Excerpts from Maybank Kim Eng report 21 Aug humourously titled "This Beng is getting bigger and better":
Analyst: Alison Fok
WE BELIEVE that its current valuation, at ex-cash FY13 PER 1.9x, is unjustified.
The Group has defied all odds to achieve a strong net profit of close to SGD50m.
It currently holds a strong outstanding construction orderbook of SGD652m as of FY12.
We are also impressed with the group’s active lookout for opportunities to boost its recurrent income. Maintain BUY with TP of SGD0.63.
Balance sheet shows flexibility. LBG holds a cash war chest of SGD86.1m (42% of market cap), which is just waiting to be unleashed.
It is highly capable of either utilising its cash reserves, or taking on debt for acquisitions or JV opportunities.
We estimate its free cash flow to stay strong averaging SGD43m per year till 2015.
Building on its core strength. We reiterate our BUY call on Lian Beng with a target price of SGD0.63, pegged at 6x FY13 PER.
We anticipate steady growth ahead for the Group. Moreover, it has strong ROE and offers an attractive and sustainable dividend yield of 5.1%.
Excerpts from Lian Beng Group press release dated 21 Aug.
The Group’s 50% joint-venture company with Paul. Y Construction and Engineering was awarded a contract by Luxury Green Development, a member of Hong Kong-listed Cheung Kong Holdings, which comprises of the main building works, with an aggregate worth of about S$169 million.
The project, due to commence in August 2012 and estimated to complete by February 2015, will cover the main building works of the condominium at Upper Thomson Road, known as “Thomson Grand”.
The condominium development project encompasses nine blocks of 20-storey residential flats, representing 339 units with an additional 22 strata houses (for a total of 361 units), with one basement carpark, swimming pools and other and ancillary facilities.
Mr Ong Pang Aik, Chairman and Managing Director commented on the contract win, “We are delighted to have won our first contract in our maiden JV with Paul Y.
"The addition of this new contract strengthens our order book to a commendable S$736.4 million and we hope that this JV will give us the momentum for future opportunities and success with Paul Y.”
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