“With a strategic focus in recent years on securing commercial projects, all of the newly secured projects are commercial projects, which generally yield higher margins for the Group. This strong project pipeline underpins confidence in forward revenue growth,” says Chan and Liu.
The recent proposed placement of 10 million new shares at 22 cents each, a price slightly above the prevailing market price, helps Lincotrade to raise net proceeds of $2.1 million to further strengthen the financial position and finance Lincotrade’s on-going projects in view of the bigger order book.
Meanwhile, Lincotrade’s revenue from Malaysia increased significantly to $4.0 million in FY2025, compared to FY2024’s figure of just $0.1 million, mainly due to the new data centre project in Johor, Malaysia, undertaken by the company’s subsidiary in Malaysia.
In addition, Linoctrade has acquired a 30% equity stake in Linc Venture Land Sdn. Bhd., which has secured a piece of land in Kuala Lumpur for a residential property development. Both analysts see the sales launch could unlock initial revenue and valuation gains for the developer, benefiting Lincotrade through its equity stake.
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“Positive reception or strong pre-sales of this KL development would validate Lincotrade’s move into the property sector and potentially contribute share of profits in the coming years,” the team comments.
By the end of this year, Lincotrade expects to finish the addition & alteration works at its new Tuas Avenue 12 factory. This includes a 204-bed workers’ dormitory on the premises.
In the analysts’ view, the on-site dormitory is a key operational catalyst and allows Lincotrade to house its construction workers in-house, eliminating the need for third-party dorm rentals or dispersed accommodations.
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“This will significantly reduce recurring manpower accommodation costs and improve efficiency. Unutilised bed capacity could be rented out to generate a small stream of recurring income. Installation of solar panels at the Tuas site will further cut energy costs over the long term. Thus, Lincotrade could see a margin uptick thanks to these cost savings and sustainability initiatives coming on-line,” mentions both analysts.
At the same time, both Chan and Liu believe that the robust construction demand suggests a steady flow of interior fitting-out jobs will follow, since every new building or major redevelopment eventually requires interior works. They believe that Lincotrade is well-positioned to tap into the sector’s growth, with demand for fitting-out works staying resilient.
According to the team, the strong FY2025 results by Lincotrade underscores effective project execution and improved cost efficiency.
Revenue climbed 8.5% y-o-y to $73.6 million while profit attributable to equity holders rose 11.5% y-o-y to $2.6 million. The company’s strategic emphasis on securing higher-margin commercial projects has continued to pay off, lifting overall gross margin from 11.6% in FY2024 to 12.5% in FY2025.
On the dividend front, Lincotrade proposed a final dividend of 0.66 cents per share, which represents a payout ratio of about 44% of FY2025 net profit attributable to shareholders, more than double its stated policy of distributing at least 20%.
“As we expect growth in the coming years, we have forecast dividend payout to be similar to FY25. This translates to a very attractive above-market yield of 7.7% in FY2026 and 10.7% in FY2027,” concludes both Chan and Liu.
The team at SAC Capital has a target price for Lincotrade at 30.1 cents, which is based on its FY2026 forward EPS and applying a 20% discount to the mean P/E ratio of 11.0 times of its peers, representing a 50% upside from current levels.
As at 11.35am, shares in Lincotrade are trading flat at 20 cents.
