This article first appeared in The Edge Financial Daily on January 7, 2020

KUALA LUMPUR: LBS Bina Group Bhd expects to be able to sustain its property sales at RM1.6 billion this year, little changed from the RM1.63 billion it achieved in 2019, despite forecasts of continued moderation in housing sentiment.

This will be maintained by the group’s continued focus on the affordable segment, according to group managing director Tan Sri Lim Hock San, who is positive about the group’s prospects.

Lim is confident the group can achieve its sales target, following the surge in palm oil prices. And should there be another cut to the overnight policy rate (OPR) this year — which some quarters anticipate as early as the first quarter — overall sentiment will also improve, he said.

The group plans to launch 11 new property projects with a combined gross development value (GDV) of RM2.32 billion this year. Of these, seven projects involve units priced below RM500,000 each, Lim told reporters yesterday.

The bulk or 75% of its new launches will be based in the Klang Valley, comprising phases of KITA @ Cybersouth worth RM1.04 billion in GDV, as well as phases in LBS Alam Perdana worth RM699 million in GDV. The remaining launches are based in Johor, Pahang and Perak.

To boost sales, LBS Bina will run a marketing campaign, dubbed “LBS Fabulous 2020”, that will reward homebuyers with RM1 million worth of prizes.

The group’s RM1.63 billion sales last year, which exceeded its RM1.5 billion target, were 6.8% higher than 2018’s RM1.526 billion, thanks to the government’s Home Ownership Campaign that helped developers trim unsold units and Bank Negara Malaysia’s OPR cut in May.

“LBS Bina is sustaining well amid a challenging economic and property market environment. We managed a compound annual growth rate of 20.37% over the past five consecutive years as a result of our ‘people-focused approach’, the wider adoption of Industrialised Building System, and design optimisation,” Lim said.

As at Dec 31, 2019, the group’s unbilled sales stood at RM2.24 billion, which provides the group earnings visibility for about three years.

The group’s land bank stood at 3,622 acres (1,465.8ha), worth an estimated RM33 billion in GDV. Lim said the group is still looking to increase its land bank, in particular via joint ventures (JVs), to ensure it maintains sufficient cash flow. “And, we are mostly more focusing on the Klang Valley. Other states will depend on the JV concept,” he added.

As at Sept 30, 2019, the group’s cash balance stood at RM94.53 million, while total borrowings and debt securities totalled RM1.25 billion, of which RM545.29 million was short term. Lim said the group is working hard to pare down its debt, and that “the group is managing its debt well”.

LBS Bina’s share price closed one sen or 2.02% down at 48.5 sen yesterday, bringing it a market capitalisation of RM749.41 million. The counter saw some 2.59 million shares traded. Over the past year, the stock has retreated some 23%.