A JOINT venture of Yanlord Land Group has acquired two prime residential integrated development sites in Jingan District of Shanghai for 4.2 billion yuan (S$859.8 million), the property developer said in a bourse filing on Friday.

 

Yanlord entered into the joint venture with Huafa Industrial Co Ltd Zhuhai through an indirect wholly-owned subsidiary, and holds an effective interest of 30 per cent in the joint venture.

 

The sites are located in one of Shanghai' s core central districts and will be developed into high-end residential apartments, cultural institutions, offices and commercial developments. They have a total gross floor area of 79,699 square metres and were acquired via public land auction.

 

REAL estate developer Yanlord Land Group saw its contracted pre-sales from residential and commercial units as well as car parks more than double to 12.03 billion yuan (S$2.41 billion) in August, from 4.81 billion yuan a year ago.

 

Total contracted gross floor area (GFA) rose 75.6 per cent year on year to 280,819 square metres (sq m) in the same month, according to Yanlord' s unaudited key operating figures it released on Monday.

 

For the eight months ended August, contracted pre-sales were up 73.5 per cent on the year to 47.77 billion yuan, while total contracted GFA increased by 34.5 per cent to 1.3 million sq m.

 

The group, together with its joint ventures and associates, recorded a total of about 4.19 billion yuan of subscription sales as at end-August. These are expected to turn into contracted pre-sales in the following months, Yanlord said on Monday.

 

Five Chinese cities - Suzhou, Nanjing, Shenzhen, Shanghai and Hangzhou - were key contributors to the group' s contracted pre-sales in the first eight months of this year. They accounted for some 78.5 per cent of contracted pre-sales of the group, its joint ventures and associates for the eight months.

A JOINT venture (JV) of Yanlord Land Group has acquired a low-density prime residential development site in Kangqiao, Pudong New District of Shanghai for 4.5 billion yuan (S$0.89 billion).

 

Property developer Yanlord holds a 51 per cent stake in the JV, and its partner, Huafa Industrial Co Ltd Zhuhai holds the rest.

 

With a plot ratio of about 1.1 times, the site will be developed into a high-end, international community.

 

It has a total gross floor area of 91,346 square metres, and was acquired via public land auction. The site is about a 20-minute drive from Pudong Qiantan International Business District and World Expo, and half an hour from Pudong International Airport.

 

Zhong Sheng Jian, Yanlord' s chairman and chief executive officer, said: " This new land acquisition reiterates our confidence in the sustainable development of high-end residential market in first-tier cities."

 

He added: " The site is a clear site that we could commence construction shortly for pre-sale in next year to sustain the group' s continuous contracted pre-sales growth in the coming years."

 

For the half year ended June 30, 2020, Yanlord saw a 59 per cent fall in net profit to 492.9 million yuan from 1.19 billion yuan a year ago.

 

Revenue for H1 2020 increased 18 per cent to 9.12 billion yuan, from 7.71 billion yuan a year earlier, owing to the increase in gross floor area delivered to customers, which was partly offset by the decrease in average selling price per square metre, Yanlord said. Earnings per share stood at 25.52 RMB cents for the half year, down from 61.52 RMB cents in the preceding year.

 

YANLORD (China) Investment Group, a unit of property developer Yanlord, has inked an investment agreement of up to seven billion yuan (S$1.4 billion) with an affiliate of Singapore&rsquo s sovereign wealth fund GIC, to co-invest in China residential projects.

 

Yanlord will own 51 per cent of each of the project companies and joint venture companies to be co-invested in, while the GIC affiliate will own the remainder, the mainboard-listed company said in a bourse filing after the market close.

 

The collaboration will run for seven years, with an option to extend for another two years upon mutual agreement. Yanlord and GIC have previously co-invested in China property development projects since 2006.

 

Yanlord&rsquo s chairman and chief executive Zhong Sheng Jian said that the company is pleased to continue its partnership with GIC.

 

&ldquo Since 2006, GIC and Yanlord have cooperated to invest in Nanjing and expanded our footprint in key cities in China. The cooperation programme will further strengthen our presence in China and create value to the shareholders,&rdquo he said.

 

Chinese real estate developer Yanlord Land Group Limited is &ldquo red hot&rdquo , and if its pre-sale figures are anything to go by, the company is on its way to exceeding a RMB 70 billion ($13.92 billion) sales target, says KGI Securities analyst Kenny Tan in a report today.

 

The company released pre-sale figures for June, with a jump of 59.5% y-o-y and 49% m-o-m. With strong summer sales expected, KGI Securities is maintaining its outperform call on the company with a 12-month target price of $1.45.

 

&ldquo Across our Chinese property peer list, pre-sale numbers are generally better m-o-m and y-o-y... The confluence of positive news led to strong market performance of Chinese property stocks, leading to an overall [approximately] 8% gain in the Global X MSCI China Real Estate ETF (CHIR) in the past two weeks,&rdquo says Tan.

 

Additionally, China&rsquo s Caixin Services purchasing managers index (PMI) came in at 58.4 for June, an improvement from 55 in May, he notes.

 

Yanlord is slated to bring in RMB 32.8 billion in revenue in FY2020F, nearly twice its FY2019 figure of RMB 18.6 billion.

 

In April this year, Yanlord announced that the group and Hong Kong Land Holdings&rsquo MCL Land have jointly won the tender for the en bloc sale of Tulip Garden in Singapore with a bid of $906.9 million. The winning bid is approximately 20% above Tulip Garden&rsquo s reserve price of $753 million when it was put up for sale by tender in late-February.

On a six-month basis, the company&rsquo s 6M2020 of RMB 29.773 billion is 42.5% of its RMB 70 billion target. &ldquo While below the half-way mark, we expect 2H2020 to provide sufficient pre-sales to make up the shortfall, as August to October is the usual peak property sales season,&rdquo says Tan.

 

For comparison, Yanlord&rsquo s 6M2019 pre-sales of RMB 18.04 billion was about 32.4% of the company&rsquo s eventual RMB 55.704 billion figure for FY2019, he added.

 

&ldquo As such, we think Yanlord should be able to exceed the RMB 70 bn target. We adopt the cap rate methodology to valuate UEL [useful economic life] and Yanlord&rsquo s investment properties together, using an 80% operating margin and 4-7% cap rate assumption for the properties,&rdquo he says.

 

WACC has been lowered to 8% to reflect lowered equity risk premiums and cost of debt. The valuation methodology for the property development business has also been changed to capture our estimated property market value more accurately.