PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 18 Nov 2019, 9:59 AM


LBS Bina Group Berhad - 2019 Plans

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The Group unveiled its plans for 2019 late last week, while also recapping on its performance in 2018, with the all-important annual sales target revealed – RM1.5bn. Considering that initial 2018 launch plans and sales targets were subsequently scaled down in the later part of the year, the current number may be seemingly daunting yet again. Nonetheless, we think the Group may have sufficient momentum carried over from its existing unsold stock of RM1.1bn coupled with its 2019 launch plans to see this achieved. Unbilled sales remain at a healthy RM1.75bn, underpinning earnings visibility for the next 2 years at the very least. We continue to like LBS for its entrenched position as a leading player in the domestic mass-market affordable housing segment, and still see it standing out amid the currently-challenging operating environment given its product offering and price points. Our Outperform call is retained with an unchanged target price of RM1.16 (20% discount to fully-diluted RNAV).

  • 2018 Review. A total of 8 projects carrying a total gross development value of RM1.2bn were launched during the year (Table 1), with sales of RM1.53bn achieved during the year. This is a scale-down from initial plans of RM2.0bn and RM1.8bn respectively however, reflective of evolving market dynamics (post-General Elections) and challenging operating conditions. 90% (RM1.37bn) of sales done were concentrated in the Klang Valley (Table 2), a significant step up from the 69% (RM982m) done in 2017. 63% of the properties sold were priced below RM500,000 per unit meanwhile (Table 3).
  • 2019 Plans. With RM1.14bn in properties still available for sale (Table 4), coupled with the 5 new projects worth RM1.82bn to be launched, we see the sales target of RM1.5bn for the year to be achievable. Primary concentration will again be in the Klang Valley (Table 5), with CyberSouth driving the bulk of launches (RM870m). Of these, RM172m will be for 416 double-storey townhouses, RM391m for 674 units of double-storey terraces and RM307m will be 971 units of serviced apartments and shops.
  • Other developments. 60%-owned subsidiary MGB Berhad’s (Malaysian Generations Builder, formerly known as ML Global) joint venture with China-based Sany Group continues to make inroads in the Industrialized Building System space. With its first mobile plant already operational since June 2018 and able to produce 2,000 units of precast concrete panels per year, its new permanent plant in Nilai will double its capacity to 4,000 units per year. With a balance order book of RM1.93bn in hand, the Group will continue to be kept busy for the next 12-18 months. The Zhuhai International Circuit remains work-in-progress, still with no noticeable progress made. The 264-acre plot is a key re-rating catalyst nonetheless, with its conservative value already worth some RM345m to shareholders of LBS, about 34% of its current market capitalization, let alone current market values estimated at ~RM355psf.

Source: PublicInvest Research - 7 Jan 2019

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