PETALING JAYA: LBS Bina Group Bhd
may enhance its appeal to investors with a higher dividend payout policy, which better aligns the company with its peers, according to RHB Research.
The property development company raised its dividend payout ratio to 40% from 30% effective financial year 2025 (FY25) onwards, which signals stronger capital management discipline and a more shareholder-friendly approach.
“We are positive on this, as it boosts the stock’s dividend yield. At a 40% payout ratio, our dividends per share (DPS) forecast of 3.7 sen for FY26 makes for an attractive yield of 8%,” the research house further said.
Beyond dividends, the group is also undertaking a strategic reordering of its landbank.
LBS currently holds about 1,136 acres in Johor, representing roughly 29% of its total landbank, and has begun selectively monetising these assets.
A recent disposal of prime land in Johor Baru generated proceeds of RM110mil, which will be redeployed into projects in the Klang Valley.
“This reflects a shift toward capital recycling, prioritising developments with higher gross development value (GDV) density and stronger demand visibility,” the research house said, noting that LBS may continue to dispose of its Johor land parcels if opportunities arise.
A key medium-term catalyst is the group’s involvement in the Kwasa Damansara development, which is expected to deliver major launches from 2027.
The project stands out for its favourable economics, with an estimated land and infrastructure cost of RM1.2bil against a GDV of RM8.3bil, implying a relatively low cost-to-GDV ratio of around 14%, the research house noted.
RHB Research highlighted that infrastructure obligations are largely borne by the master developer, allowing LBS to achieve land utilisation efficiency of nearly 90%, which is significantly higher than the typical 50%.
This, coupled with the potential scarcity value of remaining residential plots in Kwasa, is expected to support stronger long-term demand.
The company’s management is targeting RM1.6bil in sales for FY26, supported by RM274mil in bookings as at end-March and a robust pipeline of RM2.3bil in planned launches.
Unbilled sales of RM1.3bil are also expected to underpin earnings visibility.
RHB Research maintained a “buy” call on LBS, but lowered its target price to 54 sen from 72 sen, reflecting a wider discount to its revalued net asset values amid cautious market sentiment linked to tensions in the Middle East.
Despite the lower valuation, the research house sees about a 15% upside potential, supported by improved dividend returns, disciplined capital allocation and a clearer growth trajectory anchored by its Klang Valley projects.
Looking ahead, RHB Research believes LBS’ strategic pivot towards higher-efficiency developments in the Klang Valley could enhance execution certainty and margins over time.
The research house also noted that the group’s growing focus on capital recycling reflects a more disciplined approach to balance sheet management.
By redeploying proceeds into projects with stronger returns, it said LBS is better positioned to optimise its asset base and sustain long-term profitability.
