Yanlord: Deutsche maintains its Sell rating on Yanlord (TP: $0.80) following a weak FY14, in particular the bigger-than-expected deterioration in profitability. House expects Yanlord to register below-industry-average growth ahead on the lack of turnaround signs.
While upgrading demand improved following the relaxation in mortgage restrictions in 4Q14, Yanlord’s ability to grow is capped by its slow acquisition pace in recent years.
Specifically, Yanlord needs to grow its business scale more aggressively to achieve better cost efficiency and a stronger sales pipeline. Moreover, the valuation is not attractive, with the stock trading at 14x/13x 2015/16 PER versus the industry average of 7x.
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