Yanlord

Yanlord: 2Q13 results. Revenue halved yoy to Rmb 1.38b, due to the decrease in gfa delivered. Net profit collapsed 99% to just Rmb 6.4m, on the back of the lower revenue, reduced gross margins (31.6% vs 34.9% yoy), lack of large fair value gains recognized in 2Q12, and higher operating and finance costs. For 1H13, Yanlord’s revenue and net profit only made up only 24% and 6% of street FY13e estimates. While disappointing, mgt guides that significant revenue will be recognized in 2H13. This is backed by total pre-contracted sales which grew 20.6% hoh to Rmb 7.7b, and is expected to be progressively recognized as revenue in the subsequent quarters. Operationally, 1H13 ASP was flattish, up 1.9% yoy to Rmb 21,382 /sm, though GFA delivered fell 15.2% yoy to 122,627 sm . The group will continue to launch new projects and new batches of its existing projects in 3Q13, namely: - Yanlord Yangtze Riverbay Town (Phase 3) in Nanjing, - Yanlord Rosemite in Shenzhen, - Yanlord Sunland Gardens (Phase 2) in Shanghai, - Yanlord Marine Centre – Section B in Zhuhai and - Tangshan Nanhu eco-City – Land Parcel A9 As at end 2Q13, Yanlord’s net gearing rose to 43% from 35.7% at FY12. At the last close at $1.325, the stock trades at 0.76x P/B.