Lian Beng disappoints: OCBC

YTD sales of S$237.7m are down 4.7% YoY.

OCBC Investment Research said:

Lian Beng reported 1HFY12 numbers that are slightly below our expectations. The group recorded YTD sales of S$237.7m, down 4.7% YoY, but 1H net profit of S$30.5m shows a 33% improvement.

The sales decline may be attributed to lower recognition of construction contract revenue while the net profit jump was contributed by gains from the sale of its investment property at New Industrial Road. Without which, we estimate that net profit would have been largely flat.

Construction remains an important revenue driver (73% of total revenue). We note that Lian Beng still holds a sizeable net order book of S$772m, and we expect its earnings to improve when it picks up pace on the execution of its newly awarded contracts.