RHB Research retains ‘buy’ call on LBS Bina

KUALA LUMPUR: LBS Bina Group Bhd’s net profit of RM30.2 million in the first quarter ended March 31 has come in better than expected, said RHB Investment Bank Bhd (RHB Research) in a note yesterday.

The research firm said this accounted for 32 and 36 per cent of its and analysts’ full-year projections, respectively.

“We remain positive on LBS Bina’s outlook following its strong performance in the first quarter.

“However, we are wary of near-term headwinds coming from rising building material costs that could affect margins, as well as inflation and rising interest rates that may dampen consumer sentiment,” it said.

On the Zhuhai International Circuit (ZIC) updates, RHB Research said LBS Bina was assessing potential buying interest.

The memorandum of understanding signed with Zhuhai Jiuzhou Holdings Group in September 2020 to dispose of 60 per cent of its rights and interest in ZIC expired in March.

“The ZIC business will carry on as usual, with work set to start in November this year.

“Meanwhile, we are still waiting for more updates on the Melaka reclamation and development agreement signed in the first half of last year.”

RHB Research has raised its financial years 20222024 earnings forecasts for LBS Bina by 11 to 12 per cent on the back of the strong first quarter net profit.

“We maintain our ‘buy’ call on LBS Bina with unchanged target price at 63 sen.

“Key risks include an extended soft property market, rising competition in the affordable housing segment and steep interest rate hikes,” it added.