LBS: Strong Earnings Beat Driven by Cost Efficiencies

The latest research report highlights a robust financial performance, with the company’s net profit significantly exceeding expectations for the fourth quarter of FY25. The company recorded a net profit of RM40.6 million for 4QFY25, marking a 29.3% quarter-on-quarter increase, primarily attributed to improved margins. For the full fiscal year 2025, the net profit reached RM125.2 million, surging 45.2% year-on-year and outperforming both the investment bank’s and consensus estimates by nearly 10%.

Performance Drivers and Shareholder Value

This impressive performance was largely driven by accelerated development activities across ongoing projects and the successful realisation of cost savings in completed projects. These factors contributed to a substantial improvement in gross margin, which rose to 34% in 4QFY25 from 25% in the preceding quarter. Further bolstering shareholder value, the Group revised its dividend payout policy from 30% to 40% of its profit after tax and non-controlling interests, effective from FY25. Additionally, the cancellation of 10 million treasury shares was noted as a positive move.

Group revenue for FY25 increased by 8% year-on-year to RM1.55 billion, predominantly supported by its Property Development segment, which contributed 94% of total revenue. Key contributors included Klang Valley projects such as Alam Perdana Industrial Park and Pangsapuri KITA Sejati, along with others in Cameron Highlands, Pahang, and Johor Bahru.

Future Outlook and Strategic Direction

Looking ahead, the Group secured RM1.40 billion in pre-sales for FY26. While this represents a slight 2% year-on-year dip from FY25’s RM1.42 billion, it still accounts for approximately 93% of its FY25 sales target. Notably, projected launches for FY25 were lower than initially planned, with only RM1.12 billion in launched Gross Development Value (GDV) against an initial target of RM2.16 billion. The company has outlined a 3-year “8×8 strategy” from FY25 to FY27, aiming to launch projects with a total GDV of RM8 billion. Management expects launches to ramp up significantly over the next two years. As of February 2026, bookings stood at approximately RM316 million, with the Klang Valley contributing the majority (72%) of 4QFY25 pre-sales. Unbilled sales remained stable at RM1.3 billion in 4QFY25, appearing to have bottomed out from the RM2.46 billion recorded in FY22.

Investment Bank’s Recommendation

The investment bank maintains an “Outperform” call on the stock, with an unchanged target price of RM0.67, representing a circa 30% discount to its Net Tangible Assets (NTA).