OCBC Investment Research on Thursday (Jun 9) lowered its fair-value estimates for Yanlord Land Group : Z25 +0.93% to S$1.37 from S$1.44, amid worries about the Chinese developer&rsquo s exposure to the Shanghai market.

 

The research team cautioned that Covid-19-related lockdowns in Shanghai could result in construction delays and affect project deliveries to its customers.

 

Its new target implies a potential upside of 28 per cent from Yanlord&rsquo s Thursday trading price of S$1.07 as at 4.33 pm. Yanlord was trading 0.9 per cent or S$0.01 lower at the time.

 

Shanghai was the top contributor to the group&rsquo s contracted pre-sales in May 2022, driving 43.9 per cent of the pre-sales, according to its unaudited key operating figures released on Jun 6. Other key contributing cities are Suzhou (17.5 per cent), Singapore (9.2 per cent), Hangzhou (6.2 per cent), and Haikou (4.5 per cent).

 

Although Yanlord is targeting a rebound in contracted sales in 2022, OCBC Investment Research believes there is a possibility of a miss given the resurgence of Covid-19 in Shanghai.

 

That being said, the research team believes that Yanlord&rsquo s solid balance sheet would allow the group to weather industry headwinds. It maintains its 68.5 billion yuan (S$14.1 billion) forecast for the group&rsquo s full-year contracted sales target, which is more conservative compared with Yanlord&rsquo s 75 billion yuan forecast.

 

The group&rsquo s contracted GFA sold fell 81.8 per cent year on year in April 2022 to 40,803 square metres (sq m) and dropped 62.5 per cent in May 2022 to 47,695 sq m.

 

Contracted pre-sales, together with the group&rsquo s joint ventures and associates, tumbled 80.8 per cent year on year to 1.5 billion yuan in April 2022, while May 2022 contracted pre-sales slumped 70 per cent to 1.1 billion yuan.

 

OCBC Investment Research has also lowered its estimates on FY2022 core profit after tax and minority interests on slower gross floor area (GFA) delivery assumptions.

 

Even though China&rsquo s real estate market remained under stress due to the impact of lockdowns and continued weak consumer sentiment, there have been firmer industry policy easing signals, including key government agencies and city-level policy relaxations, the research team said.

 

&ldquo This should hopefully help spur the sector&rsquo s recovery,&rdquo OCBC Investment Research added.

 

CHINESE property developer Yanlord Land Group : Z25 -0.93% logged 1.1 billion yuan (S$227.2 million) in total contracted pre-sales in May 2022, down 70 per cent from the 3.8 billion yuan it recorded a year ago.

 

The pre-sales were for a contracted gross floor area (GFA) of 47,695 square metres, a 62.5 per cent fall from May 2021, according to the group&rsquo s unaudited key operating figures filed on Monday (Jun 6).

 

The group&rsquo s total contracted pre-sales for the 5 months ended May 31 stood at 18.8 billion yuan for a contracted GFA of 410,194 square metres, a 23.2 per cent decrease in value from the year-ago period.

 

The developer, together with its joint ventures and associates, also recorded 3.1 billion yuan of subscription sales as at May 31, which are expected to be turned into contracted pre-sales in the following months.

 

Shanghai was the top contributing city to the group&rsquo s contracted pre-sales, driving 43.9 per cent of the pre-sales. Other key contributing cities are Suzhou (17.5 per cent), Singapore (9.2 per cent), Hangzhou (6.2 per cent), and Haikou (4.5 per cent).

 

The group&rsquo s contracted pre-sales of other property development projects under its project-management business amounted to about 2.5 billion yuan on contracted GFA of 57,638 square metres for the 5 months ended May 31. This amount is down 62.3 per cent from the 6.5 billion yuan in the year-ago period.

 

ALTHOUGH the lockdown in Shanghai is expected to affect the operations of Yanlord Land Group in the short term, the Singapore-listed, Chinese property developer intends to speed things up when the restrictions ease, it said in response to The Business Times' (BT) queries.

 

Shanghai' s local government on Sunday (Mar 27) announced a 2-stage lockdown over a 9-day period to conduct a mass testing blitz, after Covid-19 cases spiked in the financial hub.

 

A Yanlord spokesperson said: " We believe the lockdown will affect the overall daily lives of the citizens in Shanghai and so as to our operations."

 

Offices and construction sites are required to be closed - from Mar 28 to Apr 1 for Pudong, and from Apr 1 to 5 for Puxi - while the company' s general management teams and sales teams must work from home, she noted. " Property management teams are working on the frontline to support the PCR (polymerase chain reaction) test arrangements."

 

When the city reopens, Yanlord plans to increase the number of working shifts to catch up on the development pace at its projects, just as it had done in 2020, the spokesperson told BT.

 

" Since it normally takes around 2.5 years to 3 years to complete the construction of a development, we are confident that we' ll be able to gradually catch up on the development pace under the short-term lockdown," she added.

 

Yanlord has ongoing developments and operations in multiple Chinese cities. Its Shanghai residential projects include Yanlord Arcadia, which will have 1,171 units across 16 towers, in the Puxi Yangpu district, as well as Poetic Villa, which will have 745 units, in Pudong. In January 2022, the developer sold out all the units it had released during the month for both projects: 226 apartments under the second batch of the launch at Yanlord Arcadia, and 514 at Poetic Villa.

 

The company has also implemented an online platform for some project launches and pre-sales in various cities, such as the projects in Hangzhou and Suzhou, the spokesperson said. Customers will pre-register for launches and submit documents for pre-verification, before they enter the platform at their allocated time slots to select from the available units, register their purchases and pay the deposits online. Formal sale and purchase agreements will then be signed at Yanlord' s sales centres or designated locations, by appointment, to minimise physical contact among customers and salespeople.

 

" Since there have been on-and-off, small-scale Covid-19 outbreaks in various cities in China over the past few months, our local management teams have been monitoring the construction progress closely to adopt the necessary measures to ensure the construction, pre-sales launch and delivery of the properties as scheduled," the spokesperson told BT.

 

She added: " We hope (and expect) the lockdown to be temporary and the new outbreak in Shanghai to be contained quickly under the intensive PCR tests, self-testing, quarantine and other measures being implemented by the Shanghai government."

 

The mainboard-listed shares of Yanlord : Z25 -0.8%   were trading at S$1.25 as at the midday break on Tuesday, unchanged from the previous close.

 

BT has also reached out to other Singapore-listed property firms with projects or assets in Shanghai for comment on the lockdown.

DBS upgrades Yanlord Land to ' buy' on solid long-term outlook
 

DBS Group Research on Wednesday (Mar 2) upgraded its call on Yanlord Land Group Yanlord Land: Z25 +0.84% from " hold" to " buy" , following the property developer' s earnings performance for the financial year ended Dec 31, 2021.

 

In a report, the brokerage increased its Yanlord target price from S$1.25 to S$1.43, based on 4.9 times the forecasted FY2022 price-to-earnings (PE) ratio, which is equivalent to the group' s 5-year average forward PE ratio and represents a 20 per cent upside from its Tuesday close price of S$1.19.

 

Shares of Yanlord were trading at S$1.20, up 0.8 per cent or S$0.01, as at 4.11 pm on Wednesday.

 

DBS credited the increase in valuation to the property developer' s gross margins and pre-sales outlook it observed that gross margins show signs of bottoming in FY2021, and that the pre-sales outlook is likely to stage a solid pickup relative to peers in FY2022.

 

The group' s pre-sales growth outlook, in particular, is at an inflection point, as the company' s liquidity has been largely unaffected by turbulence in the property sector, thanks to its decent cash collection and balance sheet, in the brokerage' s view.

 

DBS added that Yanlord' s expected 75 billion yuan (S$16.14 billion) in pre-sales in FY2022, a 26 per cent increase from its FY2021 figure of 59.59 billion yuan, is likely to place it as one of the fastest-growing developers of 2022, particularly as most of its peers are likely to scale back operations.

 

As for the group' s distribution practice, DBS projects that the property developer' s dividend per share of S$0.068, unchanged for the 5th consecutive year, is likely to continue despite uncertainties in the property sector.

 

This is due to Yanlord' s " disciplined financial management" , said DBS, noting that in addition to its strong balance sheet and liquidity position, the group does not face refinancing pressure as its offshore bonds are not due until at least April 2023, unlike many of its peers.

CHINESE property developer Yanlord Land Group logged 9.81 billion yuan (S$2.07 billion) in total contracted pre-sales from residential and commercial units, as well as car parks in January 2022, up 87.7 per cent from the 5.22 billion yuan it recorded a year ago.

 

The pre-sales were for a contracted gross floor area (GFA) of 170,486 square metres, a 6.7 per cent increase from January 2021, according to the group' s unaudited key operating figures filed on Tuesday (Feb 8).

 

The developer, together with its joint ventures and associates, also recorded 1.83 billion yuan in subscription sales as at Jan 31, which are expected to be turned into contracted pre-sales in the coming months.

 

The group' s contracted pre-sales of other property development projects under its project-management business amounted to about 0.8 billion yuan on contracted GFA of 25,164 square metres. This amount is down 63.7 per cent from the 2.2 billion yuan in the year-ago period.

 

Shanghai was the top contributing city to the group' s contracted pre-sales, driving 78.9 per cent of the pre-sales. The other key contributing cities are Haikou (8 per cent), Singapore (5.7 per cent), Wuxi (1.8 per cent) and Jinan (1.2 per cent).

REAL estate developer Yanlord Land Group Yanlord Land: Z25 0% on Monday (Jan 24) announced that it has sold all 514 apartment units during the inaugural launch of its Poetic Villa project in Shanghai.

 

The group bagged pre-sales totalling some 3.2 billion yuan (S$679.7 million) from a total gross floor area of 46,726 sq m at an average selling price of 67,725 yuan per sq m.

 

This brings Yanlord' s total contracted pre-sales from its recent 2 launches in Shanghai - namely Yanlord Arcadia and Poetic Villa - to about 7.2 billion yuan.

 

Said Yanlord' s chief executive Zhong Sheng Jian: " We are heartened by the strong market support received by Poetic Villa in Shanghai which reflects the continued strong local upgrader demand in Shanghai.

 

" The recent two launches further underscore our continued confidence in the Shanghai real estate market and, capitalising on our track record and brand equity in quality residential development, we will seek to strategically deepen our footprint within the Yangtze River Delta."