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Lian Beng’s controlling Ong family raises stake, order book now $1.4 bil

The Edge Singapore
The Edge Singapore • 3 min read
Lian Beng’s controlling Ong family raises  stake, order book now $1.4 bil
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(Aug 12): The Ong family, the controlling shareholder of construction and property company Lian Beng Group, has recently bought the company’s shares from the market. On Aug 2, the family bought 440,000 shares at 50 cents each, following the purchase of 299,500 shares on Aug 1 at the same price.

The purchases were made via a vehicle held by the family called Ong Sek Chong & Sons. With these purchases, the direct stake held via this entity has increased from 18.61% to 18.7%, or 93,463,000 shares.

As a result, Lian Beng chairman Ong Pang Aik now holds a deemed stake of 148,463,000 shares, or 35.38% of the company. Coupled with his direct stake of 28,325,400 shares, which remains unchanged, he now holds a total direct and deemed stake of 176,788,400 shares, or 35.38%.

The Ong family’s previous purchase from the market was on Dec 4, 2018. Ong, under his own name, bought 125,800 shares at 47 cents each. A day earlier, he bought 128,800 shares at 47 cents each.

Year to date, Lian Beng shares have gained 7.53% to close at 50 cents on Aug 5. At this level, the company is valued at $249.8 million and trading at a historical price-to-earnings ratio of just 7.6 times.

On July 8, the company announced that it had won a $234.7 million contract from NTUC FairPrice Co-operative to build a fresh food distribution centre. The contract was won by its 60%-held subsidiary United Tec Construction.

Located on Sunview Road, the seven-storey centre will have a 40m-high automated storage and retrieval system, multi-temperature cold rooms, as well as an ancillary office and facilities. Construction of the centre is slated to commence this month and be completed by July 2021.

The development is designed by Surbana Jurong and spans 2.8ha, or 301,389 sq ft. When completed, it will be used by NTUC FairPrice as a centre for receiving, sorting, storing and distributing fresh food to its retail outlets. This contract came just four months after its wholly-owned subsidiary Deenn Engineering won a $117 million contract.

On July 30, Lian Beng announced earnings of $14.5 million for the fourth quarter ended May 31, 2019, down from $56.7 million a year earlier. Revenue in the same period was $132.9 million, down from $150.4 million. The drop in earnings was attributed partly to one-off gains from the sale of investment properties in Australia.

For full-year FY2019, Lian Beng posted earnings of $32.9 million on revenue of $386.8 million, versus a restated profit attributable to shareholders of $82.5 million on restated revenue of $407 million for FY2018.

The company plans to pay a final dividend of 1.25 cents a share. It had already paid an interim dividend of one cent a share on Jan 30. The full-year dividend payout of 2.25 cents a share for FY2019 is the same as FY2018’s.

The company is “cautiously optimistic” about the outlook of the construction sector in the months ahead. With the $234.7 million contract from NTUC FairPrice, Lian Beng’s order book stands at $1.4 billion and should “provide the group with a steady flow of activities through FY2022”, the company states.

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