LBS Bina target price raised to 59 sen

KUALA LUMPUR: LBS Bina Group Bhd may explore bilateral investment opportunities with a Chinabased partner for the reclamation and development of a plot of land in Melaka into an industry hub with port facilities, said CGSCIMB Research.

Its 70 per cent indirectly-owned subsidiary Leaptec Engineering Sdn Bhd (LESB) signed a reclamation and development agreement with the Melaka government for the reclamation project on Thursday.

The research firm also noted the “Friendly State and Province” relationship between Melaka and Guangdong province, as well as LBS Bina’s presence in Zhuhai.

“We believe that the specialised works, such as land reclamation and port facilities, are likely to be outsourced or carried out via partnerships, while the construction of commercial or industrial properties will be undertaken by LBS Bina’s construction arm, MGB Bhd,” it said yesterday.

Under the agreement, LESB will pay the state government RM95 million for the rights to perform reclamation works and development at the approved area.

This will be funded via internally generated funds and/or bank borrowings.

CGS-CIMB has downgraded LBS Bina to “hold” from “add” as its share price had outperformed the FTSE Bursa Malaysia KLCI by 12 per cent, indicating that the positive outlook was likely priced in.

But it has raised LBS Bina’s target price to 59 sen from 49 sen previously, given the potential for stronger earnings from the reclamation project.

Chief Minister Datuk Seri Sulaiman Md Ali (centre) with (from left) LBS Bina Group Bhd managing director Datuk Joey Lim Hock Guan, executive chairman Tan Sri Lim Hock San, Melaka State Legislative Assembly speaker Datuk Seri Ab Rauf Yusoh, Melaka State Secretary Datuk Seri Dr Hasim Hasan, Leaptec Engineering Sdn Bhd managing director Datuk Mohd Anis Hisham Abdul Aziz and Melaka Waterfront Economic Zone chief executive officer Mohd Yusof Abu Bakar at a signing ceremony recently.