29 July 2013

Lian Beng - FY 2013 Net Profit Dropped 22.3%

Lian Beng reported latest full year report last week. To recap, FY2013 net profit decreased 22.3% to S$40.2 million as there was a gain in sale of investment property of S$7.9 million in FY2012.
  • Group proposes dividends of 1.25 Singapore cents per share
  • Group’s cash and cash equivalents remained strong at S$170.9 million as at 31 May 2013
  • Construction order book  of  S$1.3 billion as at 31 May 2013 to provide constant flow of activities through FY2016

The operating cash flow dropped due to increase in net working capital. Increase in Loan to Associates and Investment Properties resulted in huge negative investing cash flow. And because of that, you can see an increase in financing cash flow and debts to ensure the cash & equivalents stand at S$100M and above.

In normal circumstance, a rise in net working capital and investment means that the company is experiencing expansion period. So we can be cautiously optimistic that Lian Beng may have better result in later years, if everything including debts is under control. With fully sold out industrial building to get TOP by FY2014 (coming financial year), so we expect a better result coming years.

With declared 1.25c dividend, it turns to about 2.1% dividend yield (still better than bank interest rate). It is up to investors to decide the invest in longer term, hoping for a better FY result, or just look for another better investment opportunity.

Ratio Analysis (FY2012, FY2013, FY2014Q1)

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