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Despite lower earnings, Lian Beng upbeat on property outlook

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Despite lower earnings, Lian Beng upbeat on property outlook

Singapore-listed Lian Beng Group’s net profit declined by 33.7 percent year-on-year...

Singapore-listed Lian Beng Group’s net profit declined by 33.7 percent year-on-year to $12.19 million during the first half ended 30 November 2017 (1H FY2018), revealed an SGX filing on Friday (12 January).

Over the same period, the Grade A1 construction group’s gross profit slumped 33.5 percent to $19.55 million, while revenue fell by 27 percent to 87.64 million.

The drop in revenue was mainly caused by its sluggish construction business, but was offset by contributions from its investment holding division.

“Notwithstanding the lower revenue and profit to shareholders for H1 FY2018 compared to the corresponding period last year, the group is declaring an interim dividend of $0.01 per share, which is the same level as last year’s interim dividend,” it said in a statement.

Despite the lower earnings, Lian Beng maintained a healthy cash level of $155.9 million and its net construction order book reached $972 million as of 30 November 2017.

The latter is expected to provide the company with a steady flow of revenue through FY2022. Among the deals it secured is a $136.8 million contract to build a condominium along Potong Pasir Avenue 1 and another $199.5 million work package for a housing project in Serangoon North Avenue.

It is also bullish on its prospects as Singapore’s Building and Construction Authority (BCA) projected earlier this month that between $16 billion and S$19 billion worth of public projects will be granted this year, surpassing the $15.5 billion in 2017. At the same time, total construction demand is expected to increase from last year’s $24.5 billion to between $26 billion and $31 billion.

In addition, the Urban Redevelopment Authority (URA)’s recent flash estimates showed that prices of private homes edged up by one percent last year versus a 3.1 percent dip in 2016.

Amidst the positive outlook for the local real estate market, the firm is looking into spinning off its property development arm and list it on the Singapore Exchange’s Catalyst Board. Hence, it plans to hold an extraordinary general meeting (EGM) to seek its stockholders’ approval.

Meanwhile, Lian Beng’s Executive Chairman Ong Pang Aik revealed that they recently agreed to divest a property at Franklin Street, Melbourne for A$90.15 million, with the transaction expected to be completed by 2H FY2018.

 

This article was edited by Keshia Faculin.