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Lian Beng Q1 net profit up 21.3% on associates' profits

LIAN Beng Group saw its first-quarter net profit rise 21.3 per cent from the same period a year earlier despite a drop in gross profit, as associates' losses swung into profits for the three months ended Aug 31.

The main contractor on Monday posted a net profit of S$7.4 million in its fiscal first quarter, including a S$1.4 million share of profits of associates.

Lian Beng holds a 20 per cent stake in two development projects, Affinity @ Serangoon and Riverfront Residences.

In the same period a year earlier, Lian Beng's share of losses from the projects was S$3.1 million, due mainly to marketing, showflat construction and borrowing costs which were incurred prior to revenue recognition.

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Construction progress and a significant decline in marketing expenses for the two projects lifted the group's earnings in the first quarter.

Meanwhile, group revenue in the three months ended Aug 31 was S$146.8 million, up 74.5 per cent from the same period a year earlier.

Higher revenue from progressive revenue recognition in the construction segment was partially offset by a decrease in revenue from property development, due to the absence of revenue from the T-Space @ Tampines industrial project, as the project was substantially completed a year ago.

The development project that contributed revenue to the property development segment in the latest quarter was Mactaggart Foodlink.

Lian Beng said it is "cautiously optimistic" about the outlook for the construction market for the next 12 months.

"The group will continue to leverage its strong track record and proven expertise to tender actively for public- and private-sector projects," it said.

Lian Beng has an order book of S$1.4 billion to date, which should support its activities through fiscal year 2023, it said.

It added: "In July 2019, (our) 60 per cent-owned subsidiary, United Tec Construction, secured a contract worh S$234.7 million for the construction of NTUC Fairprice Co-operative Ltd's fresh food distribution centre. In September 2019, United Tec bagged a contract worth S$107.5 million for the construction of a residential development at Kampong Java Road."

Through its property development subsidiary SLB Development, Lian Beng will monitor the property market closely and exercise caution when seeking opportunities to replenish its land bank, it said.

The group is also seeking to build up a new fund management business, having received SLB shareholders' approval to diversify into fund management last month.

Earnings per share was 1.48 Singapore cents, up from 1.22 cents in the first quarter last year.

Net asset value per share was 140.22 Singapore cents as at Aug 31, up from 138.90 cents as at May 31. Cash and cash equivalents stood at S$191.7 million.

Lian Beng shares fell one Singapore cent or 2.02 per cent to S$0.485 on Monday before the results were announced.