Lian Beng

Lian Beng: OCBC maintains Buy with $0.58 TP. Lian Beng announced 1QFY14 net profit of $7.3m – down 30.9% y/y – mostly due to increased selling and marketing expenses incurred at development projects and the cessation of tenant leases at Hougang Plaza. Topline for 1QFY14 came in 44.2% higher YoY at $163.5m; due to a shift in revenue mix with a heavier percentage contribution from the construction segment, overall gross margins continue to dip – falling from 14.1% in 1QFY13 to 12.2% in 1QFY14. The house note that Lian Beng continues to enjoy a firm construction book of $1.2b, which would buttress forward revenues to an extent, and also a strong balance sheet with $200.7m in cash with a fairly benign net gearing of 25.2%. That said, see increasing uncertainties in the domestic residential space from recent cooling measures which could result in headwinds for the group’s property development business going forward.