RHB Research resumes coverage of LBS Bina with buy rating

KUALA LUMPUR: RHB Research has resumed coverage of LBS Bina Group Bhd with a positive outlook, citing the property developer's landbank rationalisation, medium-term catalysts and a more generous dividend policy.

The research house highlighted the group's strategy of recycling capital from its Johor assets into core Klang Valley projects, where execution and demand visibility are stronger.

LBS Bina, which holds roughly 460 hectares (ha) of land in Johor or about 29 per cent of its total landbank, has begun selectively monetising these assets.

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Proceeds from a recent RM110 million disposal of prime land in Johor Bahru will be redeployed into developments such as Kwasa Damansara. The group remains open to further land disposals in Johor if attractive valuations emerge.

RHB Research identified Kwasa Damansara as a key catalyst, with a major launch targeted in 2027. The project carries an estimated land and infrastructure cost of RM1.2 billion against a gross development value (GDV) of RM8.3 billion, implying a land cost-to-GDV ratio of 14 per cent.

Infrastructure works are largely undertaken by the master developer, allowing LBS Bina to achieve development efficiency of close to 90 per cent of the land, significantly higher than the industry average of 50 per cent.

Management believes the parcel could be among the last residential developments in Kwasa Damansara, potentially supporting scarcity value and pricing.

On dividends, LBS Bina has raised its payout ratio from 30 per cent to 40 per cent starting financial year 2025 (FY25). RHB Research noted this is positive for yield enhancement and capital management.

The research house's FY26 dividend per share forecast of 3.70 sen translates into an estimated yield of 8.0 per cent.

For FY26, management is targeting RM1.6 billion in sales, supported by RM274 million in bookings as at end-March and RM2.3 billion in planned launches. Unbilled sales of RM1.3 billion provide near-term earnings visibility.

RHB Research maintained a Buy call on LBS Bina but revised its target price to 54 sen from 72 sen.

The valuation is based on a 75 per cent discount to revalued net asset value, widened from 65 per cent to reflect cautious market sentiment amid geopolitical tensions in the Middle East.