The Positives
+ Higher revenue from construction and property development. Construction revenue almost doubled from a low base in 1H21. The level of construction activity has recovered and there is also more progress made in various construction projects. Revenue from Investment Holding increased mainly due to contribution from BreadTalk IHQ. The acquisition was completed in April 2021.
+ Operating and free cash flows turned positive. Operating cash flow was S$31mn, from negative S$3.3mn in 1H21. FCF was S$21.9mn, from S$6.5mn in 1H21. This was mainly due to the decrease in development properties from S$180.9mn in May 2021 to S$134.6mn in November 2021, as a result of increase in sale of development units of INSPACE.
The Negatives
– Lower PATMI and EPS due to higher construction costs. Only 77.6% of the Property Development segment’s profit, representing the effective interest held by Lian Beng in SLB was recognised. As such, the increase in contribution was offset by the higher loss incurred by the Construction segment.
Outlook
The construction industry continues to be plagued by rising cost and manpower issues. Lian Beng expects operating conditions to remain challenging, but will closely monitor the delivery of projects.
As of 14 January 2022, Lian Beng’s order book stands at S$1.3bn, which should support construction activities through FY26.
