LBS Bina Group Bhd made a dash to hit a year high of 66 sen on Jan 8. This means the counter had close to doubling its value from its low of 39 sen within less than a year period. Based on technical indicators, LBS’ near term outlook is positive, testing its resistances of 66.5 sen and 70 sen.

The uptick in the share price could be supported by mopping up of LBS shares by its founder Tan Sri Lim Hock San and sharebuy backs by the company. Based on recent developments, the property sector which has been operating in a rather challenging environment in the past couple of years, is slowing improving.

More so with the recent announcement by the government to relax the MM2H programme. The introduction of the Silver category and the reduced age requirement widen opportunities for younger individuals who were previously ineligible. 

The eligibility of attaining permanent resident status in the Platinum tier is bound to attract those eyeing a relocation to Malaysia.

In terms of financials, the property developer saw its 3Q23 net profit rising 13.8% to RM40 million, bringing its 9M23 earnings to RM103.7 million (up 3.1% YoY). The company registered improved EBITDA margins (9M23: 20.4%, 9M22: 17.7%), particularly for the construction segment, which recorded a 76% higher EBITDA. 

However, 9M23 revenue was 8.6% lower, mainly due to a 9% decrease in property development revenue as certain projects neared their completion dates before vacant possession. 

Nevertheless, investors are probably not worried as it has a high unbilled sales of RM2.2 billion as at end October.  This should provide earnings visibility for the next 2-3 years.  LBS recorded MYR1.58bn in property sales as at 20 Nov and unlikely to meet its RM2 billion property sales target for FY23.

To date, LBS has launched RM1.6 billion worth of projects, with the biggest coming from Idaman, Selangorku, and KITA @ Cybersouth.  The average take-up rate of LBS’ ongoing projects remain strong at 78%, a testament to its positioning as a leading player in the affordable housing segment.

In terms of financing, LBS Bina has issued the first tranche of sustainability sukuk, amounting to RM200 million, under its RM750 million Sukuk Wakalah Programme. Proceeds raised under the first tranche are to be used to finance or refinance eligible social and green projects in line with the group’s Sustainability Financing Framework.

Eligible green projects include those that relate to green building, renewable energy/energy efficiency, pollution prevention and control, and biodiversity conservation. Social projects relate to affordable housing, and socioeconomic advancement and empowerment.

Investors will be looking forward to further upside to the counter given its strong position as an affordable housing developer and ability to carry out cash intensive projects.