RHB Invesment Bank (RHB IB) maintained its BUY call on LBS Bina Group Bhd as its earnings for the quarter under review were broadly in line with estimates, in addition to recording a stable topline growth and improved margins.
“We remained positive on LBS Bina’s positioning as a leading player in the affordable housing segment, reflected by its high take-up rates and healthy pipeline of new launches,” it said in its Results Review today (Feb 22).
For the results of the fourth quarter ended on 31 December 2023 (4Q23), the property developer recorded a net profit of RM36.6 million, up by 42.5% year-on-year (YoY) but lower by 9.1% quarter-on-quarter (QoQ).
“This is broadly in line with expectations at 104% to 106% of ours and Street’s estimates. On a full-year basis, revenue was 6.2% higher from an increase in on-site development activities across on-going development projects mostly in Klang Valley.
“Earnings before interest, taxes, depreciation, and amortization (Ebitda) margins also improved to 18.7% financial year ending 31 December 2023 (FY23), compared to 18% in FY22, attributed to better cost optimisation for the construction segment.
“Earnings were also supported by a lower effective tax rate of 33.8% versus 37% in FY22: 37% as losses from the motor racing circuit and
investment segments improved,” the research house said.
As results were in line, RHB IB made minor adjustments to its earnings forecast and introduce FY26 earnings estimate of RM151 million.
Consequently, it maintained its BUY call and target price (TP) of RM0.82, 26% upside and 4% yield.
“Our TP is premised on a 60% discount to RNAV, and it includes a 2% environmental, social, and corporate governance (ESG) premium based on our in-house methodology.”
Meanwhile, for FY23, the research house said LBS Bina didn’t meet its sales target, recording RM1.7 billion in property sales compared to its initial target of RM2 billion.
“This was due to timing issues as three property launches were postponed. For FY24, LBS has a sales target of RM1.8 billion. Unbilled sales remain high at RM2 billion, providing earnings visibility for the next few years,” it said.
RHB IB said in FY24 will be a busy year ahead for LBS Bina as it will be involved in 19 ongoing projects, and is planning to launch another 10 projects with a combined gross development value (GDV) of RM2.3 billion in FY24.
The biggest projects being D’ Island Residence in Selangor, with a gross development value (GDV) of RM517 million and Bayu Hills in Genting with a GDV of RM425 million.
“For its ongoing projects, the average take-up rate has remained healthy at 79%. KITA @ Cybersouth, its flagship development, has an average take-up rate of 70%, with RM1.7 billion launched from a planned total GDV of RM6.8 billion,” it added.
