Maybank Kim Eng lowered its target price on Lian Beng Group Ltd to S$0.54 from S$0.63, citing higher cash flow needed by the construction and property firm, which may affect dividend timing, but maintained its ‘buy’ rating.
Lian Beng shares were flat at S$0.395 on Friday. The stock has risen 14.5 percent so far this year versus the nearly 24 percent gain on the FT ST Small Cap Index.
From a net cash position, Lian Beng’s total borrowing rose by S$96.6 million quarter-on-quarter to S$197.2 million on the back of higher financing costs for the development of two properties in Singapore, as well as increased working capital, Maybank said.
The group’s net gearing now stands at 0.05 times, Maybank said. It added that Lian Beng’s margins had shrunk on lower property sales recognition.
But the broker said Lian Beng’s construction business and recurring income from pre-cast concrete products are expected to help shore up a dividend payout of 2 Singapore cents, which translates to a yield of 5.1 percent.
Reporting by Eveline Danubrata in Singapore; firstname.lastname@example.org; Editing by Jijo Jacob