Shares of Yanlord may be in focus after Moody’s issued a relatively benign statement on the company’s credit rating on Monday.
Yanlord submitted the Moody’s report to SGX in a filing after the market close on Monday.
Moody’s said in the note that Yanlord’s credit profile supported the Ba2 rating, with its profit margin and interest coverage better than its Chinese property peers and its liquidity profile strong.
But Moody’s noted that the company’s debt leverage, as measured by revenue to adjusted debt, weakened to 72 percent in 2017 from 102 percent in 2016, due to high spending on land acquisitions in 2017, with reported debt rising to 33.1 billion yuan in 2017 from 22.7 billion yuan in 2016. That was mainly due to payment for a few large development sites, Moody’s noted.
But it added, “we expect that Yanlord’s debt leverage will recover gradually over the next 12-18 months, based on the moderation in land spending in 2018, and faster revenue growth in the same period.”
Moody’s also said it expected Yanlord to achieve its contracted sales target of 32 billion yuan to 35 billion yuan in 2018, supported by a quality land bank in key tier one and tier two cities, especially in Shanghai, Nanjing and Suzhou.
The stock ended Monday down 1.7 percent at S$1.73. On the upside, the January high of S$1.88 may act as a near-term cap, while the February low of S$1.60 may offer some support.