LHN Ltd – Strong momentum

Excerpts from Maybank report

LHN Ltd (SGX: 41O)

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

• further value-unlocking divestments;
• potential special dividends; and
• 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.

You can find the full report here and the company website here.