The CMO Survey - Highlights and Insights Report - Spring 2024
Account assignment fnbe
1. SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN
FOUNDATION IN NATURAL AND BUILT ENVIRONMENT
Basic Accounting (ACC30205)
Assignment: Financial Ratio Analysis
Company Name : LBS Bina
Lecturer: Ms. Tay Shir Men
Group Members: Calvin Wong Kim Ming (0323642)
Chiang Lin Chew (0322923)
Ti Cheng Jie (0323931)
Zachary Ooi Cheng En (0323120)
2. Table of Content
NO. CONTENT PAGE NO.
1. History of LBS Group Berhad 1
2. Recent Development 2-3
3. Profitability Ratio 4-5
4. Stability Ratio 6-7
5. Price Earning Ratio 8-10
6. Investment Recommendation 11-12
7. Appendix 13-19
8. References 20
3. Brief Background History of LBS
LBS Bina Group Berhad is a prominent property developer in Malaysia. Having been
around for more than 20 years, LBS Bina has built a strong reputation for developing
high quality properties all over Malaysia and abroad.
The history behind LBS Bina actually dates back longer than that when Datuk Lim
Bock Seng started a construction business in Petaling Jaya which would later grow to
become one of the most significant property developers in Malaysia.
LBS would then expand further in 1992 when it ventured into the property
development sector through the Jelapang Maju Light Industrial Park in Perak. That
would be the springboard to more projects as LBS continued to grow exponentially.
Before long, the company was undertaking several large projects including its
flagship projects like the Taman Perindustrian Bukit Serdang Seksyen 14, Taman
Pinggiran Putra and the very popular Bandar Saujana Putra, which was a mega
project.
Since then, LBS has continued to expand and grow where it is among the primary
players in the Malaysian market while it is expanding further outside the country into
China, seen as one of the most challenging markets in the world. Today, LBS is
involved not only in property development but in several other related areas like
property management, building materials and landscaping, among others.
Among other projects that LBS has been involved in include the very popular The
Lake Residences in Puchong, D’Island Residences, Indigo Homes, Pearl Villa, Topaz
III and IV, the Ivory Residences II, Magenta Homes and I Hub Puchong.
4. Recent Development
PROPERTY developer LBS Bina Group Bhd (LBS) will be showcasing its popular
developments at the Stylish Living Property Fair by StarProperty.my which will be
held from today till Sunday in the Kuala Lumpur Convention Centre.
“In line with this year’s theme, LBS aims to make stylish living accessible to different
property segments, whether it is affordable, medium or high-end.
“In addition to the attractive incentives, rebates and discounts available, our
developments are expected to meet the demands of homebuyers and investors alike,”
said LBS managing director Datuk Lim Hock San.
Buyers can expect to view five LBS developments — BSP Skypark (Bandar Saujana
Putra), Barrington Square (Cameron Golden Hills), Balvia, Nautilus as well as D’
Island Residence.
Catering to young families and first-time homebuyers, BSP Skypark boasts 689
serviced residence units alongside 32 commercial units. Priced from RM400,900,
with a gross built-up area from 1,004 sq ft, the serviced residences feature a three-
bedroom, two-bathroom layout. The commercial units come with gross built up area
from 1,030 sq ft and are priced from RM618,000.
Another in demand development by LBS is Barrington Square located in Cameron
Golden Hills, Cameron Highlands. Similar to BSP Skypark, LBS incorporates the
element of convenience in Barrington Square’s shop apartments.
Each apartment unit boasts a built-up area from 581 sq ft to 1,345 sq ft while the shop
units have a built-up area from 1,001 sq ft. Buyers have an option of three apartment
styles to choose from namely a studio unit priced from RM301,800, two-room
apartment from RM356,800 and penthouses with two to three rooms from
RM487,800. Shops units on the lower ground floor are priced from RM750,800.
Delivering more options in the high-end market segment, LBS will also be featuring
its flagship development, namely Balvia, Nautilus and D’ Island Residence. Inspired
by Thai elements, Balvia homes offer a larger layout option with a gross built-up area
of 4,864 sq ft and land size of 40’x80’.
The three-storey semi-detached houses come with a luxurious five bedrooms with six
bathrooms plus two utility rooms. Priced from RM2.5mil, Balvia units come with a
range of value added features which include a lift, rainwater harvesting system and
alarm as well as intercom system.
Phase one of Balvia is expected to be completed by November 2013.
Located on the Scandinavian-inspired coast of D’ Island Residence, Nautilus offers a
selection of two layout types, such as 24’ x 100’ (Type A) and 24’ x 80’ (Type B)
which have a gross built-up area from 4,791 sq ft and 4,246 sq ft, respectively.
5. The three-storey superlink home offers an exquisite five bedroom, one utility and six
bathroom layout and is priced from RM1.9mil for Type A and RM1.8mil for Type B.
Nautilus’ unique features include solar panels, a lift, rain water harvesting system, hot
water piping and alarm as well as intercom system.
Phase one of Nautilus is expected to be completed by the second quarter of 2014.
Buyers who want the freedom to design their dream homes can explore the benefits of
D’ Island Residences’ bungalow lands. Located on the north and north-west coast of
D’ Island Residence, the vacant land area ranges from 6,566 sq ft to 11,452 sq ft
priced from RM260 to RM300 per sq ft.
A RM50,000 moving-in incentive awaits buyers who successfully complete the
construction of bungalows within five years from the vacant possession date. Phase
one of the bungalow land is expected to be ready by November 2013.
6. Profitability Ratio
The following table shows profitability ratio calculation and
interpretation for LBS Bina in the year 2012 and 2013.
Profitability
Ratio
2012 2013 Interpretation
Return on
Equity (ROE)
509,644,355
516,690,656.5
X100%
=98.6%
533,532,722
699,735,858
X100%
=76.2%
HigherROE inthe
year2012 compared
to 2013 showsthat
the business,LBS
Binais earning
higherreturnsof
capital in2012.
Net Profit
Margin (NPM)
39,003,430
509,644,355
X100%
=9.4%
397,323,654
533,532,722
X100%
=74.5%
An increase inNPM
for the year2013 is
a positive signandit
indicatesthatLBS
Binakeptits
expenseslower
comparedto the
year2012. Thus,this
givesthe business
more profitfor
2013. Furthermore,
thisshowsthat LBS
Binacontrolledtheir
overall expenses
betterin2013
Gross Profit
Margin (GPM)
146,227,906
509,644,355
X100%
=28.1%
168,577,154
533,532,722
X100%
=31.6%
ThismeasuresLBS
Bina’sabilityto
control theirCOGS
expense.A higher
GPM meansthatthe
expense is better
managed.The COGS
expensesare well
managedin2013
resultinginahigher
GPM.
General Exp.
Ratio (GER)
67,470,147
509,644,355
X100%
=13.2%
85,596,945
533,532,722
X100%
=16.0%
The year 2013
showsthat the GER
ishighercompared
to 2012. A higher
general expense
wouldresultina
lowerNPM.
8. Financial Stability Ratio
The following table shows the profitability ratio calculation and
interpretation for LBS Bina in the year 2013 and 2013.
Stability
Ratio
2012 2013 Interpretatio
n
Working
Capital
(WCR)
927,829,389
520,720,661
=0.62:1
925,492,766
609,599,483
=1.52:1
For everyRM1
of current
liabilityinthe
year2013, the
business,LBS
Binahas 1.52 of
currentassets
to pay forit. It
has a higher
ratiothan 2012.
However,a
businessshould
preferablyhave
a minimumof
2:1 of current
assetsto
currentliability
to ensure that
the business
doesnotface
difficulties.
Total
Debt
(TDR)
908,176,834
1,435,008,317
X100%
=63.6%
1,137,172,437
2,009,812,670
X100%
=56.6%
For 2013, the
TDR is lower
than 2012,
havinga TDR of
63.6% and
56.6%
respectively.As
the TDR islower
than in2013,
thisresultsina
higheramount
of owner’s
equity.Itis
stronglyadvised
that a business’
TDR doesnot
exceedmore
than 50% as it
wouldhave a
higherriskof
bankruptcy.
9. Inventory
Turnover
Ratio
(ITR)
365days ÷
363,416,449
15,721,777.5
=16 days
365 days ÷
364,955,568
7,934,313
=8 days
It takes8 days
for the business
in2013 to sell
one batch of
goods.The
businessin2013
can sell goods
rapidly,
generating
more cash
quicklytopay
off itsliabilities.
Interest
Coverage
Ratio
(ICR)
18,457,247 + 75,014,260
18,457,247
=5.1 times
426,901,921 + 15,170,850
15,170,850
=29.1 times
LBS Bina’sICR is
higherin2013
than in2012.
Thismeansthat
the business’
abilitytopayoff
itsinterest
expense in
higherthan
2012. Inthe
year2013, LBS
Binahas enough
profitto payits
interest
expenses29.1
times.Toavoid
bankruptcy,a
business’
interest
coverage should
not fall below 5
times.
10. Price Earning Ratio (P/E Ratio)
2012
Basic earnings per share: 9.7
Current share price: 0.84
(0.84/9.70)= 8.148
2013
Basic earnings per share: 96.09
Current share price: 1.56
(1.56/96.09)= 0.016
The P/E ratio measures how expensive a share is. In the year 2012,
the P/E ratio is 8.148 while in the year 2013 the P/E ratio is 0.016.
This means that the share in 2013 is less expensive compared to the
share in the year 2012. A P/E ratio of 0.016 indicates that an investor
will need to wait for 0.016 years to recoup his investment.
11. LBS Bina Group Bhd (5789.KL)
FTSE Bursa Malaysia KLCI (^KLSE)
Based on the graph above, it shows that the share price for LBS
Bina Group Bhd and index for FTSE Bursa Malaysia KLCI. Before
determining whether to invest in either in a company or a overall market
share KLCI, which company has a better percentage over the time period
from May 2015 to February 2016 must be understood. Hence, 3 different
points of the time will be viewed ti determined the performance of both
the graph.
First point of the time, the share price of LBS Bina Group Bhd is 1.74 on
7 May 2014, and the index for FTSE Bursa Malaysia KLCI is 1805.10.
At 17 July 2015, the share price decrease to 1.69 and the index decrease
to 1574.67. The decrease of the share price is (1.69-1.74)/1.74 = -2.87%
whereas the index changes is (1574.67–1805.10)/ 1805.10 = -12.7%.
This is to say that the performance of the company is better than the
index.
12. The share price of LBS Bina Group Bhd is 1.7200 on 20 August 2014,
and the index for FTSEBursa Malaysia KLCI is 1577.41. At 21
November 2014, the share price decrease to 1.7000 and the index
increase to 1661.89. The decrease of share price is (1.7000-1.7200)/
1.7200= -1.16%, whereas the index changes is (1.661.89-
1577.41)/1661.89= 5.08%. As such, the performance of the company is
worse than the index this time.
For the final of the graph, on 8 July 2015 which the share price is 1.5200
for LBS Bina Group Bhd and the index for FTSEBursa Malaysia KLCI
is 1695.83. At 7 August 2015, the share price decrease to 1.4600 and the
index price also decrease to 1682.65. The decrease of share price is
(1.4600 – 1.5200)/1.5200= -3.94%, whereas the index changes is
(1682.65 – 1695.83)/1695.83= - 0.78%. Hence, the performance of the
company is worse than the index this time.
By comparing LBS Bina Group Bhd with the overall market share KLCI,
LBS Bina is continuously dropping, while FTSEBursa Malaysia is also
decreasing although there are times where is raised but not as bad as LBS
Group. Furthermore, the 3 point of time that has been calculated shows
that LBS Group Bhd is not recommended for investing in.
13. Investment Recommendation
● Transforming into a significant medium to high-end developer. LBS Bina
Group Berhad (LBS) has long been recognised as a low-to-medium cost
developer. The Group has recently rebranded its corporate image and
reposition itself to become one of the significant medium-to-high end property
players after realising that its previous business model failed to withstand the
financial crisis in 2008. We believe the stock will be back into investors' radar
screen once it posts more convincing earnings this year and its successful
launches of high-profile project, D'Island, in Klang Valley.
● Strong turnaround. LBS has successfully returned to the black in 2010 by
achieving RM16.5m net profit against losses of RM17.2m posted in 2009
thanks to strong sales and higher margin achieved from its medium-to-high
end projects. Going forward, we estimate the Group to record net profit of
RM40.1m in 2011F, a whopping jump of 142.6% yoy and maintaining its
profit momentum for 2012F and 2013F with net profit of RM83.4m and
RM119.7m respectively.
● RM9.1b sizeable GDV to sustain the Group's earnings over the next 10-15
years. LBS has a total undeveloped land bank of 2,400 acres in Klang Valley,
Cameron Highlands, Perak, Johor and China yielding total GDV of RM9.1b
(ex-China). The Group targets to launch its flagship high-end project,
D'Island, in Puchong in September 2011. The response for the pre-sales is
encouraging with 90% take-up for the 122 units of 3-storey superlink houses
being launched, pricing over a million or RM370-400psf.
● Strong unbilled sales. The Group has successfully chalked in about RM591m
unbilled sales which provides earnings visibility of almost 1.7x of the Group's
2010 revenue of RM341m. Going forward, LBS is expected to continue to
achieve impressive new sales with its strategy of focusing middle to high
income level house buyers, which is less prone to rising cost of living.
14. Attractive valuation with potential 165% upside. Our non-rated target price for LBS is
RM2.03, which is based on 50% discount to its RNAV/share of RM4.07 in view of
LBS being a small cap stock. Our target price also implies 9.4x 2012F and 6.5x 2012F
PER. Current valuations look attractive as it is trading at 7.4x 2011F and 3.6x 2012F
PER, which is significantly lower than the sector average of 13-14x.
