Excerpts from CIMB report
Analyst: Colin Tan
Diversified property and construction group Ong Pang Aik, chairman of Lian Beng Group. NextInsight file photoLian Beng is a building construction firm with an integrated civil engineering and construction support service arm as well as property development and dormitory operations. In FY17, it generated 37%/31%/20% of revenue from construction/property development/concrete and asphalt operations, and the balance from two other businesses – engineering and leasing of construction machinery and investments. |
Boosting development prospects in Singapore and China
|
Stock price |
76 cents |
|
52-week range |
46-84 cents |
|
PE (ttm) |
8 |
|
Market cap |
S$380 million |
|
Shares outstanding |
500 million |
|
Dividend yield |
2.96% |
|
1-yr return |
71% |
|
Source: Bloomberg |
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Current residential landbank in Singapore includes 20%-owned Rio Casa and 20%-owned Serangoon Ville, which total over 1.9m sq ft GFA.
Lian Beng also has a 10% stake in the Gaobeidian Township Project, an area where housing prices have doubled from c.Rmb4,600 psm at end-2014 to c.Rmb9,800 psm at end-2017 (based on data from Anjuke, China’s online property listing platform).
Investments – S$156m in total fair value gains in five years
Investment properties have grown from S$66m at end-FY12 to S$704m at end-FY17, yielding total cumulative fair value gains of S$156m in FY13-17. In 1Q18, the group sold off its properties at 247 and 249 Collins Street in Melbourne, Australia for A$35m (vs. acquisition cost of A$25m in Jul 2015) and plans to dispose its third Melbourne asset at 50 Franklin Street for A$90m (vs. acquisition cost of A$52m in Nov 2016).
| Plans for property development business spin-off The group announced in Oct 2017 that it may explore the possibility of spinning off its property development business and list it on the SGX-Catalist board, which management disclosed will provide a transparent valuation to benchmark the property development business and allow fund raising without tapping into the group’s financing. |
Foray into UK property investment for income diversification
It has a 15% stake in the consortium that acquired a land site in Leeds, United Kingdom, for which approval has been obtained from the city council in Aug 2016 to develop a 192- room hotel. The hotel will be operated under the brand ‘Hampton by Hilton’ and management expects operations to commence in late-2019F, which they believe could add to investment income.
Trading at 0.63x FY17 P/BV (NAV S$1.21 as at end Aug 2017)
Net gearing stood at 0.87x as at end Nov-17. It paid FY17 DPS of 2.25 Scts, which translates into 3.0% dividend yield. Stock is trading at 0.63x 1HFY5/18 P/BV, vs its 10-year historical average of 0.65x P/BV and at a 26% discount to RNAV of S$1.03. RNAV is based on the latest market transacted prices.
Full report here.