Yanlord share price tumbled 30%

From a high of $1.86 in early 2018, PRC-based Yanlord share price suffered a severe decline to reach a startling low of $1.29. The crash of Yanlord share price is particularly mystifying given that it came on the back of a consistently solid financial results over the last 5 years.

Is the current Yanlord share price reflecting the true value of the real estate company or is the God of Wealth playing a trick on investors? To be frank, the issue facing Yanlord is not company-specific. Rather, the whole S-chip industry is currently suffering from a crisis of confidence among investors.

Loss of faith in S-chips

The lack of confidence in S-chips is not new and has been a well-known recurring problem in Singapore stock market for the past decade. It had been a devastating period of time as investors had lost much wealth when errant S-chips either went into financial difficulties or were “creative” in their accounting. As a matter of fact, the SGX Watch-list is littered with so many dead S-chips while there were cases of S-chips embroiled in corporate scandals.

Yanlord share price

Recent move by SGX regulators to require new S-chips to have cornerstone investors or state-owned enterprise brings cold comfort to investors as well. After all, let’s not forget the near-collapse of China Aviation Oil (CAO) in 2004 after the employees engaged in massive derivative losses of USD550 million. CAO is state-owned and is controlled by the Chinese government. So having big boys behind the S-chips may not insure against their reckless business activities.

Incidentally, Yanlord share price started its free-fall mode after scandal of yet another S-chip, Midas broke out in early 2018. It was alleged that Midas, an aluminium alloy manufacturer for China’s railway system, was engaged in possible accounting frauds which saw the company transacting unauthorized loans. As a result, the auditors claimed that its audit reports from 2012 to 2016 cannot be relied upon because they had been deceived by Midas’ management.

But what made the Midas scandal so extra-ordinarily intriguing was that the company was well-known for having a Singapore ex-Minister, Chan Soo Sen, on board as one of its directors. Many investors thought that with such distinguished director on board, the corporate governance must be top class. Indeed, Midas had won the “Most Transparent Company Award” at the Singapore Investors Association (Singapore) Investors’ Choice Awards for five consecutive years in 2012 to 2016. Thus, investors must have a rude shock when the scandal broke out.

Midas’ shares had been suspended since early 2018. Given the state of affair for S-chips, who can blame Singaporean investors for losing faith in S-chips? They had been taken for a ride far too many times by S-chips.

Real deal?

Apart from the above issue, I struggle to find another valid reason for investors to give this counter the cold shoulder. Logically speaking, in order for Yanlord share price to fall so much, the PRC economy must be doing terribly or the company is facing financial difficulties. But this is hardly the case for Yanlord.

In fact, Yanlord share price should have [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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4 thoughts on “Yanlord share price tumbled 30%

  • December 3, 2018 at 8:52 am

    Hi Gerald, can you please elaborate on this statement which you mentioned in your article: “But in any case, for S-chips, the return of capital is more important than the return on capital.”

    Thanks in advance,

  • December 3, 2018 at 9:24 am

    Hi Melvin,

    When we invest in stocks, we look at the returns in the forms of capital appreciation or dividends.
    Thus, when I wrote that “for S-chips, the return of capital is more important than the return on capital”, I meant that instead of going for the returns, I would rather not risk losing my investment capital on S-chips.


  • December 16, 2018 at 4:26 pm

    Yanlord’s 2018 decline is similar to the declines in China property stocks listed in HK, which could be due to the following:
    – the contracted sales is peaking and may start decline
    – cooling measures by China Govt
    – poor sentiment on China economy, stocks, property etc, due to traide issues with US

  • December 17, 2018 at 7:06 am

    Hi Swee Lin,

    Very good observations. Indeed, the trade issue with US is wrecking havoc not just for China property stocks. The fallout is affecting tech stocks like Alibaba as well. Hope this winter will pass soon.

    On the other hand, appreciate for pointing out the Chinese government cooling measures. Like what you have pointed out, the measures could have an impact on Yanlord as well. Good sharing!


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