Lian Beng FY2022 net profit surges 66.7% amid pickup in construction activity

CONSTRUCTION firm Lian Beng Group : L03 0% on Wednesday (Jul 27) reported a 66.7 per cent year-on-year surge in net profit for the financial year ended May 31, with activity across all business segments recording an improvement following the easing of Covid-19 restrictions.

Net profit for FY2022 came in at S$43.5 million, compared with S$26.1 million in the previous financial year, according to the mainboard-listed company’s condensed interim consolidated financial statements.

Earnings per share rose to 8.70 Singapore cents, from 5.22 cents in the previous year.

Likewise, overall revenue jumped 53.2 per cent year on year to S$788.3 million.

Revenue from the construction segment rose 49.6 per cent from a low base in FY2021 to S$639.5 million. The company said this reflects improvement in construction activity in FY2022 in contrast to a “marked slowdown in construction activity” the previous year stemming from restrictions on migrant workers’ movement both into and within Singapore.

Lian Beng said it has been working on delivering projects secured prior to the pandemic following the easing of safe-management measures, but the margins of these projects have been affected due to a “substantial” rise in manpower and material costs.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Revenue from its property development segment more than doubled to S$92.8 million, from S$42.4 million the previous year. Lian Beng said this was mainly due to the increase in the number of units sold in FY2022 along with higher revenue recognition from construction progress made in the development of industrial property Inspace.

The investment holding and dormitory segment saw revenue rise 25.5 per cent to S$56 million, which the company said was mainly boosted by rental contribution from investment property Breadtalk IHQ acquired in April last year.

Other operating income fell 44.9 per cent to S$19.9 million in FY2022 due to a significant decrease in Covid-19-related grants and incentives extended by the government, Lian Beng noted.

The decrease was then offset by higher rental income of S$2.3 million from its development property Thye Hong Centre, which it acquired in December 2020.

In view of the good performance, the board has proposed a final tax-exempt dividend of S$0.02 per share, which, combined with an interim dividend of S$0.01 per share, will bring full-year dividend to S$0.03 per share.

The company said the prevailing labour shortage and rising cost of construction materials are expected to pose operational challenges to both the property development and construction industries.

The current interest rate environment is also expected to raise the group’s cost of borrowing and affect its overall margins, it added.

As at Jul 27, its construction order book stands at S$1.7 billion, and Lian Beng said it will “selectively tender” for public and private sector projects, taking prevailing market conditions into account.

It also said it will maintain financial prudence when seeking opportunities to replenish its property development land bank, in view of the additional property cooling measures implemented by the government.

Lian Beng shares closed flat at S$0.50 on Wednesday.