Construction|22November2011

BUY

LianBengGroup

CompanyUpdate

ADragoninthebag

Analyst

Event
Lian Bengs 50:50 joint venture with Centurion Properties bought the
freehold,68unitDragonMansionatSpottiswoodeParkfor$130mlast
week.Theredevelopmentcanyield118,943sqftofGFA,implyingasale
priceof$1,093psfpprandanestimatedbreakevenof$1,580psf.Asa
comparison, the projects in the primary market in the area, namely,
Spottiswoode18andSpottiswoodeResidences,aresellingatamedian
priceof$2,000psf.MaintainBUY.

OOIYiTung
ooiyitung@kimeng.com
(65)64335712

Price
Target
STIndex

$0.335
$0.62
2,697.98

OurView
DragonMansionwasfirstputupforsaleinMaythisyearwithareserve
price of $150156m but failed to attract any buyer. It returned to the
marketinOctober,gunningfor$132142m.Therewereahandfulofbids
but Lian Bengs offer of $130m came out tops. Two adjacent projects,
RoxyPacificsSpottiswoode18andUOLsSpottiswoodeResidences,are
over 90% sold at a median price of $2,000 psf. This bodes well for the
redevelopmentofDragonMansion,ascompetitionwilllikelynotbestiff.
Wehaveyettofactorinanyearningscontributionfromthisproject.
ThesaleofMSpace,LianBengsindustrialprojectinMandaiEstate,has
been very positive. We understand from the marketing agent SLP
Internationalthatitismorethan90%soldatanaveragepriceof$650
psf. When completed in the middle of next year, we estimate that the
projects pretax development profit of $30m will give FYMay13
earningsawelcomeboost.
The addition of Dragon Mansion has increased Lian Bengs attributable
unsold landbank to 84,574 sq ft. We continue to expect the groups
earnings (more than 60%) to be driven by the construction segment,
backed by a strong orderbook of $761m that excludes the anticipated
contractsfromMandaiEstate($66mincludingthebuildingofaworkers
dormitory),MidlinkPlaza($45m)andDragonMansion($42m).

HistoricalChart

Performance

1m

3m

Absolute(%)

4.1

9.7

6m
0.4

Relative(%)

3.6

11.1

17.9

StockInformation

LIBG.SI
Tickercode
LBGSP

Marketcap(US$m)
142.2
52weekhigh(S$)
0.398
52weeklow(S$)
0.275
Sharesissued(m)
529.8
6mavgd.vol(S$m)
1.1
Freefloat(%)
74.75
Majorshareholder(%)
OngSekChong&Sons(25.25)

Action&Recommendation
WemaintainourBUYrecommendationonLianBengwithatargetpriceof
$0.62,peggedat6xFYMay12FPER.
YearEndMay31
Sales(S$m)
Pretax(S$m)
Netprofit(S$m)
EPS(Scts)
EPSgrowth(%)
PER(x)
EV/EBITDA(x)
Yield(%)

KeyIndicators

ROE(%)
BVPSasatAug2011($)
Interestcover(x)

23.1
0.39
54.2

2010
345.7
29.0
24.0
4.5
41.3
7.7
3.9
2.3

2011
507.3
58.3
48.2
9.1
100.4
3.8
2.0
4.6

2012F
522.6
65.4
54.2
10.2
12.5
3.4
0.7
5.1

2013F
535.6
76.5
63.5
12.0
17.2
2.9
0.5
6.0

2014F
587.6
73.3
58.9
11.1
7.3
3.1
0.4
5.7

SEEAPPENDIXIFORIMPORTANTDISCLOSURESANDANALYSTCERTIFICATIONS
Co.RegNo:198700034E
MICA(P):090/11/2009

LianBengGroup

22November2011

Figure1:PrimarymarketpricesinSpottiswoodePark
Project
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
SpottiswoodeResidences
Spottiswoode18
Spottiswoode18
Spottiswoode18
Spottiswoode18
Spottiswoode18
Spottiswoode18
Spottiswoode18
Spottiswoode18
Spottiswoode18
Spottiswoode18

Month
Nov2010
Dec2010
Jan2011
Feb2011
Mar2011
Apr2011
May2011
Jun2011
Jul2011
Aug2011
Sep2011
Oct2011
Jan2011
Feb2011
Mar2011
Apr2011
May2011
Jun2011
Jul2011
Aug2011
Sep2011
Oct2011

Source:UrbanRedevelopmentAuthority,KimEng

Figure2:LocationofDragonMansion

Source:onemap.sg

Total
units
351
351
351
351
351
351
351
351
351
351
351
351
251
251
251
251
251
251
251
251
251
251

Cumulative
unitssold
258
283
291
298
308
312
313
314
314
316
317
317
204
227
237
238
239
239
240
240
240
240

Takeup
rate(%)
74
81
83
85
88
89
89
89
89
90
90
90
81
90
94
95
95
95
96
96
96
96

Median
price
1,853
2,051
2,081
2,115
2,124
2,155
2,006
2,232

2,161
2,152

1,992
2,230
2,322
2,300
2,298

2,400

Lowest
price
1,680
1,833
1,836
2,024
1,970
2,114
2,006
2,232

2,152
2,152

1,699
1,866
1,599
2,300
2,298

2,400

Highest
price
2,269
2,248
2,267
2,192
2,240
2,187
2,006
2,232

2,169
2,152

2,419
2,470
2,410
2,300
2,298

2,400

LianBengGroup

22November2011

Figure3:AssumptionsforLianBengsdevelopmentprojects

(YEMay)
OLAResidences*
KovanResidences
111EmeraldHill
MandaiEstate
LincolnSuites

Stake

GFA

(%)
100
19
10
55
25

(sqft)
66,245
664,342
78,689
188,370
168,000

Total
cost
(S$m)
67.1
539.3
215.1
63.5
338.0

Total
revenue
(S$m)
77.6
600.0
216.4
118.7
369.6

Totalpre
taxprofit
(S$m)
10.5
60.7
1.3
55.2
31.6

Takeuprate(%)
FY12F
FY13F
FY14F
100

100

20
100

100
100

80
100
100

Full
recognition
FY12
FY12
FY13
FY13
FY14

*Revenuehasbeenprogressivelyrecognisedsince2009,remainingrevenueisnotsignificant.Source:Companydata,KimEngestimates

Figure4:AssumptionsforLianBengsorderbook

(YEMay)
KovanResidences
109AEmeraldHill
JackingpipesforPUB
111EmeraldHill
TheRitzCarltonResidences
WaterfrontKey
TheGale
Waterbank
CentroResidences
TheLaurels
SpottiswoodeResidences
TheScala
BinTongPark
HedgesPark
WaterfrontIsle
Outstandingorderbook
NewcontractinFY12
NewcontractinFY12
NewcontractinFY13
NewcontractinFY13
Source:Companydata,KimEngestimates

Contract
size
(S$m)
201.4
45.3
15.0
50.4
99.5
101.0
112.7
144.0
78.0
95.0
88.3
119.5
4.9
150.7
128.8

150.0
150.0
150.0
150.0

Outstanding
orderbook
(S$m)
0.3

2.7
6.7

30.8
54.5
76.3
56.8
75.3
79.5
98.1
2.1
149.3
128.8
761.2

Stake
(%)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

100
100
100
100

Recognitionschedule
FY12F
100%
100%
100%
100%
100%
90%
70%
70%
50%
50%
20%
50%
100%
20%
20%

0%
0%

FY13F
100%
100%
100%
100%
100%
100%
100%
100%
90%
80%
50%
80%
100%
50%
50%

20%
20%
0%
0%

FY14F
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

50%
50%
20%
20%

LianBengGroup

22November2011

Profitandloss
YEMay(S$m)
Sales
Costofgoodssold
GrossProfit
Operatingexpenses
OperatingProfit
Netinterest
Interestincome
Interestexpense
Netinvestmentincome
NetJVandassociates
Netexceptionalitems
Pretaxincome
Incometaxes
Minorityinterest
Netprofit
EBITDA
EPSbasic(Scts)
EPSfullydiluted(Scts)

Cashflow
2010
345.7
300.4
45.3
19.0
26.3
0.7
0.4
1.1
3.4
0.0
0.0
29.0
4.8
0.2
24.0
50.5
4.5
4.5

Source:Companydata,KimEngestimates

2011
507.3
432.3
75.0
22.5
52.5
0.2
0.7
1.0
6.0
0.0
0.0
58.3
9.6
0.4
48.2
81.2
9.1
9.1

2012F
522.6
444.2
78.4
21.7
56.7
0.3
0.7
1.0
9.0
0.0
0.0
65.4
10.8
0.4
54.2
84.6
10.2
10.2

2013F
535.6
439.2
96.4
22.6
73.8
0.3
0.7
1.0
3.0
0.0
0.0
76.5
12.6
0.4
63.5
102.6
12.0
12.0

2014F
587.6
493.6
94.0
23.4
70.6
0.3
0.7
1.0
3.0
0.0
0.0
73.3
12.1
2.3
58.9
100.2
11.1
11.1

2010
403.6
336.2
70.8
5.0
164.1
96.4
67.4
14.1
41.9
11.4
259.7
198.9
163.1
28.4
7.3
60.8
53.2
7.6
144.0
82.3
0.3
60.9
0.6

Source:Companydata,KimEngestimates

Source:Companydata,KimEngestimates

2011 2012F
83.3 94.4
48.2
54.2
6.0
5.9
31.4
40.3
2.3
6.0
55.2 22.5
10.3 10.0
0.0
0.0
44.9
32.5
28.1 116.9
46.8 36.0
0.0
0.0
46.1 27.6
4.9
0.0
4.2
8.5
74.9 80.9
73.0 84.4

2013F
86.6
63.5
5.9
17.1
0.0
10.0
10.0
0.0
0.0
76.6
29.5
0.0
20.0
0.0
9.5
47.0
76.6

2014F
87.8
58.9
5.9
23.0
0.0
10.0
10.0
0.0
0.0
77.8
31.1
0.0
20.0
0.0
11.1
46.7
77.8

2013F

2014F

2.5
30.3
21.3
17.2
17.2

13.8
19.2
11.9
10.2
22.0

25.1
57.4
63.5
3.0
86.6
4.1
1.9
1.5
165.8

12.0
16.3
54.6
101.1
19.4
2.1

9.7
4.4
2.3
7.3
7.3

12.0
17.1
10.0
8.7
17.4

15.6
64.9
58.9
2.8
87.8
4.2
1.9
1.5
218.6

11.1
16.6
63.6
110.9
18.9
2.0

Keyratios

Balancesheet

2010
82.3
24.0
4.5
51.5
2.3
11.6
9.6
0.0
2.1
70.6
24.4
0.0
20.6
0.6
3.2
46.3
72.7

YEMay(S$m)
Totalassets
Currentassets
Cashandbankbalances
Inventories
Accountsreceivable
Developmentproperties
Otherassets
Property,plant&eqt
Investmentproperties
Others
Totalliabilities
Currentliabilities
Creditors&accruals
STborrowings
Others
Longtermliabilities
Longtermdebts
Others
Shareholder'sequity
Paidincapital
Reserve
Accumulatedprofits
Minorityinterest

YEMay(S$m)
Operatingcashflow
Netprofit
Depreciation&amortisation
Changeinworkingcapital
Others
Investmentcashflow
Netcapex
ChangeinLTinvestment
Changeinotherassets
Cashflowafterinvt.
Financingcashflow
Changeinsharecapital
Netchangeindebt
ChangeinotherLTliab.
Dividendspaid
Netcashflow
Freecashflow

2011
569.3
467.6
149.9
6.4
153.8
157.6
101.6
47.3
42.6
11.7
380.0
270.3
230.6
27.6
12.1
109.7
100.2
9.5
189.3
82.3
0.7
104.9
1.5

2012F
584.4
476.3
203.8
6.4
153.1
113.0
108.1
49.7
46.7
11.7
349.3
267.2
235.7
20.0
11.5
82.1
72.7
9.4
235.0
82.3
0.7
150.6
1.5

2013F
625.3
510.7
238.4
6.4
167.6
98.2
114.7
52.2
50.8
11.7
335.6
273.3
241.5
20.0
11.8
62.3
52.7
9.6
289.0
82.3
0.7
204.6
1.5

2014F
676.2
554.9
273.4
6.4
187.6
87.5
121.4
54.8
54.9
11.7
341.2
297.9
265.0
20.0
12.9
43.2
32.7
10.6
338.9
82.3
0.7
254.5
1.5

YEMay
Growth(%YoY)
Sales
OP
EBITDA
NP
EPS
Profitability(%)
Operatingmargin
EBITDAmargin
Netprofitmargin
ROA
ROE
Stability
Grossdebt/equity(%)
Netdebt/equity(%)
Int.coverage(X)
Int.&STdebtcoverage(X)
Cashflowint.coverage(X)
Cashflowint.&STdebt(X)
Currentratio(X)
Quickratio(X)
Netdebt(S$m)
Persharedata(Scts)
EPSbasic
CFPS
BVPS
SPS
EBITDA/share
DPS

2010

12.1
36.5
20.5
41.3
41.3

7.6
14.6
7.0
6.0
16.7

56.7
7.5
21.6
0.8
73.8
2.8
1.7
1.2
10.9

4.5
15.5
27.2
65.3
9.5
0.8

Source:Companydata,KimEngestimates

2011 2012F

46.7
3.0
99.8
7.9
60.7
4.2
100.4
12.5
100.4
12.5

10.4
10.8
16.0
16.2
9.5
10.4
8.5
9.3
25.5
23.1

67.5
39.4
11.7 47.3
50.7
54.2
1.7
2.6
87.6
94.4
2.9
4.5
1.7
1.8
1.1
1.3
22.1 111.1

9.1
10.2
15.7
17.8
35.7
44.4
95.8
98.7
15.3
16.0
1.6
1.8

ANALYSTSCOVERAGE/RESEARCHOFFICES

SINGAPORE

INDONESIA

PHILIPPINES

StephanieWONGHeadofResearch
RegionalHeadofInstitutionalResearch
+6564321451swong@kimeng.com

Strategy

Small&MidCaps
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Conglomerates

Technology&Manufacturing

Transport&Telcos
RohanSUPPIAH
+6564321455rohan@kimeng.com

Airlines

Marine&Offshore
WilsonLIEW
+6564321454wilsonliew@kimeng.com

Hotel&Resort

Property&Construction
AnniKUM
+6564321470annikum@kimeng.com

Conglomerates

REITs
JamesKOH
+6564321431jameskoh@kimeng.com

Finance&Banking

Logistics

Resources
EricONG
+6564321857ericong@kimeng.com

Marine&Offshore

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OOIYiTung
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YEAKCheeKeong,CFA
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Engineering

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KatarinaSETIAWANHeadofResearch
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Consumer

Infra

Shipping

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Others
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+622125571126rsilaen@kimeng.co.id

Auto

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Property

Resources
RahmiMARINA
+622125571128rmarina@kimeng.co.id

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Cement

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ConfectionaryandBeverage

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Services

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THAILAND
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WatcharaSATITPORNUMNUAY
+6626586300x4770watchara.s@kimeng.co.th

Retail

Bank

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Utilities

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REGIONAL
ONGSengYeow
+6564321832ongsengyeow@kimeng.com

RegionalProducts&Planning

Recommendationdefinitions
Ourrecommendationisbasedonthe
followingexpectedprice
performancewithin12months:

+15%andabove:BUY
15%to+15%:HOLD
15%orworse:SELL

LianBengGroup

22November2011

APPENDIXI:TERMSFORPROVISIONOFREPORT,DISCLOSURES
AND
DISCLAIMERS

Thisreport,andanyelectronicaccesstoit,isrestrictedtoandintendedonlyforclientsofKimEngResearchPte.Ltd.("KER")ora
relatedentitytoKER(asthecasemaybe)whoareinstitutionalinvestors(forthepurposesofboththeSingaporeSecuritiesand
FuturesAct(SFA)andtheSingaporeFinancialAdvisersAct(FAA))andwhoareallowedaccessthereto(eachan"Authorised
Person")andissubjecttothetermsanddisclaimersbelow.

IFYOUARENOTANAUTHORISEDPERSONORDONOTAGREETOBEBOUNDBYTHETERMSANDDISCLAIMERSSETOUTBELOW,
YOUSHOULDDISREGARDTHISREPORTINITSENTIRETYANDLETKERORITSRELATEDENTITY(ASRELEVANT)KNOWTHATYOUNO
LONGERWISHTORECEIVESUCHREPORTS.

Thisreportprovidesinformationandopinionsasreferenceresourceonly.Thisreportisnotintendedtobeanddoesnotconstitute
financialadvice,investmentadvice,tradingadviceoranyotheradvice.Itisnottobeconstruedasasolicitationoranoffertobuy
orsellanysecuritiesorrelatedfinancialproducts.Theinformationandcommentariesarealsonotmeanttobeendorsementsor
offeringsofanysecurities,options,stocksorotherinvestmentvehicles.

Thereporthasbeenpreparedwithoutregardtotheindividualfinancialcircumstances,needsorobjectivesofpersonswhoreceive
it.Thesecuritiesdiscussedinthisreportmaynotbesuitableforallinvestors.Readersshouldnotrelyonanyoftheinformation
hereinasauthoritativeorsubstitutefortheexerciseoftheirownskillandjudgmentinmakinganyinvestmentorotherdecision.
Readersshouldindependentlyevaluateparticularinvestmentsandstrategies,andareencouragedtoseektheadviceofafinancial
adviserbeforemakinganyinvestmentorenteringintoanytransactioninrelationtothesecuritiesmentionedinthisreport.The
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LianBengGroup

22November2011

Additionalinformationonmentionedsecuritiesisavailableonrequest.

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specificrecommendationsorviewsexpressedinthereport.

2011 Kim Eng Research Pte Ltd. All rights reserved. Except as specifically permitted, no part of this presentation may be
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