Yanlord

Yanlord: 1Q11 results likely a non-event, despite revenue +252% yoy to Rmb 2.9b and net profit +197% to Rmb 268m.
Strong yoy growth mainly driven by higher GFA delivery of 185k sm, +484% yoy. But this was offset by lower ASP of Rmb 15k psm, -39% yoy, due to lower contribution from Shanghai projects…

Gross margins declined to 32% from 57.2%, mainly due to lower contribution from its very high margin project Shanghai Yanlord Riverside City. The project, which boasts margins as high as 80%, accounted for only 3.5% of total revenue in 1Q11, a decline from 48% contribution in 1Q10. Going fwd, margins are expected to stay <40% due to delivery of more projects in secondary cities and also higher cost of land in Shanghai…

Macquarie maintains Neutral and $1.42 TP, believes co’s GPM is on a downtrend, and its high end exposure is a risk.
JPM retains O/w, with $2.20 TP, says contract sales has improved, but still at a slow pace. Sees possible near-term sector headwinds, but believes these are largely in the price.