LBS - handsome payout dividend

Although LBS Bina Group Bhd has strongly hinted at a higher-than-industry-average dividend rate, its board continue to waver between rewarding shareholders with a more handsome payout and growing its Malaysian business with incoming funds.

Their consideration is to use a mere portion of the deferred cash payment, which will be received in four portions from end-2014 to 2017, to incentivize investors. But even so, it is a decision that weighs heavily on the board.

Its lofty ambition is to double last year’s net profit of RM37.2mil to RM74mil in three years.

To recap, the small-cap property player had inherited three projects in China via the reverse takeover of Instagreen Corp Bhd 11 years ago. A fortnight ago, it sold these assets to Zhuhai Holdings Investment Group Ltd for HK$1.65bil (RM680mil).

As part of the deal, LBS Bina will receive a cash settlement of HK$500mil (RM206.24mil), followed by a proposed settlement of 225.56 million new shares in Hong Kong-listed Zhuhai Holdings at HK$1.33 per share worth HK$300mil (RM123.74mil) and promissory notes for the sum of HK$850mil (RM350.61mil).

The one-off deal contributed a pro forma gain of RM309mil to group revenue, and the fact that the group still owns 264 acres of the Zhuhai International Circuit – the 60% exchange in shares – indicates potential for future business opportunities in the territory.

Meanwhile, the board is keeping mum on the new dividend policy until the first tranche of the cash payment of HK$500mil and the 225.56 million shares come through by the end of August.

In the last two years, LBS Bina had paid out dividends of 2.5 sen.