Ying Li International Real Estate Limited ($0.159, down 0.3 cent) announced that all the units in Tower One of the Future Beijing project have been fully taken-up on the first day of its launch. Tower One consist of 585 SOHO apartments and were sold at an average selling price of approximately RMB34,200 per GFA sqm and is targeted to hand over in FY17.
We understand that the total pre-sales consideration is approximately RMB1.06 bln. Notably, this is YL’s maiden foray outside Chongqing through an effective 15.1% stake participation in the project. Other prominent partners in the project include Shanghai Everbright Holdings and CITIC-CP Asset Management.
Future Beijing is a mixed use development project in Beijing with a total GFA of approximately 715,000 sqm, the project comprises high-rise premium SOHO apartments, premium and landmark office buildings and retail malls and is located in the Tongzhou New City Canal Core Area, the second CBD of Beijing.
With the fast rising demand in the Beijing Tongzhou area, the group is currently working together towards launching the pre-sales of Tower Two ahead of original schedule. Given the group’s patchy track record in the past, we are particularly encouraged with this positive result and believe the project should bring significant value and opportunities to the group, if executed well.
In fact, Tongzhou will also be home to Universal Studio’s 6th theme park, which will be the biggest Universal Studio Theme Park in the world and is scheduled to be completed by 2020. By then, approximately two million Beijing residents will have shifted in to Tongzhou as part of a massive urban extension project to relief the current over-crowded CBD areas. This includes approximately one million government officials relocating their city government offices from the current CBD to the Tongzhou area by 2017.
As mentioned in our previous results note, the 3Q FY15 should represent a trough in terms of earnings as YL is likely to recognise sales from its San Ya Wan Phase 2A project in 4Q15. Based on our RNAV estimate of 50 cents, we see fair value lies somewhere between 20-25 cents, based on its Chinese peers’ average of 50-60% discount to book value.
As such, we think YL could potentially re-rate to its peer group average if the group is able to demonstrate consistent execution capability on its pipeline of projects. With the recent pullback in share price, we deem the current share price as an attrative entry point and hence, recommend a Buy rating. (Read Report)
Source : Lim & Tan Research