As I run thru my portfolio, I try to figure which stocks to keep.....Lian Beng is one of them and I expect its share price to be resilient for the near and medium term, becos:
a) Its order book stands at $839 million, which would provide it with a constant flow of activities through FY2014.
b) Upcoming dividend = 1.6 cents = 4.57% yield on stock price of 35 cents.
Notably, this dividend is double FY10’s 0.8 cents a share, which Lian Beng should be able to sustain next year.
So, rising dividend, strong order book = strong stock price.
c) Earnings per share = 9.1 cents, so PE = 3.8 X only
All in all, this is a stock I would buy & hold, unlike manufacturing stocks that will take a hit as the economies shrink in the months ahead. Anyone else in the same frame of mind?
Last week, construction companies released good news:
1) Lum Chang Holdings, a construction player-cum-property developer, secured a S$91.5m project to construct a commercial development at Biopolis road/ Biomedical Grove
2) Tee International secured five contracts totalling S$6.4m from various companies.
Obviously, there is a strong pipeline of construction projects not just on the public sector front (driven by infrastructure development like the MRT Downtown Line), but also from the private sector.
Reck, Lian Beng will get a booster if the company will do share buybacks. I believe it has tabled a share buyback mandate for voting in the upcoming AGM. The company is cash-rich --- it had S$150 million cash at end of FY11.
Lian Beng closed up 0.5 cents to 34.5 cents. Cheap !
Wants to enhance shareholder value thru a spin-off of subsidiaries for primary listing on Taiwan Stock Exchange
a. Wholly owned subsidiary Lian Beng Engineering & Machinery
b. 90% owned Sinmix Pte Ltd
Tis will enable them to achieve independent valuation and "provide clearer credit profiling for its future business growth."
Group to convene EGM to seek approval from shareholders; believes proposed spin-off can bring long term value to shareholders
While Lian Beng has done very well in the past few years, the market ignored it, and its stock traded at a tight range just above 30 cents --- even during the 2009 market recovery.
I think the listing of its 2 subsidiaries in Taiwan is finally the catalyst for this undervalued counter.
This morning already touched 37 cents, when the rest of the market went to sleep.
Lian Beng Group (LBG SP, $0.355, BUY, TP $0.62) - We reinitiate coverage on Lian Beng Group with a BUY rating and target price of $0.62. Its orderbook remains robust at $839m; its earnings are reinvested in its construction business to ensure sustainability of income in the event of a downturn; and its engineering and concrete subsidiaries are ready to be spun off for listing in Taiwan. Dividend yield is an attractive 4.6%. We see no reason for Lian Beng to trade at an undemanding PER of 3.9x, a sharp discount to its peers at 6.3x.
NextInsight
a hub for serious investors
