Kuala Lumpur, 6 May – Alliance DBS Research Group recently released its research report on LBS Bina Group, titled “On the Cusp of Greater Success”.
The report highlighted the following:
• Township developer defying odds with robust property sales
• Record sales target of RM1.2bn in FY16 to transform earnings profile
• FV of RM1.85 based on 40% discount to RNAV
Leveraging on township developments – LBS has established a strong reputation for its successful flagship developments – 850- acre Bandar Saujana Putra (BSP) and 175-acre D’Island – which have been instrumental in driving its all-time high property sales of RM1.03bn (+60% y-o-y) in FY15. The strong sales momentum is expected to be sustainable given the overwhelming response to the two key developments in 1Q16 in spite of the generally subdued market.
Strong growth trajectory – LBS is targeting FY16 sales of RM1.2bn, on the back of RM1.9bn worth of launches in the pipeline. Also, its earnings visibility remains strong with record unbilled sales of RM1.07bn (as at Jan 16). LBS is poised to register a strong 3-year earnings CAGR of 22% over FY15-18F.
Deep value in Zhuhai land – LBS’s 60% stake in the 264-acre Zhuhai International Circuit remains its crown jewel given the robust outlook in Zhuhai, especially in the run-up to the opening of the Hong Kong-Zhuhai-Macau link bridge by 2018 which will transform Zhuhai’s socio-economic landscape. Assuming RMB100psf (RM60psf), the Zhuhai land could be valued at RM410m (for 60% stake), equivalent to half of LBS’ market cap.
RM1.85 fair value – This is based on 40% discount to our fully diluted RNAV of RM3.10. Current valuation implies 7x FY17 PE. Attractive dividend yield.
Attractive dividend yield – LBS will receive its last tranche of payment worth HK$200m by Dec17 for its asset disposal to Zhuhai Holdings Investment Group in mid-2013, following which LBS is committed to declare a special DPS of 6 sen. Taking into account its 30% regular dividend payout, this could result in a DPS of 12.5 sen in FY17, implying 7.9% yield.
To download the full report for free, please click on the link below: