PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 21 Nov 2019, 11:24 AM


LBS Bina Group Berhad - Partners Perak State

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It’s been reported that the Group has entered into a Memorandum of Understanding with the Perak state government, more specifically Perak State Secretary Incorporated (SSI) to develop two parcels of land for mixed-use developments. The win-win collaboration will see LBS establishing a stronger foothold in the state while the state government will also further its mission in providing affordable housing to low/middle income households. 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).

  • Collaboration between both parties will see LBS developing 50 acres of land located in Temoh near the Batang Padang district and 41 acres of land in Chepor near the Hulu Kinta district. Said to comprise cluster terraced homes, terrace and semi-detached houses, the mixed development project will carry an estimated gross development value (GDV) of RM200m. Construction works are slated for 4Q2019, with completion by 2022/23. With financial impact to the Group only noticeable in FY20 onwards, we leave earnings estimates unchanged at this juncture. Pretax margins are anticipated to be around 10%, yielding about RM20m over the 4-year project period.
  • Near term earnings will be driven by its RM1.14bn worth of properties still available for sale and the 5 new projects worth RM1.82bn to be launched this year. Unbilled sales as at 31 December 2018 are also a healthy RM1.75bn.

Source: PublicInvest Research - 25 Jan 2019

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