http://www.businesstimes.com.sg/arch...-503m-20140411

Published April 11, 2014

Lian Beng nine-month profit jumps 67% to $50.3m

Revenue also rises 67% to $585.6m; group to continue to focus on construction segment

By Lynette Khoo

[email protected] @LynetteKhooBT


CONSTRUCTION company and developer Lian Beng recorded a 67 per cent jump in net profit to $50.3 million for the nine months ended Feb 28 as it recognised profit from its industrial project that was just completed.

Revenue also grew 67 per cent to $585.6 million, mainly bolstered by its industrial development property M-Space, which attained TOP (temporary occupation permit) in January this year.

Lian Beng's executive chairman, Ong Pang Aik, noted that the group's stronger revenue was not solely due to the recognition of M-Space as revenues from construction and ready-mixed segments also showed improvement.

The construction segment remained a key driver to the group revenue for the first nine months of fiscal 2014, contributing about 53 per cent, while its property development and ready-mixed concrete segments contributed 30 per cent and 15 per cent respectively.

Its construction order book was $1.1 billion as at Feb 28, providing it with sustainable flow of construction activities through fiscal 2017.

Revenue from the group's residential development projects such as 50 per cent owned Spottiswoode Suites and Midtown Residences, which are mostly sold, will start streaming in steadily.

But given the current softness in the residential market, the group will continue to focus on the construction segment, Mr Ong said.

Armed with strong cash and cash equivalents of $174.9 million as at Feb 28, the group is on the lookout for business expansion through acquisition, joint venture or strategic alliance. Some plans are already in the works.

It recently formed a wholly owned subsidiary in Malaysia to manage the supply of granite and aggregate and set up its own fleet of tugs and barges to transport construction materials from overseas to Singapore.

Mr Ong said he hoped to sell 50 per cent of this granite supply to third parties.

Lian Beng is also planning to set up a new pre-mix plant by the end of this year, Mr Ong said, though exact details are not fixed yet.

Mr Ong said construction costs will rise given the new government requirements for developments at selected government land sites to use productive technologies and prefabricated components in new projects.

But Lian Beng will price in the higher construction costs into contracts with developers. For projects where Lian Beng is the developer and construction company, the group will factor in the higher costs through lower price bids for land sites from the government, Mr Ong said.

"We will still continue to tender for projects with better margins and go for projects with recurring income," Lian Beng executive director Ong Lay Koon said.

On that front, Lian Beng is interested in more commercial and industrial projects, she said. It is also looking at property development overseas in China and Cambodia through its newly formed joint ventures in these countries.