2QFY12 earnings were in-line with our estimates, coming in at S$11m, easing 5.2% YoY on the back of lower construction work recognised. LBG is set to ride on Singapore's current building boom and its ventures in private residential and industrial developments will help boost its bottom line. LBG’s net cash per share of 15.6S¢ (1QFY12: 14.2S¢) would be invested into its property business. Maintain BUY with a TP of S$0.71, based on a target P/E of 7x FY12 earnings.
Earnings in line with expectations. 2QFY12 earnings dipped 5.2% YoY to S$11m, mainly on the back of a 25.7% YoY decline in revenue. While there was a pickup in ready-mix concrete and property development segments, it was enough to make up for the drop in construction work. The impact of the decline in revenue to earnings was largely mitigated by
the S$1.6m dividend received from its 19%-owned property development joint venture company and lower operating expenses.
Taiwan listing plans on track. We checked with management on the progress of its previously announced plans to spin-off its concrete and engineering businesses. If all goes well, the listing of its two subsidiaries on the Taiwan Stock Exchange would be completed by 3Q 2012. To recap, we had earlier estimated IPO proceeds to come in at ~S$28m, based on FY11 earnings of ~S$9m for both subsidiaries and 10.4x prospective earnings.
52 Weeks Range 0.270 - 0.413
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