Comprehensive Analysis of LHN Ltd (LHN SP)
Broker: Maybank Research Pte Ltd
Date of Report: March 6, 2025
Introduction
LHN Ltd has showcased a robust operational performance in its recent voluntary business update for 1QFY25. The report highlights the company’s strategic expansion in the co-living sector and its overall healthy occupancy rates across various properties. Analysts maintain a positive outlook on LHN, reiterating a BUY recommendation with a target price of SGD0.55, indicating a potential upside of 20% from the current price of SGD0.46.
1Q25 Operational Highlights
As of December 31, 2024, LHN recorded an impressive occupancy rate exceeding 95% across its industrial, commercial, and Coliwoo co-living spaces, excluding joint venture properties and those in progressive handover. The demand for rentals remains strong, driven by expatriate hiring and a limited supply of new housing units, alongside a resurgence in international visitor arrivals. This favorable market environment is expected to support sustained earnings growth.
Co-living Business Expansion
The Coliwoo brand remains a critical driver of LHN’s revenue. In 1QFY25, the company secured an additional 45 keys at a new property located at 453 Balestier Road, bringing the total number of keys managed in Singapore to 2,915, along with 85 SOHO projects overseas. Management anticipates continued strong demand for both short-term and long-term rentals in 2025.
Future Projects
Looking ahead, LHN plans to launch three new Coliwoo properties located at Arab Street, Balestier Road, and Upper Bukit Timah Road in FY25. This expansion includes a hotel, a residence, and a serviced apartment, which will collectively add over 130 keys to the existing portfolio. Furthermore, additional projects at Middle Road and Armenian Street are under consideration for the next 1-2 years, indicating a strategic push into new markets.
Property Development Initiatives
In a strategic joint venture with two partners, LHN has acquired a property on Lorong 22 Geylang for SGD30 million. The plan is to redevelop this property into a strata-titled commercial building, expanding LHN’s footprint in the retail and office market. This initiative aims to diversify revenue streams and enhance growth potential.
Financial Performance and Projections
| FYE Sep |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue (SGD m) |
94 |
121 |
132 |
141 |
147 |
| Core Net Profit (SGD m) |
23 |
29 |
33 |
35 |
37 |
| Core EPS (cts) |
5.6 |
7.0 |
7.9 |
8.4 |
8.8 |
| Net DPS (cts) |
3.0 |
3.0 |
3.0 |
3.0 |
3.0 |
| Core P/E (x) |
5.9 |
5.1 |
5.9 |
5.5 |
5.2 |
Conclusion and Recommendation
The analysis posits that LHN is in a strong position to capitalize on the growing demand for co-living spaces and the commercial property sector. The expected growth in revenue and net profit reinforces the BUY recommendation, with an unchanged target price of SGD0.55, reflecting an undemanding forward P/E ratio of 7x. Investors are encouraged to consider LHN as part of their portfolio, given its strategic expansion plans and promising market outlook.
