LBS (5789) - CIMB Research retains Add for LBS Bina, target price RM2.55


KUALA LUMPUR: CIMB Equities Research retained its Add call for LBS Bina with a target price of RM2.55, based on a 30% discount to realised net asset value (RNAV).

It said on Tuesday LBS remains one of its top picks among the Malaysian developers given its strong sales momentum and attractive dividend yield of 6% in 2017.

“Fundamentals are intact and approval for the China Zhuhai International Circuit (ZIC) upgrade will provide a shot in the arm to its share price, in our view.

“We believe the share price will also be supported by the feel-good factor from the recently proposed share split and bonus issue,” it said.

To recap, China LBS organised a site visit on Nov 1 to 3 to Zhuhai, China, to give analysts a better understanding of its investments in Zhuhai and to display the city’s growing economic activities.

The analysts visited the Hong Kong-Zhuhai-Macau Bridge (HZMB), the Zhuhai International Circuit (ZIC) and Zhuhai Holding’s property development project at Lakewood Hills and met up with Zhuhai Holding’s management.

LBS owns a 60% stake in the international racing circuit’s plot of land, which measures 264 acres. 

“With improved connectivity from the upcoming HZMB and Zhuhai’s focus on tourism, we believe the outlook is promising for ZIC,” it said.

Under the ZIC upgrading and transformation, the site will be upgraded into an integrated tourist attraction with three key zones (motor sports & services amenities, tourism and the Melaka Cultural Trade). Management targets to obtain approvals by 1Q18F.

On Oct 31, 2017, LBS announced a two-for-one share split followed by a one-for-10 bonus issue.

While the deal will not impact CIMB Research’s earnings forecasts, it thinks the share split and bonus issue will be viewed by some shareholders and investors as a form of reward, which could spur short-term interest in the counter given the currently buoyant market.

“We believe the boost of liquidity for LBS will enhance its marketability. Maintain Add,” it said.