LBS Bina Group Bhd (LBS:5789) has a remaining GDV (gross development value) of more than RM35bn over 2,791 acres of landbank. 65% of the company’s launches are priced below RM500k. Presently, LBS has several ongoing projects with GDV of RM7bn. BUY with a target price of RM0.80 based on SOP (sum of parts) valuations premised on expected robust new sales of RM2.1bn for FY23, unbilled sales of RM2.3bn and strong take up rates for its ongoing projects.

LBS is targeting new property sales of RM2.1bn for FY23 with 12 new launches in 2023 plus several launches in 2H2022 whereby more than 50% are located within the Klang Valley while the rest are in Johor, Pahang and Perak. Over 70% of the new launches are priced below RM500k. The ongoing projects are well received with average take up rate of 75%.

For 4QFY23, LBS is gearing up to capture a more upscale market segment, featuring higher average selling prices (ASP) in the range of RM320k to RM800k, including; D’ Island Residence - total GDV of RM139m (ASP of RM800k); Bandar Saujana Putra – total GDV RM199m (ASP of RM470k); Bayu Hills, Genting – total GDV RM482m (ASP of RM750k); and Taman Kinding Flora, Chemor – total GDV RM49m (ASP of RM320k).

As of 9MFY23, LBS achieved new sales of RM1.4bn and is on target to reach its sales target of RM2.1bn for the year. LBS is expected to launch RM2bn worth of projects in 2024, leveraging on its current working capacity and financial strength.

We expect LBS to register net earnings of RM129.1m and RM130.6m for FY23 and FY24 respectively underpinned by strong unbilled sales of RM2.3bn and new launches. The company’s balance sheet is manageable with net gearing of 0.3x as at 1HFY23

Source: Rakuten Research - 2 Nov 2023

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