Lian Beng's ballooning marketing expenses mar 1QFY14 results

Gross margins down to 12.2%.

Lian Beng announced 1QFY14 PATMI of S$7.3m, down 30.9% YoY, mostly due to increased selling and marketing expenses incurred at development projects and the cessation of tenant leases at Hougang Plaza, according to OCBC.

Topline for 1QFY14 came in 44.2% higher YoY at S$163.5m; due to a shift in revenue mix with a heavier percentage contribution from the construction segment, overall gross margins continue to dip – falling from 14.1% in 1QFY13 to 12.2% in 1QFY14, the research firm added.

"We note that Lian Beng continues to enjoy a firm construction book of S$1.2b, which would buttress forward revenues to an extent, and also a strong balance sheet with S$200.7m in cash with a fairly benign net gearing of 25.2%," said OCBC.

"That said, we see increasing uncertainties in the domestic residential space from recent cooling measures which could result in headwinds for the group’s property development business going forward," it said further.