Yanlord Group suffers 94% slump in Q1 earnings

SINGAPORE - Yanlord Land Group, a developer of high-end homes, has suffered 94 per cent slump in first quarter earnings to 15.5 million yuan (S$3.3 million) on lower sales due to austerity measures introduced by the central government since 2010 to cool the property sector in various cities across China.

Revenue for the three months to March 31 fell by 43 per cent to 1.01 billion yuan owing to fewer homes completion during the period.

The revenue stream was mainly generated from the delivery of Yanlord Lakeview Bay - Land Parcels A2 and A5 in Suzhou, Yanlord Sunland Gardens (Phase 1 and Phase 2) in Shanghai, Yanlord Yangtze Riverbay Town (Phase 3) in Nanjing and Yanlord Riverbay (Phase 1) in Chengdu, which accounted for 33.9 per cent, 20.4 per cent, 19.2 per cent and 18.4 per cent, respectively to group gross revenue from the sales of properties.

Gross profit fell to 432 million yuan from 640 million yuan previously, in-line with the decrease in gross floor area delivered in the current quarter.

Gross profit margin, however, was higher at 42.7 per cent compared to 36.3 per cent in the same period last year, primarily due to the recognition of a resettlement service fee income during the latest quarter.

Earnings per share dived to 0.79 fen from 13.65 fen previously while net asset value per share firmed to 9.88 yuan compared to 9.84 yuan as at Dec 31.

To better encourage home ownership, China's central bank has in recent months released various credit easing measures including reduction in interest rates, relaxation of bank reserve ratio requirements as well as the easing of the eligibility criteria for first-home mortgages.

This allows buyers who have fully repaid mortgages to enjoy lower downpayments and mortgage rates, with first-home status.

These liquidity measures coupled with the expressed statement to local banks to support the reasonable financing needs of developers will serve to further support end-user housing demand and contribute to the sustainable development of the real estate sector, Yanlord noted.

Buyer sentiments are further buoyed by the progressive relaxation of austerity measures, it added.

Looking ahead, Yanlord is confident of its performance relative to the industry trend for the coming quarter and next 12 months based on the number of pre-sale units to-date, expected delivery schedules and on-schedule construction works in progress.

As at March 31, the group has received advances for pre-sale properties amounting to 9.13 billion yuan, with an accumulated pre-sale amount of 12.45 billion yuan.