It will be done once the group achieves high vaccination rates among its staff and contractors

by ANIS HAZIM / Pic credit: lbs.com.my

LBS Bina Group Bhd is expected to ramp up capacity at its project sites by the end of September upon achieving high vaccination rates among its workers.

According to CGS-CIMB Research, all LBS’s construction sites are able to commence work with a 60% on-site capacity under Phase 1 of the National Recovery Plan.

“We gather that 80% of its staff and contractors are fully vaccinated and the remaining will be immunised by the end of September,” CGS-CIMB analyst Ngo Siew Teng said.

The analyst stated that LBS’s sales momentum and sales conversion of around 50% in July and August 2021 were slower due to lockdowns.

“LBS does not anticipate any delay in projects or late delivery payment at the moment as its projects are all ahead of schedule.

“Its extension of time has also been granted due to the lockdowns and its high usage of the industrial building system precast system saves labour and construction time,” Ngo added.

She also noted that LBS’s memorandum of understanding with Zhuhai JiuZhou to acquire LBS’s 60% stake in Zhuhai International Circuit (ZIC) has expired in March 2021.

“We gather the group has resubmitted the ZIC upgrading and transformation plan to the relevant authorities and has successfully obtained the approvals to allow it to start work latest by November 2022,” stated Ngo.

At the same time, LBS has explored potential offers and joint venture partners.

“We believe LBS may monetise the land through sales or partnerships with a China-based builder to develop the site,” she added.

LBS is still gathering key investors for its reclamation and development agreement (RDA) project and necessary groundwork, such as environmental impact assessment and feasibility studies.

In April 2021, LBS signed an RDA with the Melaka state government for the reclamation and development of reclaimed land into an industry hub with port facilities, located within the Melaka Waterfront Economic Zone.

“Given the ‘Friendly State and Province’ relationships between Melaka and the Guangdong province, and LBS’s presence in Zhuhai, we believe the group could explore bilateral investment opportunities with a China-based partner for this project,” noted Ngo.

CGS-CIMB retained its ‘Add’ call given the potential value arising from LBS’s development at ZIC and anticipated higher financial year 2021 forecast (FY21F) to FY23F earnings.

“Our target price of 56 sen is still based on 0.6 times FY22F price-tobook value (P/BV) for three years mean P/BV, while LBS is poised to benefit from the Malaysian government’s focus on affordable housing as the majority of its products are priced below RM500,000 per unit,” Ngo said.

The group’s key downside risks are a deterioration in property market sentiment and lower-thanexpected sales.