Lian Beng H1 net profit declines 15.5%, top line up about 100%

LIAN Beng Group L03 : L03 0% saw the increase in top line for the half year to November eroded by a surge in cost of sales and operating expenses, as well as a substantial reduction in government handouts.

The property developer cum construction group posted a 15.5 per cent lower net profit of S$14.9 million for H1 FY2022, compared to S$17.6 million in the corresponding period a year ago, according to a regulatory filing on Friday (Jan 14).

As a result, earnings per share fell to S$0.0298 from S$0.0352 previously. This was in spite of an almost 100 per cent increase in Lian Beng's top line to S$377.3 million, from S$197.5 million.

More activities in its construction, property development and investment holding segments helped boost its revenue.

Specifically, the group's construction segment posted a 98.7 per cent increase in revenue year on year to S$310.1 million from S$156.1 million previously, as the level of construction activity and progress made in various projects improved in H1 FY2022.

This is in contrast to the situation in H1 FY2021 when the pace of work resumption was slowed down by manpower disruption from the control of workers' movement and stringent safe-management measures.

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The improvement in construction activity and progress was, however, offset by rising labour and material costs amid the ongoing pandemic. There was a cut of about S$10 million in government relief assistance and incentives as well.

Ong Pang Aik, chairman of Lian Beng, said: "The construction industry continues to be plagued by rising cost and manpower issues. The group expects the construction sector's operating conditions to remain difficult in the year ahead, amid continued manpower shortage and deployment challenges."

However, with more units sold for the industrial project INSPACE, along with higher revenue recognition in line with construction progress made on the project, the group's property development segment posted an increase of about 100 per cent in revenue to S$39.9 million.

Meanwhile, investment holding revenue rose 41.3 per cent to S$17 million from S$12 million previously, mainly due to contribution from food and beverage vendor BreadTalk's headquarters building following Lian Beng's acquisition of the property in April 2021. The group's dormitory unit recorded stable occupancy and revenue year on year as well.

An interim dividend of S$0.01 per share has been declared and is payable on Jan 31. No such dividend was dished out in the corresponding period a year ago.

Lian Beng reported net asset value per share of 149.74 Singapore cents as at end-November 2021, an improvement from 148.10 cents as at end-May 2021.

Order book as at Jan 14 was S$1.3 billion, which the group expects to be supported by its construction business activities through FY2026.

The group has flagged challenges in the completion of some projects under the property development segment due to manpower shortages but said it "will take the necessary initiatives to moderate any financial impact in the event of a delay".

The group expects its dormitory and investment holding segments to continue generating stable recurring income in the ensuing months.

Lian Beng shares closed S$0.005 or 0.9 per cent lower at S$0.54 on Friday, before the results announcement.