LBS Bina (LBS) again registered a better-than-expected 1QFY22 net profit of RM30.2m (+19.9% YoY, -15.0% QoQ) which beat our and consensus expectations. Group 1QFY22 net profit already constituted 41% and 35% of our and consensuses full year estimates mainly due to better than expected margins which were partly lifted by reversal on impairments/bad debts during the quarter. LBS sold c.RM574m worth of properties as at May 11, 2022 with unbilled sales steady at RM2.36bn. We understand that it has more than RM500m in bookings in the pipeline which puts it on track to meet its RM1.6bn FY22 sales target. All told, we adjust FY22/FY23/FY24 upward by 20%/13%/17% to account for higher margins assumed and also the reversal of impairments. Maintain our Outperform call given its attractive investment proposition and entrenched position as a leading player in the domestic mass market affordable housing segment. Target price is unchanged at RM0.69 (50% discount to fully-diluted RNAV), with the lower discount vis-à-vis its peers on account of its ability to monetize its land bank acquisitions/joint ventures quicker than its peers.

• Sold RM373m worth of properties in 1QFY22. LBS sold RM373m worth of properties in 1QFY22, or an increase of 60% YoY, driven mainly by existing townships in the Klang Valley. Sales as at 11 May, 2022 is already at RM574m or c.36% of its FY22 sales target of RM1.6bn. Klang Valley constituted 92% of the new sales secured so far, with the remaining 4% from Johor, 2% from Pahang and 2% from Perak. Unbilled sales as at April remained steady at RM2.36bn.

• Launched RM188m as at May 11, 2022. To recap, the Group plans to launch 14 new projects in 2022 – which will cover Klang Valley, Johor, Pahang and Perak – amounting to 3,733 units with a GDV of RM1.77bn. In Klang Valley, LBS intends to launch 2,604 units with a total GDV of RM1.11bn in projects such as KITA @ Cybersouth township (2,128 units with RM853m in GDV), a new phase of Melodi Perdana serviced apartments at the LBS Alam Perdana township (321 units and a total GDV of RM120m) and Astella at D’Island Residence (155 units and a total GDV of RM132m). We understand that so far, it has launched RM188m worth of properties from existing projects such as KITA @ Cybersouth township, LBS Alam Perdana, Bandar Putera Indah (Perak) and Taman Kinding Flora (Johor).

Source: PublicInvest Research - 19 May 2022