Construction and civil engineering firm Lian Beng has posted earnings of $26.1 million for its FY2021 ended May 31, down 9% from the $28.7 million logged in the year before.
On a fully diluted basis, this translates to earnings per share (EPS) of 5.22 cents, compared to 5.73 cents in FY2020.
This resulted in an increase in Lian Beng’s net asset value per share to 148.1 cents as at May 31, versus 141.24 cents in the year before.
The latest results follows contractions in the group’s construction, property development, investment holding and dormitory businesses following the measures implemented to curb the spread of Covid-19 infections.
As such, revenue for the year edged down by 7.5% y-o-y to $514.5 million.
Revenue from the construction business fell by 7.2% to $427.5 million as work resumed slowly amid the manpower shortages that arose from tighter border measures, disruptions in manpower deployment and safe management measures implemented at worksites.
The property development segment similarly registered an 8.2% decline in revenue to $42.4 million. This is due to lower revenue recognition from the construction of food factory, Mactaggart Foodlink after it received the temporary occupation permit in March.
This decline was partially offset by higher revenue recognition from progress made in the construction of freehold industrial facility INSPACE as well as the sale of the remaining units in T-Space during the year.
The group’s investment holding and dormitory segment saw revenue dip by 9.6% to $44.6 million in view of the rental relief granted to tenants as well as the lower occupancy seen in its dormitories.
Even so, Lian Beng says there was a turnaround in its share of results from associates in this segment to $6.5 million, from losses of $10.9 million seen in the year before. The group attributes this to favourable foreign exchange and interest rates.
Overall, the group’s cost of sales edged down by 3.6% to $454.7 million following the lower level of business activity.
With this, gross profit for FY2021 fell by 29.2% to $59.8 million mainly due to lower profit from the construction segment.
Other operating income was up by 72.8% to $36.1 million thanks to $18.5 million in grants and incentives extended by the government as well as $5.5 million in net foreign exchange gains arising from the depreciation of the USD against the SGD on USD-denominated bank loans.
Some contribution also came from an appreciation of the British Pound and Australian Dollar vis-à-vis the SGD on assets denominated in the respective foreign currencies.
A $0.9 million fair value gain in investment securities also contributed to the higher operating income in FY2021.
The overall increase was partially offset by a $1.6 million decrease in interest income as well as the absence of a $0.6 million gain of the disposal of a subsidiary that was recognised in the previous year.
In this time, Lian Beng’s operating expenses were up by $1.0 million to $10.1 million following higher grant expenses of $1.1 million in relation to the property tax rebates given to its tenants.
Overall, net profit for the year as up 4.5% to $35.2 million.
As at end May, Lian Beng’s cash and cash equivalents stood at $208.3 million, up from $194.6 million at the end of FY2020.
To this end, the company has proposed a first and final dividend of 1 cent per share.
Amidst the challenging backdrop of the Covid-19 pandemic, chairman and managing director Ong Pang Aik is thankful that the company’s “strategy to build diversified revenue streams has enabled [it] to tide through this difficult period”.
Going forward, he expects operating conditions, particularly in the construction sector to remain challenging as the pace of activities remains constrained by manpower shortages and deployment challenges.
Similar delays are expected to affect the completion of some projects under the group’s property development arm.
The group has – through its 60% owned-subsidiary United Tec Construction – secured a $131 million contract for the construction of a private residential building at Canberra Drive. This brings its orderbook to $1.4 billion as at July 29, thereby giving it activity flow through FY2025, says Ong.
Additionally, the group is looking forward to raking in contributions from the Thye Hong Centre to its development portfolio and the BreadTalk IHQ to its investment holding portfolio following the completion of their acquisitions in December 2020 and April, respectively.
Shares in Lian Beng closed flat at 51 cents on July 29, before its results announcement.
