Lian Beng Q1 net profit surges 59% to S$11.97m
This comes from strong construction orders previously clinched as well as its JVs in property development
Singapore
LIAN Beng Group enjoyed a 58.5 per cent surge in net profit to S$11.97 million for its fiscal first quarter ended Aug 31, on the back of strong construction orders previously clinched.
Group revenue rose 10.8 per cent to S$167.64 million over the same period, due mainly to an increase in revenue generated from the construction segment and workers' dormitory business, which more than offset the decrease in revenue in the ready-mixed concrete segment.
Attributing the strong results to seeds sown in the past, Lian Beng executive chairman Ong Pang Aik said: "The strengthening of our construction order book to above S$1 billion level last year has now translated to higher construction revenue for us.
"Also, the property development projects in which we increasingly participated through joint ventures in the past are bringing in the results now."
The group said its mixed-use projects The Midtown in Hougang and NEWest in West Coast Drive are 96 per cent and 82 per cent sold; KAP, in King Albert Park, a freehold mixed-use project, is almost fully sold. Lian Beng owns 50 per cent of The Midtown, 10 per cent of NEWest and 15 per cent of KAP. Spottiswoode Suites freehold condo project, jointly developed by Lian Beng and Centurion Properties, is 77 per cent sold.
Owing to the adoption of Financial Reporting Standards (FRS) 111 on Joint Arrangements and Revised FRS 28 on Investment in Associates and Joint Ventures, the results from the group's associates companies and joint ventures (JVs) are now depicted separately. Profits from JV development projects lifted Lian Beng's share of results from associates and JVs to S$5 million in the fiscal first quarter from a loss of S$3.6 million in the year-ago period.
Lian Beng pointed out that while these JV development projects will continue to contribute positively to earnings, its core construction business will remain the key revenue growth driver. Its construction order book of about S$1 billion as at end-August will provide a sustainable pipeline of activities till fiscal year 2017.
The group put its war chest at S$150.9 million in cash and cash equivalents as at Aug 31 to fund business opportunities.
In September, Lian Beng and its joint venture partner sold their stake in 122 Middle Investment, which owns the former Midlink Plaza site on Middle Road to the Singapore unit of Chinese conglomerate Nanshan Group for S$270 million.
Meanwhile, Lian Beng and its consortium partners - KOP, KSH Holdings and Centurion Global - are putting up for sale more strata units at Prudential Tower, in which they own a 92.8 per cent stake.
They have just sold half the 11th floor of Prudential Tower under a single strata unit of 5,952 sq ft to Shanghai Tunnel Engineering Co for S$16.37 million or S$2,750 psf.
Shares of Lian Beng closed a cent lower on Monday at S$0.63.
