Yanlord

Yanlord: Merrill Lynch reiterate Underperform call and lowers TP to $0.90. House do not foresee any fundamental improvement over the next 12 mths given its high-end segment exposure as well as its focus on Tier-1 and leading Tier-2 cities. While believe that fine tuning on ppty policy is possible, higher tier cities are not likely to be included considering prices there went up tremendously in 2009/10.

Cite Co’s cash flow not as good as perceived, with Yanlord as one of the five companies that will have a tighter cash flow in 2012, per house latest stress test report. While this doesn’t mean Yanlord will run into liquidity problems, think it does put the firm in a less defensive position in this downturn.

Add that Yanlord’s valuation looks rich using a few benchmarks (8.8x FY12 P/E, 0.7x P/BV, and 58% NAV discount), while a few HK-listed midcap names, including R&F, Shimao, and Agile, are trading at more attractive valuations.