Lian Beng Group’s revenue slumped by 47.5 percent year-on-year to $37.18 million in the first quarter ended 31 August 2017 primarily because of lower contributions from its construction business, revealed an SGX filing on Thursday (12 October).
Consequently, gross profits and its earnings for the period fell by 33.1 percent and 29.4 percent to $12.41 million and $8.94 million respectively.
Nevertheless, the construction firm’s other operating income increased by more than three-fold to $10.46 million from $3.35 million previously mainly due to the sale of its investment property at 247 & 249 Collins Street in Melbourne, Australia.
“Our investments in property investment have helped us mitigate the cyclical nature of project-based segments such as construction and property development. The returns from property investment have enabled us to sustain our profit level despite the lower contribution from construction and property development segments,” said Lian Beng Executive Chairman Ong Pang Aik.
As of 31 August 2017, the company maintained healthy cash level of $146 million, while its net construction order book reached $661 million.
In addition, it acquired more land bank for future redevelopments. Last May, a 20-percent-owned associate firm successfully acquired Rio Casa via en bloc sale for $575 million. Another firm where it owns a similar amount of stake acquired Serangoon Ville for $499 million in July 2017.
Meanwhile, Lian Beng announced on Thursday that it is mulling to spin-off its property development business and list it on the Catalist board of the Singapore Exchange.
Pursuant to this, the construction company has appointed SAC Capital Private Limited as the financial advisor for the proposed spin-off as well as the sponsor and issue manager for the contemplated floatation.
The rationale for the move is to provide a transparent valuation for its property development business and to let the management focus on their assigned business segments. Another reason is to enable this subsidiary to be financially independent and raise its own funds.
This article was edited by Keshia Faculin.