LBS Bina's quarterly profit down by a third as construction, taxation drag

KUALA LUMPUR (Aug 31): LBS Bina Group Bhd's net profit sank by a third to RM14.02 million in its second quarter of financial year 2019, from RM20.82 million a year ago, as it was dragged by a weaker construction and trading segment, and higher taxation.

The segment's income more than halved to RM6.06 million from RM14.88 million on soft margin, loss incurred by a subsidiary and higher depreciation and finance costs. Taxation for the quarter rose 33% to RM17.08 million.

The lacklustre quarterly results was also because its motor racing circuit business' losses widened by 68% to RM3.4 million, while intra-group transactions pulled its management, investment and others segment into a loss before tax of RM15.94 million from a profit of RM5.72 million previously due to intra-group transactions. These, coupled with the above-mentioned, offset the 180% jump in profit to RM51.38 million in its property development segment.

As such, its earnings per share declined to 0.9 sen from 1.62 sen. Revenue, conversely, was 4.8% higher at RM319.38 million from RM304.75 million previously.

For its cumulative six months ended June 30, 2019 (1HFY19), the property developer’s net profit fell 28% to RM31.71 million from RM43.86 million a year ago, despite revenue climbing 19% to RM645.94 million from RM544.87 million. Similarly, the period was weighed down by its construction and trading, management, investment and others, and its motor racing circuit businesses.

On prospects, the group stressed that property development, which accounted for 80% of its revenue in 1HFY19 remains its main earnings driver, and that it is positive on the segment's outlook remaining positive despite the challenges facing the industry.

The optimism stems from its total property sales of about RM1 billion, and unbilled sales of RM1.92 billion as at July 31, which the group said is "well supported by 18 ongoing projects and a total land bank of approximately 4,000 acres".

In a separate statement, LBS Bina group managing director Tan Sri Lim Hock San said the group is in a strong position to meet its sales target of RM1.5 billion for this year.

“We have been focusing on launching more affordable units within self-sustaining and mature townships, with good designs, amenities and easy accessibility, which have helped us to ride through the current challenging economic climate,” it said.

The group has lined up new launches, including the ‘Melodi Perdana’ apartment in LBS Alam Perdana and Tower 2 (South Tower) of Residensi Bintang Bukit Jalil, which are expected to be rolled out in the last quarter of 2019.

LBS Bina's shares closed half a sen or 0.94% lower at 52.5 sen yesterday, bringing it a market capitalisation of RM818.06 million. In the past year, the stock has slumped about 39%.

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