singapore stock market news, singapore stock market ,singapore shares
SEMBCORP MARINE by cl
SEMBCORP MARINE, dmg maintain BUY with target price $3.04($3.02)
SGX, kim eng upgrade to BUY from HOLD with target price $8.30($5.30) EPS
for FY 09/10 revised to UNCHANGED and 21%
SGX, mac maintain OUTPERFORM with target price $8.80($7.37) EPS for FY09/10
raised by 2% and 12%
YANG ZI JIANG, mac maintain UNDERPERFORM with target price $0.38($0.28) EPS
for FY 09/10 raised by 23% and UNCHANGED
YANLORD by cl
YANLORD by daiwa
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COSCO, dmg upgrade to NEUTRAL from SELL with target price $1.14($0.92)
-Key catalyst Clinch of offshore conversion projects. Cosco has recently
clinched Modec’s offshore conversion project, affirming its capability to
undertake these projects. We note that Modec has identified other contract
work opportunities for Petrobras, including a Floating Storage
Regasification Unit, a Tension Leg Platform and FPSO for Petrobras’ Papa
Terra oil field, in its website. We think any contract win would put Cosco
in good standing to explore further working opportunities. Separately, we
note that Cosco is finalising two other FPSO conversion projects at a
potential value of US$150m.
-Maiden newbuild expected for delivery in 3Q09. According to Sevan’s recent
annual report, Sevan Driller 1 is currently 90% completed at Cosco, with
expected delivery in 3Q09. The successful completion and delivery of this
maiden cylindrical drilling rig would enhance Cosco’s track record.
Furthermore, we understand Cosco has been awarded the contract to build
Sevan’s second cylindrical drilling rig.
-Still, we do not deny that the near-term outlook is bleak, with more order
cancellations expected… So far, Cosco announced the cancellation of 5 bulk
carrier orders and deferment of 26 others (excluding the orders from parent
Cosco Group). While we expect some cancellations from parent, Cosco Group,
as HK-listed China Cosco Holdings has indicated plans to cancel or defer
bulk carriers in its recent results’ guidance, we believe the market has
already factored in these negative announcements.
-We are reverting our valuations to mid-cycle P/E multiples from trough P/B
valuations. Cosco is currently trading at a P/E of 16.3x/13.2x on FY09F/10F
EPS, a premium to the Chinese and Singapore peers. In view of the higher
investor risk appetite and the potential offshore order flow, we peg a
valuation parameter of 12x P/E on FY10F earnings for its shipbuilding/
conversion and offshore and NAV of the 12 bulk carriers under its
shipchartering business arm, deriving a target price of S$1.14 (from S$0.92
previously). We upgrade Cosco from SELL to NEUTRAL, given the balanced
risk-reward and fair valuations.
EZRA, dbs maintain BUY with target price $1.53($1.45)
-Ezra to undertake private placement of shares. Ezra announced this
morning that it would be undertaking an equity issue via a private
placement of up to 78m new shares priced at S$1.185 each, raising total
gross proceeds of up to S$92.4m. The issue price of each new share
represents a discount of c. 8.8% to yesterday’s closing price of S$1.30 (or
a 9.8% discount to yesterday’s volume weighted average price of S$1.314).
This issue represents around 13.3% of Ezra’s outstanding share capital
(inclusive of shares held as treasury shares).
-According to the group, the proceeds will be used as pre-emptive capital
for the following purposes (percentages indicate estimated proportions) 1)
Paying down debt (10 - 50%); 2) Funding capex (10 - 70%) 3) Funding
possible M&As (5 - 50%) 4) General working capital (10 - 30%)
-While the timing of this exercise has come as a surprise, nevertheless, we
believe the success of this equity issue will boost balance sheet as well
as enable the group to undertake opportunistic acquisitions, which we
believe could be value enhancing for shareholders.
-Impact on net gearing. As of 2Q09, Ezra had cash balances of US$83.2m and
net debt of US$176.7m. Net gearing stood at 0.47x. Upon the successful
exercise of this issue, we estimate this will lower Ezra’s 2Q09 net gearing
to around 0.22x, and project this to step down to 0.20x and 0.23x by end
FY09 and FY10 respectively.
-Maintain BUY with TP adjusted to S$1.53. Our fair value has been adjusted
upwards slightly to S$1.53, after we account for this equity issue, and
roll forward our valuation to 10x and 6x blended recurring FY09/10 PE (prev
FY09 PE, FYE Aug) for Ezra’s core businesses and EOC respectively, and
market price of its stake in Ezion Holdings. Maintain BUY on Ezra.
EZRA, jpm maintain NEUTRAL
- 65 million shares at $1.18-$1.22 According to a Reuters article, Ezra is
seeking to raise up to US$53 million through the placement of 65 million
new shares at S$1.18-S$1.22 per share. This represents a 6.2%- 9.2%
discount to the last close price of S$1.30 (May 20, 2009). The deal has an
upsize option of up to 19 million shares, which could raise an additional
US$16 million.
- Potential dilutive impact of 10%-12% The deal would have a potential
dilutive impact on FY09E EPS by about 10%-12% depending on whether the
upsize option is exercised.
- Alleviating the working capital strain While the news highlighted that
the cash will be used for capex, debt repayment and possible M&A, we
believe that it will primarily be used to fund working capital needs for
now as we noted that net cash generated from operating activities was a
mere US$259,000 with cash conversion cycle increasing from 100 to 130 days
as of 1H FY09. Some of the cash could also be deployed to fund its ongoing
capex of US$350 million (2 multi-function support vessels & 1 AHTS for
US$275 million and US$75 million for Vietnam yard expansion) but we believe
this could be minimal as management has highlighted before that it has
secured the required debt financing for the capex.
- Gearing Gearing would potentially come down from 47.1% to between 28.7
and 33.0% post the fundraising.
- Valuation impact from the 2 MFSVs We have not factored in the
contribution from the 2 incoming multi-function support vessels to our
valuations, which are slated for delivery from 2H 2009 and 1H 2010. With an
improved cash position post the placement, Ezra should have no difficulty
in taking delivery of these 2 vessels, which could potentially add another
20% to our SOTP.
FIRST SHIP LEASE TRUST by cl
-For the next five years most of the shipping industry will be working for
the banks not the equity holders.
-In the long term Evergreen Marine should emerge as the big beneficiary of
the crisis in the container industry. (could be James Kan talking!)
Singapore will become the shipping capital of the future if it isn’t
already close to being there. Goodbye London.
-The Company FSL still has a conservative looking business model in a
shipping context. Overall lease contracts look good, cashflows solid,
counterparties solvent and there have been no approaches for lease
re-negotiations. For FSL the key issue over the next few quarters will be
how to slice the cashflow between the debt and equity holders given the
potential for covenant breaches on lower ship values.
-Refinancing risk otherwise doesn’t kick in until 2012.
-Distribution has already been cut to 75% as they take a more conservative
approach. Once the negotiation with the banks takes place expect more.
-BUT current yield is 33%!! A cut to 50% distribution still is equivalent
to 22%……
-IPOing at 500mn mkt cap they are now at 127mn. This makes new ship
acquisitions impossible as even though ship values are very attractive they
would be massively dilutive at the current equity value.
-The business trust sector should consolidate but with only 3 comparables
in Singapore that may be tough. It seems to me corporate action of some
form is likely eventually.
FRASERS CENTRE POINT, uob maintain BUY with target price $1.44
-Suburban malls are more resilient. We conducted a site visit on 19 May 09
to Northpoint Shopping Centre located in Yishun, which was a lot more
crowded compared to our last visit in Jan 09 (see our last update Anchor
tenants have reopened at Northpoint dated 29 Jan 09). This reaffirms our
view that suburban malls in the Housing and Development Board (HDB)
heartlands are less affected by the economic turmoil. According to Frasers
Centrepoint Trust (FCT), shopper traffic increased 7.9% yoy at Causeway
Point, 7.2% at Northpoint and 8.6% at Anchorpoint in 2QFY09.
-Retail sales index rebounded in Mar 09. Retail sales index for
departmental stores and supermarkets recovered to +3.8% and +6.8% yoy
respectively in Mar 09 after briefly entering negative territory in Feb 09.
Anecdotal evidence suggests domestic consumption will continue to improve,
going into 2Q09. A more buoyant retail scene will ensure renewal rates for
leases expiring stay firm.
-Earnings recovery driven by Northpoint. Net property income from
Northpoint rebounded 31.3% qoq to S$4.2m in 2QFY09 with 80% of the
enhancement works already completed. Occupancy rate at Northpoint recovered
from 52.2% as at Dec 08 to 72.1% as at Mar 09. Management estimated that
the asset enhancement initiative, which will be fully completed by Jun 09,
will increase Northpoint’s average rent by 20% and net property income by
30%.
-FCT focuses on suburban malls located next to the Mass Rapid Transit (MRT)
stations, which cater to non-discretionary spending by captive populations
in HDB heartlands. Our target price of S$1.44 is based on the Dividend
Discount Model (required rate of return 7.7%, terminal growth 2.5%). FCT
provides 2009 distribution yield of 8.8% and trades at 30.9% discount to
NAV/share of S$1.23.
KEPPEL CORP, dmg upgrade to BUY with target price $7.96($5.24)
-In the running for new FPS orders. Trade publication, Upstream, recently
reported that Keppel O&M has jointly collaborated with J Ray McDermott to
tender for a spar construction contract for work in Kodiak Field,
Mississippi, Gulf of Mexico. Separately, we read that Keppel has also
expressed keen interest for eight of Petrobras’ hull construction
contracts. While we are unable to verify the status of the projects at the
point of writing, we remain confident that these bids would translate to
new orders momentum, given Keppel’s quality deliverables and strong track
record. As such, we raise our new order estimates from S$2.2b/S$2.6b to
S$3.0b/S$3.5b for FY09F/10F. Thus, our FY10F net profit is raised by 5%.
-O&M customers’ concerns somewhat alleviated, except for Skeie Drilling.
Skeie Drilling (of which Keppel owns 5%) is currently constructing three
jackup rigs at Keppel FELS, and the delivery deadlines have been extended
by 4-6 months with the last jack-up due in Jun 2011. According to Skeie’s
17 Apr’s press release, Skeie requires a total capex and funding
requirement of US$1.6b and would be seeking bondholder meetings to conclude
this new capital raising by late May 09. While we remain cautious on
customers’ nonpayment in the near term, we expect fewer such events to
happen as credit conditions improve, going forward.
-Valuations below normalised levels, even after the recent share price
rebound. Keppel O&M’s trading valuations at an implied 10.1x FY09F P/E and
12.3x FY10F P/E, are still lower than normalised levels, even after the
recent share rebound. Given the more optimistic outlook and new order flow
momentum, we have changed our valuation framework to P/E from P/B, applying
16x P/E on FY10F EPS for Keppel O&M. We have also updated DMG’s target
prices and share prices of the listed entities, deriving a new target price
of S$7.96 (from S$5.24 previously), representing an upside of 17.4%.
Upgrade from NEUTRAL to BUY.
KEPPEL LAND, ocbc downgrade to SELL from BUY with target price $1.61
-Still early to call for a turnaround, in our view. While the property
transaction data for April showed a gradual return of buyers towards the
high-end property segment, we reckon that a majority of this demand was
directed towards projects with small size units which fetched low absolute
prices and also projects in which developers had re-launched at lower
prices. We believe that the turnaround for high-end property developers
such as KepLand has yet to come as buying sentiment still remains fragile
in the high-end segment and buyers remain sensitive to pricing, which will
limit the ability of developers to raise selling prices.
-Extension of payment served as reminder of lingering default risk. Earlier
in May, KepLand said it had extended the payment due date to an enbloc
buyer of 51 units in The Suites at Central by 6 months, while receiving a
monthly payment of S$0.5m during the extension period. While we reckon that
buyer is committed to complete the purchase, we do see significant risk,
given the large quantum of the outstanding payment (estimated ~S$94m).
Despite the recent improvement in sentiment, this incident served as a
reminder of the potential default risk that developers are likely to
continue to face. If the buyer fails to complete the transaction, KepLand
will be able to keep the 20% downpayment, which would effectively lower the
breakeven price of the units to S$1,445 psf. However, given that the last
transacted for the project was around S$1,500 psf in April, the margin of
safety is little and write-down may be needed for the returned units if
prices continue to fall over the next 6 months. Nevertheless, impact on our
valuation will not be significant as the estimated total attributable
profit from this project is ~2.6% of our RNAV estimate.
-Downgrading to SELL. Since we upgraded our recommendation on KepLand to
BUY on 27th April, KepLand’s share price had risen by 40.7%. Although the
recent Rights issue had removed funding overhang and boosted KepLand’s
balance sheet, we believe that the recent optimism had been overdone, given
our view that a turnaround for high-end developers and the recovery of the
office market will still take some time. We prefer to stay conservative
with our fundamental view and maintain our 50% discount to development
profits and property valuations. As such, we are keeping our fair value
unchanged at S$1.61, and downgrading KepLand from BUY to SELL.
LI HENG, daiwa downgrade to HOLD with target price $0.2($0.22)
-Barely profitable. Li Heng reported 1Q09 revenue of RMB472.5m, down 41.2%
YoY from 803.7m. Gross margins also fell 21.5ppt from 34.4% in 1Q08 to
12.9% in 1Q09. As a result, NPAT slumped 95.5% from RMB224.1m to RMB10.2m
over the year.
-Main causes of the poor NPAT performance. We attribute Li Heng’s huge fall
in 1Q09 profitability YoY to the following factors (i) Fall in ASPs
(RMB16,420/t in 1Q09 versus RMB34,370/t in 1Q08). (ii) Fall in gross
margins (12.9% in 1Q09 versus 34.4% in 1Q08). (iii) Increase in income tax
rate (43.9% in 1Q09 versus 13.1% in 1Q08).
-Updates from management. The PA chip plant as part of Li Heng’s Phase III
expansion plans has almost been completely installed, and trial testing
should commence in Jul or Aug 09. The extra 70,000 tonnes of nylon capacity
should come on stream by end 1Q10 (trial testing Jan or Feb 10), and the
respective structures have already begun construction. This new capacity
will be used for finer yarns that ultimately go towards making sweaters and
lingerie. Hence, a lower tonnage of production should pan out, somewhere
between 40,000 – 50,000 tonnes per year. Order visibility stands at two
months, but customers are noticing a sharp fall in orders after July 09,
especially for export segments.
-Changes to our estimates. We have further lowered our gross margin
assumptions from 15.1% and 16.7% previously to 13.5% and 15.1% for FY09 and
FY10 respectively. ASPs have also been slashed from RMB19,350/t and
RMB21,340/t previously to RMB16,590/t and RMB18,480/t for FY09 and FY10
respectively. Our production volume assumptions have remained unchanged as
Li Heng is still able to maintain a 90% rate of utilisation. As a result,
EPS has been reduced 17.9% to 2.8S￠ for FY09 and 7.9% to 4.4S￠ for FY10.
-Valuation. We have updated our DCF model and lowered our required return
on the market from 20.0% previously to 15.0% to account for an improvement
in market sentiment, liquidity and risk aversion. This gives us a new
target price of S$0.20 (S$0.22 previously) on the back of lower forecasted
earnings. Given the limited upside, we are downgrading the stock to a HOLD.
PETRA FOOD, dbs downgrade to FULLY VALUED from HOLD with target price $0.53
($0.35)
-1Q09 results within expectations. Net profit surged by 49% to US$4.3m,
largely on absence of a negative impact of hedge re-designation (US$2.05m)
seen in 1Q08. Revenue grew by 12.9% y-o-y to US$281.8m due to contribution
from both its Cocoa Ingredients (US$217.8m, +14.3% yoy) and Branded
Consumer (US$64.0m, +8.5% yoy).
-Core operations countering European losses. Gross margins for BC division
dipped by 2ppt to 28.9%. This is largely due to larger contribution from
3rd party brands on the back of new agency lines secured. Regional
countries account for 31.7% of revenue, up from 26.7% in 1Q08 as a result
of a 28.8% growth. CI (Asia & Latin America) showed a good performance with
EBITDA, surging 50% to US$7.8m. EBITDA/mt (6-mth moving average) improved
to US$189/mt, thanks to higher product pricing and ability to pass on price
increases. However, its European operations registered a larger EBITDA loss
of US$2.4m (from US$1.97m) as the facility was producing generic grade
cocoa ingredients and semi-finished products.
-Downgrade to FV. TP raised to $0.53, as we raised our valuation to 12x
FY09F PER (from 8x previously), in line with peers in view of normalization
of equity risk premium. But, the stock has doubled since Mar along with the
market optimism for a 2H recovery. Valuation now looks rich at c.15x on
current year’s earnings, in our view. As such, we downgrade to FV.
SEMBCORP MARINE by cl
-Tan Cheng Tat, CFO and Judy Han, Corp Comm of SembCorp Marine (SMM SP)
presented to a 90% full room of investors. Key points of presentation &
concerns raised below
-Order book remains strong with contracts secured YTD at S$608m bringing
total order book to S$8.7b. Currently involved in a few tendering process
and should expect newsflow soon. Ship conversion and offshore activities
are expected to be strong going forward. For ship repair they do have
stable base load from regular customers and will focus on niche areas like
LNG gas tankers, containerships, rig repairs and FPSO upgrades.
-On Petrorig I - SMM has technically delivered to the owner on 8th Apr but
did not receive payment within 2 weeks and hence a termination notice was
issued. SMM owns the rig and has the right to sell. The rig was
subsequently advertised by a 3rd party and the closing date is 20th May and
there were many big names amongst the interested parties. The court hearing
in the US has been postponed to this Friday but there is an affiliated 3rd
party offer to pay the balance and take up the rig. So far SMM has not made
a decision yet and will want to wait till after the court hearing. If the
rig is sold, SMM will at least keep the portion that belongs to them
(S$210-230m) after taking into account all costs incurred instead of the
entire proceeds. Work on Petrorig II and III are done and could down the
same route as I.
-On Cosco - said they had a bad spell and going through the learning curve.
Cosco had delivered 1 vessel to an Indian owner and may deliver a few more
vessels this year. SMM does not view order cancellations as necessarily
negative as Cosco will get to keep the 20% deposit which is better than if
they had to pay penalty for late deliveries.
-Looking at M&A opportunities to plug the value chain gap.
SEMBCORP MARINE, dmg maintain BUY with target price $3.04($3.02)
-PetroRig I – twist in outcome, but SCM maintains confident to sell rig.
SCM is currently in the midst of selling PetroRig I, though there appears
to be some difficulties as SCM’s wholly owned subsidiary, Jurong Shipyard
(JSPL) received an injunction to proceed with the sale. Nonetheless, we
believe JSPL is able to recover the final payment through the sale of
PetroRig I, though this may take a while longer than expected.
-Better-than-expected margins. SCM turned in better-than-expected operating
profit margin in 1Q09 for the third consecutive quarter. We opine that this
ascertains SCM’s capability and efficiency for rigbuilding as the first
quarter is a seasonally slow quarter for higher-margin shiprepair and thus,
the revenue profile for the first quarter is skewed towards rigbuilding. We
expect subsequent quarters to record better profit margins than 1Q09.
-Increasing ROE track record. SCM’s ROE has consistently trended up from
FY02. We believe this demonstrates its commitment towards delivering
returns.
-SCM is currently trading at a P/E of 11.0x/11.7x on FY09F/FY10F EPS. Given
the slightly clearer outlook ahead, SCM’s trading valuation looks
inexpensive, compared to its mid cycle historical P/E band of 16x, backed
by its record backlog orders and quality deliverables. We derive our target
price of S$3.04 (from S$3.02 previously) based on sum-of-the-parts
valuation. We value SCM based on P/E of 16x FY10F earnings for its niche
rig building/repair business sector. SCM’s 30% stake in Cosco Shipyard
Group (CSG). 4.98% equity interest of Cosco Corp’s share at Cosco’s Target
Price of S$1.14. (based on our revised fair value estimate for Cosco).
Applying a 15% discount, considering the near term risk from its customer.
SGX, kim eng upgrade to BUY from HOLD with target price $8.30($5.30) EPS
for FY 09/10 revised to UNCHANGED and 21%
-Due for a sharp turnaround. The ADT has rebounded sharply from below a
billion in mid-March to the current $2bn levels. Since May, the ADT has
sustained at around $2bn and even hitting bull market levels of above $3bn
on certain days. So far into SGX’s final quarter (Apr-June), its ADT has
shown a sharp resurgence of 93% qoq and 10% yoy. The significant bounce in
ADT, which is a key performance indicator of its mainstream securities
market revenue, bodes well for a strong earnings recovery ahead.
-Rising futures volume adds to the momentum. Besides the turnaround of the
securities market revenue, the derivatives market revenue has been
strengthening as well. Futures volumes rose 6% yoy in April after 3
consecutive months of decline. Further, the group’s new product launches
such as the Extended Settlement contracts and various initiatives to grow
the options market will continue to sustain its fast-growing derivates
market segment.
-Strengthening monopoly status. Despite turbulent times, the group stays
committed to technology upgrade. On-going improvements in trading,
clearing, data and web capabilities provide a good infrastructure for SGX
to capture opportunities in algorithmic trading, commodities clearing and
information services business. It has recently launched an enhanced web
site and will be introducing a new derivatives clearing system by year-end.
-Forecasts raised. As ADT has risen to levels that more doubled of our ADT
assumption of $1.2bn for FY10, we are increasing our FY10 ADT assumptions
to $2bn in line with the market recovery. As such, we have raised our
earnings estimates accordingly for FY10 by 21%. Our FY09 earnings estimates
remain unchanged as ADT YTD was still within our estimates of $1.2bn.
-A natural recovery play. We have raised our target price to $8.30, based
on 21x FY10 PER (from 19x FY09 PER previously) in line with SGX’s recovery
stage PER cycle. With renewed market confidence, we reckon SGX will be a
fantastic recovery play given its monopoly status and appeal being the
Asian gateway to a diversified range of securities and derivatives
products. Upgrade to BUY.
SGX, mac maintain OUTPERFORM with target price $8.80($7.37) EPS for FY09/10
raised by 2% and 12%
- We update our forecasts, incorporating higher turnover assumptions in
light of the recent surge in market activity. We believe that whilst there
is no certainty of volumes sustaining at these levels, the less bearish
sentiment will have a positive impact on SGX? revenues as long as
participation remains high. We maintain our Outperform with a new target
price of S$8.80, which is 19% higher than our previous target price of
S$7.37.
- Securities trading value averaged S$1.32bn a day in April and S$2.34bn a
day in the first two weeks of this month. Taking this to the three quarters
for the current financial year ending 30 June suggests that the securities
daily average trading value could reach our current assumption of S$1.2bn.
We believe that as long as investor participation remains at this level,
Singapore Exchange will benefit through higher securities trading revenues.
- While derivatives trading volume has not seen as aggressive a rebound,
March and April data did rise above the lows seen in the beginning of the
year. We believe that derivatives volume should also see a similar
improvement in May, given that key derivatives products are tied to
securities markets. We think derivatives revenues will track our estimate
of a 29% contribution to total FY6/09 revenue.
-Earnings and target price revision. We have raised FY6/09 and FY6/10 net
profit forecasts by 2% and 12%, respectively, due to higher turnover
assumptions. Target price raised to S$8.80 from S$7.37.
YANG ZI JIANG, mac maintain UNDERPERFORM with target price $0.38($0.28) EPS
for FY 09/10 raised by 23% and UNCHANGED
- We revise our earnings forecasts for Yangzijiang Shipbuilding (YZJ) on
the back of improved margin due to larger vessels under construction in
2009. We maintain Underperform but increase our target price to S$0.38 from
S$0.28.
- Holding up better than peers YZJ’s profitability is holding up relatively
well compared with its Chinese peers, with 1Q09 EPS up 17% YoY. We think
the key driver is larger vessels under construction. The average vessel
size under construction rose from 14,360cgt/vessel in 2008 to 20,575cgt in
2009, up 43%. The expanded vessel size improves production scale and
margin. We think the larger vessels will help YZJ to maintain a high margin
this year; however, we expect the average vessel size under construction to
pull back to 15,567cgt in 2010.
- Revision of current contracts YZJ has seen 6–12 month delays in delivery
and revision of vessel prices for current contracts. The company denies
cancellations so far. We estimate a six-month delivery delay would decrease
the company’s margin by about 2% and a price renegotiation range of 15–
20%. Our commodity team’s recent visits to steel plate companies indicated
that some ship plate plants are seeing delays of up to two years.
- Decreasing utilisation Having expanded in 2007, YZJ’s new capacity is
scheduled to be fully deployed by 2012. However, without new orders, the
company’s capacity utilisation will shrink to below 50% after 2010, in our
view. We believe the decreasing utilisation will put pressure on the yard’s
margin.
-Earnings and target price revision. We raise our EPS forecast for 2009 by
23%, leave our 2010 EPS forecast unchanged and cut our 2011 EPS forecast by
7%. We increase our target price to S$0.38 from S$0.28.
YANLORD by cl
-Heated wood floorings, purified water system (good for ladies’ skin and
hair)and wine cellars - this are some of the key highlights in Yanlord’s
apartments in Shanghai. These extra little comforts not only help to
differentiate Yanlord as the premium property developer in China, but also
meant they could achieved >60% GROSS MARGIN for Shanghai Riverside project.
This premier developer remains one of our top pick in China property space
to ride the billion boomers’ asset reflation theme.
-YTD , the co has already secured RMB5bn of sales, of which RMB2bn was
achieved just in the month of April. Based on the company’s projects
available for sale, RMB 7-8bn of sales looks achievable for FY09. Whilst
the street is generally looking for about RMB6bn sales. The decline in
mortgage rate (from 8% to about 4%!!!) certainly is supportive of continued
strong sales outlook.
-ASP outlook, Yanlord is more optimistic on Shanghai market ,especially now
that people in China are anticipating Shanghai’s ascension to a ‘Global
Financial Capital’. The strategy on Tier 2 cities is to continue to push
through sales volume at stable to slight increasing ASP.
-Landbanks - Yanlord still has about 5-6 years of landbanks, admittedly the
landbank in Shanghai looks rather low, but this will still last them till
2011. The company will focus on acquiring land in Shanghai and Chengdu.
-Gearing remains healthy with net debt to equity at 41% and looks to
decline with the cash proceeds coming through.
YANLORD by daiwa
-Listed in Singapore, but fully focused on China. Founded in 1993, Yanlord
Land Group (Yanlord) is a mid-scale PRC property developer listed in
Singapore since 2006. The company is focused mainly on mid- to high-end
property projects in affluent citiesin China, including Shanghai, Suzhou,
Nanjing and Zhuhai.
-Opting for pricing over volume. FY08 was a challenging year for Yanlord,
as with many other property developers in China. The company achieved total
revenue of S$1.01bn with a total gross floor area (GFA) of about 286,000sq
m. However, this was 18.0% and 40.6% lower than the total revenue and GFA,
respectively, for FY07.
- Despite the drop in revenue recognised and GFA delivered in FY08, Yanlord
managed to increase the average selling price (ASP) of its properties in
FY08 to Rmb17,294/sq m (S$3,536/sq m), while the gross-profit margin
improved by 10.4 percentage points year-onyear to 55.5%. As a result, the
company’s net profit rose by 2% YoY to S$225.8m. We believe this could be
attributed mainly to Yanlord’s focus on the PRC high-end residential
segment, a segment that still managed to command premium pricing despite
the drop in transaction volume.
-Strong performance so far in 2009. Yanlord continued to demonstrate a
strong performance in 1Q FY09, with revenue rising by 60.4% YoY to
S$186.4m, and net profit up 160.6% YoY to S$24.3m. Driven by Phases 2 and 3
of Yanlord Riverside City in Shanghai, the ASP was Rmb24,968/sq m for 1Q
FY09, some 44.4% higher than that for FY08. This in turn led to the sharp
increase in the gross-profit margin to 64.1% for 1Q FY09, compared with
37.5% for 1Q FY08.
- Yanlord’s management believes that although the financial crisis will
continue to exert pressure on market demand, the PRC property sector is
showing preliminary signs of recovery. As a result, in addition to
continuing to focus on sales of existing projects, the company plans to
launch two new projects in Tianjin and Nanjing over the next few months.
