Lian Beng

Lian Beng: FY13 results missed estimates; Earnings dropped 24.3% y/y to $39.4m due to the absence in a sale of industrial property recognized in the previous year. Excluding the gain in FY12, core earnings fell 7.1% despite a 13.6% improvement in revenues to $505.6m. This was due to an increasing sales mix coming from the ready-mixed concrete segment, which has lower margins compared to its construction business. Throughout FY13, Lian Beng doubled its investment properties to $136.6m (+106%) on the purchase of two 111 Emerald Hill residential units, progressive payment for long term investment in residential units and development cost incurred for the Mandai workers' dormitory. Lian Beng's gearing went from net cash to 0.38x as the group took on debt to finance its development projects at Spottiswoode Suites, The Midtown, M-Space and the Mandai workers' dormitory. Construction projects clinched year-to-date was strong at $915m, underpinned by BCA's forecast on increased construction demand of $26-32b for 2013, followed by a 25% slowdown to $20-28b per annum for 2014 and 2015. This brought Lian Beng's order book to $1.3b, providing activities through to FY16. Management continue to explore business opportunities in the region through acquisition(s), JVs/ strategic alliances to sustain its growth prospects going forward. Lian Beng proposed final dividend of 1 cent and a special 0.25 cents dividend; implied dividend yield of 2.2% and trades at 7.8x P/E and 1.2x P/B. Maybank KE recommends a BUY rating with TP of $0.69.