Towards Financial Freedom
Lian Beng - Outlook Remains Positive
LBG's 2QFY14 PATAMI was 8.2% higher y-o-y, on the back of a 35.4% yo-y revenue growth driven by the construction segment, despite higher operating expenses and losses from associates. Going forward, revenue growth is likely to be fuelled by Singapore's construction demand, although PATAMI growth may be dampened by higher operating expenses. Maintain BUY and SGD0.70 TP.
- Construction demand to support revenue growth. LBG has an established track record in both the public and private sectors. Given that the Singapore Government has a healthy pipeline of construction projects over the next few years, LBG is likely to be able to secure more new contracts. This, coupled with its strong orderbook of SGD1.0bn that is expected to last till 2016, LBG is in a good position to benefit from the expected increase in construction demand.
- M-Space expected to obtain TOP in 3QFY14. Once its industrial development M-Space obtains the temporary occupation permit (TOP), this would boost LBG's profitability. However, PATAMI growth and margins would be somewhat dampened by higher distribution costs from its property development projects. Such expenses are expected to be lower over the next few quarters, but margins are likely to remain under pressure y-o-y.
- Stable outlook. Our SGD0.70 TP is based on 6x FY14 earnings. We expect LBG to dish out higher dividends in FY14, as it books profits from M-Space. We like LBG for its strong orderbook and track record, which will continue to be supported by heightening construction activities in both the private and public sectors.
Financial Exhibits
SWOT Analysis
Company Profile
Lian Beng is one of Singapore's major home-grown building construction groups with integrated civil engineering and construction support service capabilities. It is principally involved in the construction of residential, industrial and commercial projec ts, and civil engineering projects as a main contractor. As an A1 grade contractor in general b uilding, it is able to tender for public sector building projects of unlimited contract value, while its A2 grade in civil engineering allows it to handle engineering projects of up to SGD85m. It has established a reputation for its ability to handle large-scale and complex projects.
Lian Beng is one of Singapore's major home-grown building construction groups with integrated civil engineering and construction support service capabilities. It is principally involved in the construction of residential, industrial and commercial projec ts, and civil engineering projects as a main contractor. As an A1 grade contractor in general b uilding, it is able to tender for public sector building projects of unlimited contract value, while its A2 grade in civil engineering allows it to handle engineering projects of up to SGD85m. It has established a reputation for its ability to handle large-scale and complex projects.
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Source: OSK
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