SINGAPORE (Nov 17): DBS Vickers Securities is reiterating its “buy” recommendation on China-based real-estate developer Yanlord Land Group, with a price target of S$1.46, in anticipation of decent 4Q earnings delivery and a higher dividend payout.

This comes despite China facing a recent tightening in its property market, which the group’s management expects may gradually impact the business, but without substantially lowering profitability in all of the cities in which Yanlord operates.

“Despite the recent tightening, we believe margins would be sustainable in FY16/17,” says DBS’s team of analysts in a Tuesday report. The analysts proceed to note how the group has achieved about RMB26.3 billion (S$5.43 billion) contracted sales for 10M16, close to its full-year sales target of RMB27 billion — and they believe this will act as a buffer for the near-term impact of China’s market tightening.

“Yanlord has yet to finalise its sales plan for next year, but according to its earlier guidance, it could have over RMB50 billion of saleable resources for 2017. Assuming a c.55-60% sell-though rate, we believe Yanlord could achieve c.RMB30 billion sales in 2017,” says the team.

The group is also in the midst of acquiring land sites, mainly through joint ventures (JVs), to manage land cost, after spending some RMB10.4 billion on the acquisition of new land this year.

Aside from observing strong earnings visibility for Yanlord’s FY16 earnings, DBS’s team of analysts say that its Nanjing and Shanghai projects, which were sold at “decent" average selling prices (ASPs) since 2H15, should help to further raise the group’s full-year gross margin to over 28%.  

Shares of Yanlord were up 2 Singaporean cents at S$1.32 at mid-morning trade today.