into property contracted pre-sales in the following months, said Yanlord. 

 

Suzhou was the top contributing city to the group&rsquo s contracted pre-sales, driving 13.9 per cent of it. Other key contributing cities were Shenzhen (12 per cent), Jinan (10.8 per cent), Tianjin (10.3 per cent), and Nanjing (10.1 per cent). 

 

Pre-sales from residential and commercial units, as well as car parks, in these five cities raked in 18.4 billion yuan, accounting for around 57.1 per cent of the group and its joint ventures and associates&rsquo total contracted pre-sales. 

 

Other property development projects under Yanlord&rsquo s project management business made about 1.6 billion yuan on contracted GFA of 73,971 sq m in FY2023. 

 

Yanlord Land Group Z25 0.96% has reported total contracted pre-sales of RMB1.09 billion ($205.5 million) for the month of November. The amount, which came from the group&rsquo s residential and commercial units as well as car parks, was 71.5% lower than November 2022&rsquo s RMB3.82 billion.

 

This month&rsquo s total contracted pre-sales stood over a gross floor area (GFA) of 38,398 sqm, which was a 66.0% decrease from November 2022&rsquo s GFA.

 

For the eleven months ended Nov 30, the group&rsquo s total contracted pre-sales was approximately RMB29.23 billion on a total contracted GFA of 1,143,086 sqm, a decrease of 52.8% and 8.0%, respectively, compared to the corresponding period of 2022. 

 

For the same period, contracted pre-sales of other property development projects under the group&rsquo s project management business stood at RMB1.359 billion on a total contracted GFA of 64,349 sqm.

 

The key contributors to the group&rsquo s total contracted pre-sales were the Chinese cities of Suzhou, Jinan, Shenzhen, Nanjing and Tianjin, in that order.

 

CHINESE property developer Yanlord Land Group recorded 26.1 billion yuan (S$4.8 billion) in total contracted presales from residential units, commercial units and car parks for the first nine months of the year.

 

The presales were for a contracted gross floor area of about 1.02 million square metres (sq m) and were 51.7 per cent lower than presales for the year ago period, the group said in a bourse filing on Tuesday (Oct 10).

 

Presales include those by the group, its joint ventures and associates. 

 

Yanlord Land&rsquo s total contracted presales for September was down by 83.2 per cent to 1.6 billion yuan for a contracted gross floor area of 67,835 sq m. 

 

In its unaudited key operating figures for the nine months ended Sep 30, Yanlord Land said it has approximately 2.6 billion yuan of subscription sales, which are expected to be turned into contracted presales in the coming months.

 

Five cities in China &ndash Nanjing, Suzhou, Shenzhen, Jinan and Tianjin &ndash accounted for about 59.5 per cent of total contracted presales for the first nine months of the year. 

 

For the first six months of 2023, Yanlord Land posted a net profit of approximately one billion yuan for the half year ended June 2023, down 20 per cent from the 1.4 billion yuan a year ago.

 

Property prices in China have slumped amid worsening business sentiment as property giants Country Garden face potential debt default and Evergrande Group aims to restructure US$22.7 billion of offshore debt.