LBS Bina (LBS) delivered 2QFY23 net profit of RM33.0m (-6.1% YoY, +28.7 QoQ) which came in within our and consensus estimates. In 1HFY23, Group net profit of RM63.5m (-2.7% YoY) constituted c.53% and 50% of our and consensus full year estimates. As at 14 Aug 2023, the Group managed to clinch pre-sales worth RM1.1bn, driven mainly by projects in the Klang Valley. We believe it is still on track to meet its FY23 sales target of RM2bn. Unbilled sales remain healthy at RM2.5bn. All told, we keep our earnings estimates unchanged and reiterate 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 RM0.67 (60% discount to NTA), at parity to sector mean discount to NTA on account of its ability to monetize its land bank acquisitions/joint ventures quicker than its peers.

• Sales momentum still good at about RM1.1bn secured as at 14 Aug 2023. Group sales again is driven mainly by projects in the Central region (about 90% of total sales), with projects in Johor contributing 6% while Perak and Pahang securing of 2% each of total sales. Elsewhere, unbilled sales remain steady at RM2.5bn, up slightly from RM2.4bn a quarter ago. We understand that average take-up rate for the projects launched so far is about 74% (with bookings of about RM364m in the pipeline)

• RM2bn sales target in FY23. YTD, LBS has successfully launched projects valued at RM1.5bn, and is eyeing more launches with estimated RM1.6bn worth of development projects located in the Klang Valley, Johor, Pahang and Perak. To recap, the Group aims to launch 4,021 units from 12 projects in existing developments in FY23, with 51% of the new properties in the Klang Valley, 23% in Johor, 23% in Pahang, and 3% in Perak. The projects in the Klang Valley are link houses and townhouses within KITA Bestari in Cybersouth, Astella terrace houses at the D’Island Residence in Puchong, and Block B of LBS’ Prestige Residence in Seri Kembangan.

Source: PublicInvest Research - 22 Aug 2023