Lian Beng

Lian Beng: 3QFY15 results were in line, despite net profit down 44.3% to $18.7m, taking 9MFY15 net profit to $46.9m (-8%).

For 9HFY15, revenue was up 6.3% to $569.9m, due to increase in revenue by the Construction division arising from recognition of on-going and new construction projects, offset by the decrease in revenue from the Property Development division following the completion of M-Space in 9M14.

Gross margin fell 9.3ppt to 10%, mainly due to the full recognition of gross profit from M-Space in 9M14.

Bottom-line was boosted by a more than 22x rise in associate and JV contributions at $29.7m, from the disposal of 112 Middle Road and profit recognition from Newest, KAP Residences, and The Midtown.

Tax expenses also fell 64.1% to $4.3m, mainly due to claims made by Lian Beng for the investment in innovation and productivity improvements under the Productivity and Innovation Credit (PIC) scheme.
Going forward, management cautions on a challenging outlook for the construction industry, although the group's $640m construction backlog will provide revenue visibility till FY17.

Meanwhile, 50% JV projects Midtown (96% sold) and Spottiswoode Suites (78% sold) will contribute to earnings in FY15, while its 65% JV at Mandai Link (93% sold) will see earnings streaming in by FY18.

Lian Beng will also be co-developing a workers' dormitory and training centre for The Association of Process Industry at Jalan Papan, which will contribute to recurring income once completed.

Lian Beng currently trades at 4.1x annualized 9MFY15 P/E.