Lian Beng Group (Singapore): A Micro-cap Wealth Builder for Investors.

[Ed. Note – This article does not meet our new editorial guidelines, nor does the company profiled meet our investment criteria. It will be removed from the site in the future.]

Lian Beng Group Ltd (SGX:L03) is a Singapore base investment holding company established in 1973. The Company is active in the construction of residential, industrial and commercial projects, and civil engineering projects as a main contractor. The Company operates in five segments: Construction segment, the Property Development segment, the Manufacturing of concrete segment includes and investment holding segment.

Lian Beng Group is one of Singapore’s major home-grown building construction groups with integrated civil engineering and construction support service capabilities. Its A1 grade with the Building and Construction Authority (BCA) enables it to tender for public sector building projects of unlimited contract value, while its A2 grade in Civil Engineering allows it to handle engineering projects of up to $85 million in contract value. The Group has also established for itself a solid reputation for its ability to handle large-scale and complex projects.

Lian Beng is also engaged in other construction related activities including the provision scaffolding and engineering services, supply of ready-mix concrete, leasing of equipment and machinery, reinforcement bar fabrication and training of foreign construction labor. The company with joint-venture partners engages in property development, albeit on opportunistic bases.

The company recently landed five contracts worth S$ 412 million in April 2013. Earlier, in March 2013, the Lian Beng Group had incorporated a subsidiary company in Singapore, named Lian Beng Bliss Pte Ltd, with paid up capital of S$1 for investment holding and property development.

Singapore’s construction sector has grown at rate at 6.2% (previously 5.1%) in first quarter of 2013.  Business Monitor International (BMI) expects growth for Singapore’s construction sector expected to reach 5.1% in 2013, lower than the 8.7% estimated for 2012. Its future outlook for Singapore’s construction sector will grow an average of 3.7% per annum between 2014 and 2020.

In a report by timetric it said. “Singapore’s construction industry valued SGD27.7 billion (US$22 billion) in 2011, and recorded a CAGR of 11.57% during the review period. The industry is expected to grow at a CAGR of 4.88% over the forecast period. Infrastructure construction was the largest market, accounting for 32% of total industry value and recording a CAGR of 12.48% during the review period. The infrastructure construction market valued SGD8.9 billion (US$7.1 billion) in 2011. Singapore’s government invested heavily in rail and road infrastructure and has a strong pipeline of rail transit projects nationwide. It allocated SGD464.2 million in 2012 towards various long-term development plans.”

Annual Results
In Singapore Dollars May-12 May-11 May-10 May-09
Gross Income 70,451 72,411 43,566 35,712
Operating Income 50,922 53,316 28,249 19,500
Pretax Income 62,452 58,271 28,990 20,831
Net Income 52,086 48,182 24,036 17,012
Earnings Per Share 0.1 0.09 0.05 0.03

(Source CNBC)

Lian Beng Group has had tremendous growth over last few years. The growth has recently slowed but the valuations still look attractive. The stock has given handsome returns over last one year it rose 51% and is now trading around S$0.53. At its current price it has a market of S$ 280 million and a dividend yield of 1.89%. The price to earnings ratio of 6.8 verses industry average of 15.9.