By Ian Tai //
February 23, 2022

On 15 February 2022, LS 2 Holdings Ltd (LS 2) issued its Offer Document to raise S$ 5.6 million in gross proceeds with offering 27.75 placement shares at S$0.20 for each share on the SGX.

Upon issuance, the market capitalisation of LS 2 is to be lifted up to S$ 37.0 million. Here, in this article, I would list down 9 things for investors to take note before investing in LS 2. 

#1: Corporate Profile 

LS 2 has 20+ years of experiences in offering a wide array of cleaning services to facility managers of commercial & residential properties, schools, universities, a handful of town councils, and private companies in Singapore.

The services that LS 2 offers include conservancy, facilities cleaning, facade cleaning, disinfection, school cleaning, F&B cleaning, Road & Beach cleaning, waste management, and pest control services. 

#2: Major Customers

Page 110 of LS 2’s Offer Document 

Since 2018, LS 2 has derived close to 40% of its group sales from the Ministry of Education (MOE). As of 17 December 2021, LS 2 offers cleaning services to over 120 schools across 3 school zones in Singapore.

As for Sport Singapore, LS 2 had revealed that the initial contract with it had expired in August 2020. Hence, this caused its contribution to fall in 1H 2021. Subsequent to its expiry, LS 2 has won a new contract but at a smaller sum with Sport Singapore. 

Meanwhile, Singapore Management University and Changi Airport had brought in 5.8% of group sales each in 1H 2021 and were substantial contributors to the company in that period. 

#3: Financial Results

Page 22 of LS 2’s Offer Document 

Typically, LS 2 derives sales from cleaning contracts, where their duration would range between 1-3 years.

Therefore, LS 2 would need to continue to tender and bid for new contracts to maintain or grow its revenues in the future. From 2018 to 2020, LS 2 had generated higher sales from S$ 43.4 million to S$ 54.6 million.

With a slight decline in operating cost in 2020, LS 2 has recorded S$ 7.33 million in shareholders’ earnings, the highest in 3 years. 

In 1H 2021, LS 2 has completed 2 projects and hence, recorded lower revenues. This had caused its earnings for 1H 2021 to fall, from S$ 4.17 million in 1H 2020 to S$ 1.88 million in 1H 2021.  

On the side note, LS 2 had revealed that its expenses were partially defrayed by various government support schemes, such as the one-off Job Support Scheme, and other grants namely, Wage Scheme Credit (WCS), Special Employment Credit (SEC), Production Solutions Grant (PSG), Enterprise Development Grant (EDG), Absentee Payroll Funding and WorkPro Grant. 

Without these subsidies and schemes, LS 2 would not be profitable but instead, incur net losses over the 3½-year period from 2018 to 1H 2021. 

The amount of net losses would be as follows: 

#4: Financial Strength

Page 74 of LS 2’s Offer Document

From 2018 to 1H 2021, LS 2 had maintained above 1.0 in current ratio. Also, the company had kept its gearing ratio below 50% in 2018, 2020, and 1H 2021. 

#5: Order Book 

On 17 December 2021, LS 2 had around S$ 57.6 million in cleaning contracts.

#6: IPO Proceeds

Page 56 of LS 2’s Offer Document

Out of the S$ 5.6 million in gross proceeds, LS 2 revealed that it intends to use a total of S$ 3.0 million to fund various business expansion initiatives such as: 

  1. Offer its cleaning services to property developers and asset managers. 
  2. Expanding and upgrading its workers. 
  3. Tendering for higher margin projects in the private sector. 
  4. Expand its services: horticultural & infrastructure-levels cleaning services. 
  5. Engage in strategic acquisitions and joint ventures. 
  6. Invest in equipment & technology to boost productivity of cleaning services. 

Apart from business expansion initiatives, LS 2 would allocate S$ 1.41 million to fund its working capital and S$ 1.14 million in listing expenses. 

#7: Major Shareholders

Page 70 of LS 2’s Offer Document 

Roger Tan and Alvin Ong would remain as substantial shareholders of LS 2, after the issuance of placement shares. 

Roger Tan is appointed as Executive Chairman and Executive Director of LS 2. At present, he is responsible for its overall strategic direction and expansion plans.

Meanwhile, Alvin Ong is the CEO and Executive Director of the company. Alvin’s role is to direct and control the operations of LS 2. 

#8: Dividend Policy 

LS 2 does not adopt a formal dividend policy at this point in time. 

#9: Valuation 

LS 2 would have 7.82 cents in post-placement net asset value (NAV). Thus, at 20 cents per placement share, the offer is valued at P/B Ratio of 2.6x.


LS 2 is a highly experienced cleaning company in Singapore. Its profits had been contributed by higher revenue and as well as support schemes and subsidies by the Singapore government.

It is important to take note that LS 2 had collected a number of schemes and supports and without them, it would incur net losses. 

Moving ahead, LS 2 has approximately S$ 57.6 million in cleaning contracts. The company has allocated S$ 3.0 million in various business expansion activities.

In the near future, LS 2’s growth would hugely depend on its capabilities to secure and renew cleaning contracts from the public and private sectors in Singapore. 

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