LIAN BENG GROUP LTD (SGX:L03)
Lian Beng Group 1H22 Results - Property Development Supports Bottom Line
- Higher construction revenue with resumption of activities but weighed down by higher costs.
- Lian Beng Group (SGX:L03)'s bottom line is still supported mostly by property development sector.
The Positives
Higher revenue from construction and property development.
- Lian Beng's construction revenue in 1H22 (Jun 2021 to Nov 2021) almost doubled from a low base in 1H21. The level of construction activity has recovered and there is also more progress made in various construction projects.
- Lian Beng's revenue from Investment Holding increased mainly due to contribution from BreadTalk IHQ. The acquisition was completed in April 2021.
Operating and free cash flows turned positive.
- Lian Beng's operating cash flow was S$31mil, from negative S$3.3mil in 1H21. FCF was S$21.9mil, from S$6.5mil in 1H21. This was mainly due to the decrease in development properties from S$180.9mil in May 2021 to S$134.6mil in November 2021, as a result of increase in sale of development units of INSPACE.
The Negatives
Lower PATMI and EPS due to higher construction costs.
- Only 77.6% of the Property Development segment’s profit, representing the effective interest held by Lian Beng in SLB Development (SGX:1J0) was recognised. As such, the increase in contribution was offset by the higher loss incurred by the Construction segment.
Outlook
- The construction industry continues to be plagued by rising cost and manpower issues. Lian Beng expects operating conditions to remain challenging, but will closely monitor the delivery of projects.
- As of 14 January 2022, Lian Beng’s order book stands at S$1.3bn, which should support construction activities through FY26.
- See
Vivian Ye
Phillip Securities Research
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https://www.stocksbnb.com/
2022-01-26
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