INSIDE INSIGHTS

Lian Beng chairman continues building stake

Published Mon, Feb 8, 2021 · 05:50 AM

FOR the five local trading sessions that spanned Jan 29 to Feb 4, the Straits Times Index (STI) declined 0.5 per cent while the Nikkei 225 Index, Hang Seng Index and S&P/ASX 200 Index averaged a 1.4 per cent gain.

This has brought the STI's total return for the 2021 year to Feb 4 to 2.3 per cent.

Within the STI, United Overseas Bank, Wilmar International and OCBC have seen the highest net institutional inflows in the 2021 year to Feb 4, while outside the STI, the highest net institutional inflows remained drawn to technology trio Fu Yu Corporation, AEM Holdings and UMS Holdings.

The three stocks that have seen the highest net market maker and liquidity provider inflows in the 2021 year to Feb 4 are Singapore Telecommunications, Thai Beverage and CapitaLand.

Over the five sessions, the iEdge S-Reit Leaders Index diverged from the STI and gained 0.5 per cent, bringing its total return for the 2021 year to Feb 4 to 2.0 per cent.

Among the business trusts, stapled trusts and Reits in the S-Reit sector, Keppel DC Reit, Keppel Reit and Frasers Centrepoint Trust were recipients of the highest net institutional inflows in the 2021 year to Feb 4.

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Share buybacks

There were five primary-listed stocks conducting share buybacks over the five sessions with a total consideration of S$1,462,312.

A significant number of companies reporting full year results this earnings season has coincided with the recent slowdown in buyback activity, with just S$239,973 in buyback consideration filed the week before.

Boustead Singapore bought back 1,368,800 shares on Feb 3, paying between 89.0 cents per share and 88.5 cents per share.

As at Feb 3, it had purchased 0.64 per cent of its issued shares (excluding treasury shares) on the current mandate. The buyback with S$1,220,613 in consideration on Feb 3 was comparatively large, considering that between Sept 15 and Dec 3, the company had conducted 11 buyback transactions, totalling 1,745,300 shares.

The preceding share buyback mandate saw it buy back 1.56 per cent of its issued shares (excluding treasury shares).

Back on Nov 13, Boustead Singapore reported its H1FY21 (ended Sept 30) revenue was stable year on year at S$289.7 million, with the Covid-19 pandemic appearing to have marginal impact on the group's overall revenue performance, although it noted high variability in the impact on each division's revenue performance.

Its H1FY21 total profit after income tax profit was 25 per cent higher year on year at S$22.8 million.

The progressive global infrastructure-related engineering and technology group maintained its net cash position was boosted to S$231.7 million at the end of H1FY21, translating to a net cash per share position of 47.6 cents.

Director and substantial shareholder transactions

The five trading sessions saw 70 changes in director interests and substantial shareholdings filed for close to 40 primary-listed stocks.

This included three company director acquisitions, with three disposals filed, and substantial shareholders filing five acquisitions and eight disposals.

Hanwell Holdings

A filing on Feb 1 noted that Hanwell Holdings substantial shareholder Sam Goi Seng Hui had acquired 3,291,100 shares over two transactions for a consideration of S$902,724.

At 27.4 cents per share, this took his total substantial shareholding in the stock, above the 20 per cent threshold, from 20.94 per cent to 21.54 per cent.

His preceding acquisition was on Jan 4, with 574,800 shares acquired at 28.5 cents per share.

Mr Goi has gradually increased his total interest in the manufacturer, distributer and marketer of quality consumer products from 15.13 per cent in March 2018.

For its H1FY20 (ended June 30), Hanwell Holdings' net profit after tax was S$13.49 million as compared to S$5.77 million in H1FY19.

For the period, it noted that its Singapore consumer business grew 1.6 per cent in revenue against the same period last year, mainly contributed by good performance for rice, cooking oil and tofu.

The group also highlighted its price and cost management efforts in the Singapore consumer business.

Hanwell Holdings also noted that the China sector of the packaging business (Tat Seng Group) saw a decline in revenue for the period, while also seeing a reduction in raw material costs.

Hanwell Holdings holds 63.95 per cent of total shareholding of Tat Seng Packaging Group. This also means that Mr Goi maintains a 63.95 per cent deemed interest in the shares of Tat Seng Packaging Group, in addition to his 0.26 per cent direct interest.

Hanwell Holdings is expected to report its FY20 results in the final week of February.

Lian Beng Group

Between Jan 28 and 29, Ong Sek Chong & Sons acquired 400,000 shares of Lian Beng Group. At an average price of 45.7 cents per share, the consideration for the two open market transactions totalled S$183,000.

The transactions took the total interest of Ong Sek Chong & Sons in the homegrown construction group from 31.71 per cent to 31.79 per cent, and followed the acquisition of 2,202,000 million shares of the company at 45.6 cents per share between Jan 18 and 25.

Ong Sek Chong & Sons' total interest in Lian Beng Group has gradually increased from 29.62 per cent in August 2019.

Lian Beng Group chairman and managing director, Mr Ong Pang Aik, and executive director, Ms Ong Lay Huan maintain deemed interests in Ong Sek Chong & Sons.

This means Mr Ong now maintains a 37.52 per cent total interest in Lian Beng Group, while Ms Ong maintains a 35.00 per cent total interest.

Mr Ong joined the group in 1978 and was instrumental in growing the business from its early days as a subcontractor. He is presently responsible for the overall strategic direction and business expansion of the group.

Lian Beng Group has established a reputation for managing large-scale and complex construction projects. The group is principally involved in the construction of residential, industrial and commercial projects, and civil engineering projects as a main contractor.

As a Building and Construction Authority (BCA) Grade A1 contractor in General Building, Lian Beng Group is able to tender for public sector building projects of unlimited contract value, while its A2 grading in civil engineering allows it to tender for engineering projects of up to S$85 million in contract value.

On Jan 14, Lian Beng Group reported a 5.2 per cent decline in its H1FY21 (ended Nov 30) profit attributable to shareholders.

Attributed to a sharp 36.6 per cent decline in group revenue, the group saw a lower contribution from the construction business, which endured more than four months of work suspension under the Circuit Breaker measures.

Based on advance estimates released back on Jan 4, Singapore's construction sector in 2020 declined by 33.7 per cent compared to 2019.

However, a sequential recovery saw the sector declining 28.5 per cent year on year in the fourth quarter of 2020, compared to 46.2 per cent year-on-year decline in the third quarter of 2020.

Partially offsetting weakness in its construction business, Lian Beng Group saw a turnaround in its share of profit from joint ventures following its disposal of a joint venture in April 2020, as well as improved profitability in its property development business in H1FY21.

Lian Beng Group's property development business is through its 78 per cent owned subsidiary, Catalist-listed SLB Development.

For the 2021 year through to Feb 4, the share price of SLB Development has gained 9 per cent, while the share price of Lian Beng Group has gained 2 per cent.

At the close of H1FY21, the group maintained its cash and cash equivalents remained at a healthy S$194.2 million, while the net asset value per share was 145.6 cents, compared to 141.2 cents as at May 31, 2020.

The group also highlighted that its S$1.5 billion order book would provide a steady flow of activities through FY23.

Nevertheless, it expects operating conditions in the construction sector to remain challenging as long as pandemic-related measures remain in place.

Cognisant of the need to prioritise cash conservation and cost control, Lian Beng Group did not declare any interim dividend for H1FY21; rather, it's retaining funds to ensure that it is able to meet its working capital requirements and has the ability to capitalise on potential investment opportunities.

One such investment opportunity is the put and call option agreement (with consortium partners) to acquire the BreadTalk IHQ Building from BreadTalk Group for an aggregate purchase consideration of S$118 million.

Mr Ong has noted that this acquisition will extend the group's investment footprint in industrial real estate and help to diversify its property portfolio.

Mr Ong added that BreadTalk Group's lease commitment and the property's strategic location would enable the group to yield positive rental returns from the investment, in addition to potential capital appreciation over the longer term.

The average daily trading turnover of Lian Beng Group in the 2021 year to Feb 4 has grown more than three-fold, compared to the full 2020 year.

Ban Leong Technologies

Between Feb 3 and 4, Ban Leong Technologies managing director Ronald Teng Woo Boon acquired 226,000 shares of the company for a consideration of S$55,370 at 25.0 cents per share.

This took his total interest in Ban Leong Technologies from 25.88 per cent to 26.08 per cent.

Mr Teng's preceding acquisitions were between Jan 14 and 15 with 163,000 shares bought at 24.0 cents per share, and on Sept 22 with 29,000 shares bought at 22.0 cents per share.

Mr Teng is the founder of the group and plays an important role in managing the overall business operations.

His responsibilities include formulating and executing its business strategies and policies as well as charting the growth of the group while spearheading the sales and marketing function of the group.

On Nov 6, the group reported a 17.3 per cent year-on-year increase in H1FY21 (ended Sept 30) revenue and 153.3 per cent increase in profit after taxation.

While the group noted continued demand for IT products from changes in businesses and individual practices may be positive for the IT industry, it will continue to remain vigilant in its inventory management and cashflow management for H2FY21.

Ban Leong distributes a diverse range of IT accessories, multimedia and data storage products.

Multimedia products primarily consist of audio and visual products ranging from earphones, speakers and cameras to commercial and consumer displays.

Based in Singapore, the group and has regional offices in Malaysia and Thailand.

  • The writer is the market strategist at Singapore Exchange (SGX). To read SGX's market research reports, visit sgx.com/research.

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