• Three months ago, LHN Limited was lavished much attention by analysts, leading to 3 reports being initiated. But the stock (32 cents) is currently down about 10% over that period.  

• This, despite LHN delivering on its story of divestment of certain assets and riding the momentum of the co-living space. 

• LHN (market cap: S$131 m) has emerged as Singapore's No.1 player in the co-living space, accounting for 20% of group revenue. LHN entered this sector back in 2019 but has gained wider investor recognition only in recent times.

• LHN's co-living brand, Coliwoo, caters to a diverse group of tenants such as expatriates, exchange students, medical tourists and younger Singaporeans. In exchange for their rent, LHN provides amenities such as lounge and gym within the properties it has acquired.

• Maybank KE forecasts LHN will achieve S$24 million net profit for FY23 (ending Sept 23), translating into a PE of 5.5 only. Dividend yield is juicy at 6.2%. Read on ..
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LHN coliwoo
Excerpts from Maybank KE report
Analysts: Li Jialin & Eric Ong

 Performance on track; maintain BUY

 

LHN reported solid 3Q23 operating metrics with stable rental rates and improving occupancy for its Coliwoo projects (total of 2,064 keys).

LHN

Share price: $0.32

Target: 
$0.54

Meanwhile, its facilities management, carpark and energy subsidiaries continue to secure new contracts.

We remain positive on LHN’s prospects and maintain BUY with a 12-month TP of SGD0.54, still based on 8x FY24E P/E. Re-rating catalysts include: 

1) further value-unlocking divestments;  
2) potential special dividends; and
3) successful upgrade to the SGX mainboard from its current listing on the Catalist board.

 

High occupancy rate of new assets


In 3Q23, rental rates across its portfolio ranged from SGD2,200-3,500 per month, supported by strong demand for short-stay.

As of 7 Sep’23, its three new co-living assets, ie, Coliwoo Orchard/Lavender/298 River Valley, had healthy occupancy level of 90%/85%/100%, respectively.

Since Aug’23, LHN has grown its portfolio with the acquisition of 286 & 288 River Valley and 99 Rangoon Rd. LHN plans to convert the latter into a 32-room student hostel with retail/F&B on the 1st floor.

The total cost (including renovation of SGD1.5m) is up to SGD16m. 404 Pasir Panjang as well as 48 and 50 Arab Street are being renovated and are on track to be operational in 2Q24.

 Firing on all cylinders

 

The facilities management arm secured 35 new contracts and retendered for 22 for services that range from cleaning, disinfecting, pest control, landscaping, minor building improvements, and integrated FM smart tech solutions.

It launched 6 new carparks since May’23, taking the total to 760 parking lots.

The group is actively expanding its energy business portfolio.

To date, it has successfully installed and manages 21 solar energy projects with a combined capacity of 3.1 megawatts of renewable energy. Another four projects are in progress and are expected to contribute 0.6 MW.

 Commits to more capital recycling

 
LHN has already received the SGD28.8m net proceeds from the sale of LHN Logistics (84.05% stake).

CASHPILE
• LHN has already received the SGD28.8m net proceeds from the sale of LHN Logistics (84.05% stake).

The proceeds will be used for reducing net gearing, potential special dividends, and working capital.

The proceeds will be used for reducing net gearing, potential special dividends, and working capital.

Management is also actively looking for more opportunities to recycle capital to unlock value from mature assets, such as its industrial property at 55 Tuas South (SGD21m), which is scheduled to complete redevelopment by 4Q24.

To meet its target of adding 800 keys per year, LHN plans to enter into large management contracts with JV partners


Full Maybank report is here. 

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