Yanlord contracted sales to decline in 2021: OCBC

SGX-listed Yanlord Land reported a 67.1% increase in its PATMI in the first half of the year.

Chinese developer and SGX-listed firm, Yanlord Land, might see lower gross margins and contracted sales in 2021, according to a report by OCBC Investment Research.

It noted that Yanlord’s contracted sales fell 11.5% as of end-July year-on-year (YoY) from its residential and commercial units and car parks.

“Yanlord’s contracted sales from residential and commercial units and car parks (together with its JVs and associates) fell 3.7% and 11.5% YoY to RMB28.7b and RMB31.6b for the first half of 2021 and 7M21, respectively. Total GFA contracted increased slightly by 0.2% to 1 square metre (sqm) for 7M21, and this translates into an ASP of RMB31,607 per sqm, or a decline of 11.7%. Management reiterated its full-year contracted sale target of RMB70b, which implies an expected dip of ~11% from FY20,” OCBC said.

On environment, social, and governance, the brokerage arm of OCBC said that the company does not aggressively pursue green building certifications like its leading peers. Yanlord has also limited its eco-friendly goals to a few properties.

Potential investment risks include cooling measures, rising offshore funding costs and foreign exchange risks, and overspending on land bank acquisitions.

Meanwhile, upside risks include easing of price caps in key cities Yanlord has exposure to, stronger-than-expected pre-sales figures, and boots in dividends per share.