Yanlord Land Group Limited (Yanlord) reported a subdued set of 4Q18 results which missed ours and the street’s expectations. Revenue slumped 79.4% YoY to RMB2,325.4m due to a decrease in GFA delivered to customers (-77.2%) and lower recognised ASP of RMB51,257 psm (-22.6%). Coupled with higher operating expenses and finance costs, PATMI for the quarter dipped 78.5% YoY to RMB256.9m.

This culminated in FY18 revenue and PATMI of RMB24,888.0m and RMB3,544.6m, representing a decline of 2.9% and an increase of 10.2%, respectively. However, PATMI only formed 90.0% and 94.2% of ours and the street’s forecasts, respectively.

A first and final dividend of 6.8 S cents was declared, unchanged from FY17 and represents a payout ratio of 18.2%. This was also lower than our projection due to weaker-than-expected reported PATMI.

Another slight disappointment came in the form of a continued increase in Yanlord’s net gearing ratio, which stood at 96.8%, as at endFY18, versus 91.2% as at 30 Sep 2018.

Looking ahead, Yanlord has RMB12.9b of accumulated pre-sales still pending recognition. Advances of ~RMB9.9b have already been collected.

We will provide more details after the analyst conference call. For now we have a BUY rating and S$2.04 fair value estimate.

Source: OCBC Research - 28 Feb 2019