Ying Li

Ying Li: Dismal 2Q13 revenue down 39% yoy to Rmb 89.4m, as sales of properties halved to Rmb 62.3m, which more than offset the 34% rise in rental income to Rmb 27.1m. Mgt notes fewer properties being available for sale as the bulk of completed projects were sold in prior periods. Net loss of Rmb 17.2m, from net profit of Rmb 39.6m yoy, due to big jump in admin expenses (specifically translation losses amounting to Rmb 11.4m) and finance costs due to change in accounting treatment for interest as the loans for the IFC project are now expensed upon completion of the project, vs a capitalization of interest expense in the past. The group will focus on devt of integrated properties in Chongqing, particularly in the Yuzhong district. Mgt believes it will continue to benefit from the strong fundamentals and rapid urbanization of Chongqing. Ying Li’s projects in the pipeline include: Ying Li International Plaza (expected completion 4Q13), San Ya Wan Phase 2 (expected completion over 2015-16), and the Chongqing Financial Street Project (expected completion 2016-17). Mgt expects the group to remain profitable for whole of FY13. Earnings will likely be back-end loaded, with the Rmb 974m cumulative contracted pre-sales at Yong Li International Plaza likely to be recognized when the project is completed in 4Q13. NAV stands at Rmb 1.46, which translates to valuations at 1.5x P/B, based on the last close of $0.445.