PublicInvest Research retains Outperform for LBS Bina, TP 86c


  • Property
  • Tuesday, 07 Jan 2020

Star Property and LBS property events at Central I-city Mall at Shah Alam in Selangor in November 2019.

KUALA LUMPUR: PublicInvestment Research retained its Outperform call for LBS BINA GROUP BHD with an unchanged target price of 86 sen, which is a 40% discount on fully-diluted realised net asset value (RNAV).

It said on Tuesday the lower discount vis-à-vis its peers reflected the group’s ability in quickly monetising its vast land bank despite tough conditions.

The research house said the group had on Monday unveiled its plans for 2020, with the all-important sales target of RM1.6bil revealed, higher than the RM1.5bil set last year though in line with sales actually achieved (RM1.63bil).

“While operating conditions remain sluggish, management opines the numbers are achievable on account of the lower interest rate environment and right product mix supporting demand, ” it said.

PublicInvest Research said LBS Bina plans to launch RM2.32bil worth of projects will be launched this year, spanning Klang Valley, Johor, Pahang and Perak.

“We see no major issues in the group achieving its targets, with the bulk of its property launches in the coming year priced in the affordable range, reaffirming LBS’ investment merits and its entrenched position as a leading player in the domestic mass-market affordable housing segment, ” it said.

To recap, 11 projects across five different locations carrying gross development values (GDV) of RM1.83bil were launched, the bulk of which were in the Klang Valley.

PublicInvest Research said unbilled sales are a robust RM2.24bil, underpinned by total sales of RM1.63bn generated for the year.

Sales in 2019 were driven by its CyberSouth and Alam Perdana developments, both still seeing average take-up rates ranging between 43% and 91% within three months of launch.

For 2020, its primary concentration will again be in the Klang Valley, with CyberSouth (RM1bil) and Alam Perdana (RM699mil) making up the bulk of launches.

CyberSouth will continue to remain a key contributor for the foreseeable future with its RM7.5bil balance GDV to be developed, likewise Alam Perdana with a balance of about RM3bil to tap on.

PublicInvest Research said 2020 promises to be an exciting one with regard to the group’s stake in the Zhuhai International Circuit.

While efforts are ongoing in improving the upgrading and transformation plan with a targeted re-submission to authorities in the near future, works will have to be started this year after a one-year extension till November 2020 had been obtained from the authorities for it to fulfil a stipulated condition on its development approval for the larger Western plot.

“The 264-acre ZIC plot is a key re-rating catalyst, with a conservative value (RM50psf) already accounting for 45% of its current market capitalization, let alone its estimated current market value conservatively two to three times that amount, ” it said.

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