MARC Ratings has affirmed its AA-IS rating on LBS Bina Group Berhad’s (LBS) RM750.0 million Islamic Medium-Term Notes (IMTN) Programme with a stable outlook. The current amount outstanding under the programme is RM600.0 million.
The rating reflects LBS’ strong track record in affordable and mid-market residential developments, good near-term earnings visibility from sizeable unbilled sales, and low inventory with healthy take-up. Moderating factors include potential near-term leverage pressure from higher borrowings for new project launches and exposure to property market cyclicality.
LBS has maintained strong sales, achieving an aggregate take-up rate of 66.2% across ongoing projects totalling RM4.8 billion in gross development value (GDV) as at end-June 2025. New launches from mid-2024 to mid-2025 represented 24% of GDV, while healthy sales kept inventory low at RM82.8 million (2024: RM92.3 million). Unbilled sales of RM1.3 billion as of end-June 2025 provide liquidity to fund remaining development costs.
Over the next two years, the group has planned launches in its existing Klang Valley townships (KITA @ Cybersouth and D’Island Residence), targeting around 13,000 units with an estimated GDV of RM6.0 billion in 2026–2027. In addition, it has secured development rights from Kwasa Land Sdn Bhd to construct residential units on a 192-acre freehold site in Kwasa Damansara (estimated GDV: RM8.3 billion). Development is expected to commence in 2027 and span approximately 14 years. The group also maintains a landbank exceeding 3,700 acres, primarily in Kuala Langat and Cyberjaya in the Klang Valley, and Batu Pahat and Kota Tinggi in Johor, supporting long-term growth.
In 9M2025, revenue declined 4.9% y-o-y to RM1.1 billion due to recent project completions, while newly launched projects remain in their early stages. Operating profit margin was stable at 17.9%, supported by the use of a prefabricated construction model that reduces waste and enhances productivity. OPBITDA interest coverage remained strong at around 4.62x. Operating cash flow was modest at RM45.1 million, reflecting upfront costs for four new projects, but is expected to improve as sales progress. Liquidity remained healthy, with unencumbered cash and bank balances of RM260.9 million as of end-9M2025.
As of end-9M2025, the group maintains moderate leverage (gross and net debt-to-equity ratios of 0.67x and 0.43x), with borrowings rising moderately to RM1.3 billion to support ongoing developments and 2H2025 launches.