LBS POISED TO EXPLORE OPPORTUNITIES WITH CHINA FOR MELAKA RECLAMATION PROJECT

KUALA LUMPUR, April 9 -- LBS Bina Group Bhd (LBS), which has a presence in Zhuhai, Guangdong, could explore bilateral investment opportunities with a China-based-partner for the reclamation and development of an industrial hub with port facilities in Melaka, said CGS-CIMB Securities.

In a research note today, it said this was based on the ‘friendly state and province’ relationships between Melaka and the Guangdong province in China.

“We gather the specialised works, such as land reclamation and port facilities, are likely to be outsourced or carried out via partnerships, while the construction of commercial or industrial properties would be undertaken by its construction arm, MGB Bhd,” it said.

Yesterday, LBS's indirect subsidiary, Leaptec Engineering Sdn Bhd (LESB) signed a Reclamation and Development Agreement (RDA) with the Melaka government for the reclamation and development of an industrial hub with port facilities in Tanjung Bruas, Melaka Tengah.

The approved reclamation area is part of the Melaka Waterfront Economic Zone (M-WEZ) blueprint for the project spanning 10,117 hectares along the Melaka coastline.

CGS-CIMB said LESB will own 80 per cent of the land, while the state government will own the remaining 20 per cent.

The stockbroking firm has raised the target price (TP) for LBS to RM0.59, given the potential for stronger earnings from the RDA and Zhuhai International Circuit monetisation.

Similarly,  Public Investment Bank believed LBS would have to forge partnerships with relevantly-experienced parties, possibly weighing on eventual net margins.

“Its listed subsidiary, MGB, will benefit from potential construction works, however,” it said.

It said LBS has attributed the close relationship it has with authorities in the Guangdong province and the latter’s ties with the Melaka state government as a major draw card for the entire development.

The investment bank has retained a ‘trading buy’ call for the stock, with a slightly higher TP of RM0.69.

As at 10.50 am, LBS share price was unchanged at 0.56 sen with 46.97 million units transacted.

-- BERNAMA