Lian Beng

Lian Beng: Highlights from today's lunch corporate presentation at Maybank-KE - One of the largest local construction firms - Strong net margin track record (10-15%) vs peers (5-7%), attributable to upstream self-sufficiency for its own supply needs, eg. ready-mixed concrete (RMC), cranes and machinery, steel rebars, scaffolds, etc. - Massive construction orderbook of $1.1b stretching till 2017 Financials - At 9MFY14, net profit of $50.3m (+67% y/y), already surpassed FY13 net profit of $39.4m - Current annualized recurring net profit of est. $14.1m comprises: Mandai dormitory (est. $6.4m), ready-mixed concrete (est $7.7m) - Mgt targets to achieve recurring net profit of $20m, underpinned by further organic growth in the dormitory and RMC business, as well as upcoming 40% JV in an asphalt premix business. Catalysts - “On track for record revenue and profit” - “Bonus” fair value (accounting) gains upon revaluation of dormitory business, est. $18m (extrapolating from Centurion’s 4Q13 disclosure) - Paves the way for higher special dividends Valuations - Last traded $0.71 - 5.6x annualized 9M14 P/E - 1.2x P/B Ratings - DMG has a Buy rating with SOTP-based TP of $1.17