LBS Bina (LBS) delivered a better than expected performance in 3QFY23, after reporting a net profit of RM40.2m (+13.8% YoY, +56.8% QoQ). For 9MFY23, Group net profit of RM103.7m (+3.0%YoY) constituted c.86% and c.84% of our and consensus full year estimates. The current quarter, we understand, is lifted mainly by completion of certain projects, which yielded better margins due to cost savings. The Group is also still on track to meet its FY23 sales target of RM2bn in our view, as Group’s pre-sales is now at about RM1,564m (or 78% of FY23 sales target as at 14 Nov ‘23) while bookings in hand are reported at RM234m. Unbilled sales dropped from RM2.5bn to RM2.23bn as at 31 Oct ’23. All told, we adjust our FY23-FY25 earnings estimates higher by average of 5% after revising our margin and billing assumptions. We maintain our Outperform call, given its attractive investment proposition and entrenched position as a leading player in the domestic mass-market affordable housing segment. Target price is unchanged at RM0.67 (c.60% discount to NTA).

• Group pre-sales at RM1.564bn (as at 14 Nov 2023), or at about 78% of its FY23 sale target of RM2bn. Group sales again is driven mainly by projects in the Central region (about 88% of total sales), with projects in Johor contributing 6%, Pahang securing 4% and Perak contributing 2% of total sales. Elsewhere, unbilled sales dropped from RM2.5bn to RM2.2bn as more billings were recognized during the quarter, in addition to delivery of vacant possession on two completed projects during the current quarter. Average take-up rate for the projects launched so far is about 78%, driven by projects such as KITA@Cybersouth, Bukit Jalil, LBS Alam Perdana and Prestige Residence.

• RM2bn sales target in FY23. YTD, LBS has successfully launched projects valued at RM1.673bn, and is eyeing more launches with estimated RM424m worth of development projects located in the Klang Valley, Johor, Pahang and Perak. To recap, the Group aims to launch 4,021 units from 12 projects in existing developments in FY23, with 51% of the new properties in the Klang Valley, 23% in Johor, 23% in Pahang, and 3% in Perak. The projects in the Klang Valley are link houses and townhouses within KITA Bestari in Cybersouth, Astella terrace houses at the D’Island Residence in Puchong, and Block B of LBS’ Prestige Residence in Seri Kembangan.

Source: PublicInvest Research - 22 Nov 2023