Strong year to come. Lian Beng posted a full-year revenue of SGD505.6m (up 13.6% YoY) on contributions from its construction and manufacturing of concrete arm and net profit of SGD39.4m (down 24.3% YoY). Excluding a one-off SGD7.9m gain from sale of investment property in FY5/12, net profit would have fallen by 11%. We expect property development earnings to begin to shine through as well as ex-Seletar Garden and Changi Road sites to launch in the following year. Maintain BUY with TP raised to SGD0.69.

Within expectations. FY5/13 underlying net profit of SGD39.4m was within expectations mainly because of strong construction earning and manufacturing of concrete which was offset by a lack of property development earnings and a contraction in construction margins. A final dividend of SGD1.25cts was announced, lower than last year’s of 2cts.

Residential stakes to bear fruit. To recap, Spottiswoode Suites (exDragon Mansion), Midtown Residences (ex-Hougang Plaza), KAP Residences (ex-King Albert Park), NEWest (ex-Hong Leong Gardens) were launched respectively in FY5/13. So far the residential take-up rates are impressive - 89.6%, 60.6%, 98.2%, and 62.5% respectively. We understand for NEWest, all residential units have been sold out, with the remainder of unsold units as Triplex Town Houses that require a higher nominal amount for investors to fork out. Commercial units have almost been fully sold for MidTown Residences, KAP Residences and NEWest with ASP of approximately SGD5,500 psf.

Stay true to the core. As of now, Lian Beng’s construction book continues to be very healthy and stands at SGD1.3b through FY5/16, In 4 th quarter alone, Lian Beng won five contracts totaling SGD411m – Oxley Tower @ Robinson, ex-Midlink Plaza turned hotel, Goodwood Residences, Flora Drive and a 12-storey office block.

Maintain BUY. Lian Beng continues to execute strong earnings in its core segment. Maintain BUY, TP raised slightly at SGD0.69.

Source: Maybank Kim Eng Research - 29 Jul 2013