Compiled by Rachel Mui
CHINA AVIATION OIL | NEUTRAL
TARGET PRICE: $1.32
NOV 21 CLOSE: $1.20
RHB Research Institute, Nov 21
We have revised our target price from $1.50 to $1.32, representing an 8 per cent upside from the counter's closing price of $1.22 on Nov 20, and a 5 per cent FY19F yield.
With the exception of 2012, China Aviation Oil (CAO) has reported its lowest quarterly profit in Q4 every year since 2011. We expect the company to report US$16.7 million (S$23 million) in profit (+3 per cent year-on-year) in Q4, which will be the lowest quarterly profit for this year.
We believe the market remains anxious about the potential business impact from the recent change in its CEO and some board members.
In September, CAO announced the appointment of Mr Wang Yanjun as its new chief executive. It also announced some changes to its board on Nov 1, the day it announced weak quarterly results (Q3 profit fell 12 per cent year-on-year).
YANLORD LAND GROUP | BUY
TARGET PRICE: $2.04
NOV 21 CLOSE: $1.26
OCBC Investment Research, Nov 21
Yanlord's recent Q3 results were solid, with Patmi (profit after tax and minority interests) beating our expectations.
For 9M 18, Yanlord's revenue rose 57.1 per cent to 22.6 billion yuan, forming 75.5 per cent of our FY18 forecast. Patmi of 3.3 billion yuan represented an increase of 62.4 per cent and this accounted for 87.8 per cent of our full-year projection.
Looking ahead, Yanlord has 11.3 billion yuan of accumulated pre-sales pending recognition as at Sept 30, with advances received amounting to nine billion yuan.
It has a land bank of 7.79 million sq m, which is sustainable for development for five years.
The company highlighted that it had encountered some pre-sales permit delays for two projects in Shenzhen, with a push back to early next year.
As such, management signalled that a more feasible contracted sales target for 2018 would be 27 billion yuan, versus 30 billion yuan previously.
In Singapore, Yanlord is hopeful of obtaining Provisional Permission from the authorities by Jan 17, 2019, for its Tulip Garden project.
But one of the negatives in Q3 was the increase in Yanlord's net gearing ratio from 78.3 per cent in Q2 to 91.2 per cent.
Management acknowledged that this was above its comfort zone and highlighted that it will continue to be more prudent in its land acquisition.
The push back in the delayed projects in Shenzhen will also eventually translate into cash inflows once they are launched, thus alleviating the situation.
We maintain "buy", but lower our fair-value estimate from $2.13 to $2.04.
Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.