Yanlord Land first-half net profit plummets 91.5% to RMB73.7m

See what decimated its earnings.

Yanlord Land Group Limted (Yanlord) reported that its net profit attributable to equity holders of the Company was lower at RMB73.7 million in the period of January to June 2013 (1H 2013) as compared to RMB871.2 million in 1H 2012 mainly due to lower other operating income arising from the fair value gain on investment property and disposal of available-for-sale investment which occurred in 1H 2012 as well as a net foreign exchange loss of RMB113.3 million in 1H 2013 on the appreciation of the Company’s US$ denominated senior notes against its S$ functional currency compared with a net foreign exchange gain in 1H 2012.

Still, Yanlord assured that the Group’s high quality developments continue to be well received in the PRC. Driven by the positive demand, pre-contracted sales as at 30 June 2013 rose RMB1.309 billion to RMB7.659 billion from RMB6.350 billion at the end of FY 2012. In-line with its delivery schedule, the Group expects to deliver most of its pre-sold units in the subsequent quarters which will serve to enhance its recognised revenue for FY 2013. As of 30 June 2013, the Group has received RMB5.874 billion as advances for pre-sold properties.

Underscored by the Group’s delivery schedule whereby a larger proportion of the Group’s sales is expected to be recognised in 2H 2013, the Group’s recognised revenue in 1H 2013 declined by 4.3% to RMB3.062 billion from RMB3.198 billion in 1H 2012. GFA delivered in 1H 2013 was 122,627 sqm while average selling price (ASP) was 1.9% higher at RMB21,382 per sqm.

Attributable to the Group’s prudent financial policies, Yanlord remains in a strong financial position. Net debt to total equity gearing ratio was healthy at 44.7% in 1H 2013 while cash and cash equivalents as at 30 June 2013 was RMB4.268 billion which will be used to fuel the Group’s future development.

Commenting on the Group’s financial performance, Mr. Zhong Sheng Jian, Yanlord’s Chairman and Chief Executive Officer, said, “Consistent with our revenue recognition method and delivery schedule, net profit was impacted for 1H 2013. However, we are confident that progressive recognition of our pre-sold units in the subsequent quarters will serve to enhance our recognised revenue for FY2013. To mitigate the uncertainty posed by the macro-economic environment, Yanlord will continue to focus on its core competencies to deliver high-quality residential developments coupled with innovative designs and comprehensive services that will consistently exceed the expectations of discerning consumers thereby augmenting Yanlord’s position as one of the leading developers in the PRC.”

Subsequent to the end of the period, the Group launched the inaugural batch of apartment units at Yanlord Yangtze Riverbay Town (Phase 3) in Nanjing. Opening to positive market response, the project saw 336 units or 94.3% of the 356 units launched sold in the first two days. Pre-sale proceeds for the opening weekend amounted to approximately RMB1.209 billion with ASP of approximately RMB27,223 per sqm achieved for the 44,395 sqm sold.

Moving forward, the Group will continue to launch new projects and new batches of its existing projects in 3Q 2013, namely, Yanlord Yangtze Riverbay Town (Phase 3) in Nanjing, Yanlord Rosemite in Shenzhen, Yanlord Sunland Gardens (Phase 2) in Shanghai, Yanlord Marina Centre – Section B in Zhuhai and Tangshan Nanhu Eco-City - Land Parcel A9.

“While austerity measures promulgated by the PRC central government since 2010 continue to present near term challenges for the PRC real estate sector, we nonetheless remain confident about the long term development of the sector which is underpinned by strong demand arising from rapid urbanisation and stable development of the PRC economy. To better mitigate against uncertainty posed by the macro environment, the Group will continue to maintain its healthy cash position and prudent financial policies. Led by an experienced and dedicated management team with extensive industry knowledge of the PRC real-estate sector, we will continue to focus on our business strategies and comparative advantages in the development of quality residential apartments in prime locations within high growth PRC cities. This will best allow for the sustainable growth of our core business segments and capitalise on the long term growth prospects of the PRC real estate sector,” added Mr Zhong.