Property developer LBS Bina Group Bhd has blossomed over the last few years, largely buoyed by better financial results.
A key player in the mass market, affordable housing sector, LBS posted RM76.01 million in net profit from RM680.3 million in revenue in FY2015. In FY2017, its net profit rose over 21% year on year to RM103.36 million on the back of a 37% y-o-y increase in revenue to RM1.36 billion.
LBS’ numbers held up this year although they came in below analysts’ expectations owing to lower-than-expected property sales. For its nine months ended Sept 30 (9MFY2018), net profit came in at RM68 million, compared with RM68.46 million in the previous corresponding period, even as revenue rose 2.5% y-o-y to RM955.13 million.
LBS, which has a 30% dividend payout guidance but has been paying out at least 50% of earnings since FY2014, in February went through a one-to-two share split that came with a 1-for-10 bonus issue.
During the The Edge BRC awards evaluation period of June 30, 2015, to June 29, 2018, LBS’ share price saw returns at three-year compound annual growth rate of 14.9% a year — well above its peers’.
Over the past few years, the company had also made the headlines with a couple of corporate exercises.
First, it bought a 21.92% stake in MGB Bhd (then known as VTI Vintage Bhd) in July 2014, then nibbled at the stock, and on April 11, 2016, exceeded the mandatory takeover threshold after raising its stake to 50.93% from 31.95%. By December 2016, LBS had accumulated a 56.43% stake in MGB. In September 2016, LBS injected its 75% equity interest in MITC Engineering Sdn Bhd into MGB — to streamline its construction business under MGB — for a consideration of RM225 million. Today, its stake in MGB stands at 59.49%.
MGB has also performed well financially. For its financial year ended December 2017, the construction outfit registered a net profit of RM34.33 million from RM692.64 million in sales. Its market capitalisation of RM373 million as at Dec 10 meant LBS’ 59.5% stake had a market value of RM222 million. LBS’ own market capitalisation stood at RM1.08 billion.
LBS’ latest annual report shows that it has 19 ongoing property development projects and a land bank of more than 3,800 acres, with tracts in Dengkil (638.2 acres) and Ijok (469.9 acres), both in Selangor; Kulai (785.4 acres) and Bandar Putera Indah, both in Johor; and Chemor (356.2 acres) in Ipoh. Among its choice parcels are 5.5 acres in Johor Central Business District, valued at RM300 psf; 6.6 acres in Danga Bay in Johor, valued at RM300 psf; and 10.9 acres in Bukit Jalil, Selangor, valued at RM458 psf.
Those familiar with LBS would know that it also has assets in Zhuhai, China.
LBS, via Lamdeal Investments Ltd (HK), has a 60% stake in Zhuhai International Circuit Ltd (PRC), with the Zhuhai city government’s Zhuhai Jiuzhou Group Holdings Ltd holding the remaining 40%.
Zhuhai International Circuit, a 4.3km Grade 2 circuit, is the first permanent racing circuit built in China. According to LBS’ 2017 annual report, the value of media coverage hit a high of more than RMB160 million (RM97 billion) and the festival was awarded the “Best Racing Event of the Year”. In addition, Zhuhai was proclaimed the Automobile City of China and China City of Motor Sport Racing. LBS is entitled to a 60% share of profit from this joint venture.
In November last year, LBS obtained approval for an upgrading and transformation plan from the Zhuhai government, which could spell big things for LBS. Analysts have pegged a valuation of RM345 million for LBS’ 60% stake in the race circuit.
In June, LBS said it would not hold back on plans to transform the race circuit although its planned venture with NWP Holdings Bhd had lapsed.
With the opening of the Hong Kong-Zhuhai-Macau mega bridge, will it add brownie points to LBS’ Zhuhai assets? This will be keenly watched in the years to come.