LHN Limited

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Refocus

 

 LHN was established in 1991 under the name Space Resource Optimisation Company. It was listed on SGX Catalist in Apr-2015. The company provides real estate management services by taking old, unused & under-utilised commercial, industrial & residential properties; enhanced & transform them into usable space. 

Business are segmented into: 

  • Industrial with 16 properties

  • Commercial with 11 properties

  • Residential with 11 properties 

  • Logistics services  

    • In Singapore, Malaysia, Myanmar & Thailand 

  • Facilities management (FM)

    • Managing 30 industrial, commercial & residential properties​

    • In Singapore, Cambodia, China, Hong Kong, Indonesia, Malaysia, Myanmar, Thailand

 

Portfolio Shift

Industrial and Commercial business had trended lower since FY14 while Residential enjoyed an uptick in 2H20. LHN is in the midst of acquiring or leasing assets to build Coliwood brand co-living space. Assets acquired past few years were: 320 Balestier Road; 40 & 42 Amber Road; 75 Beach Road; 115 Geylang Road; 471 & 472 Balestier Hotel; 1557 Keppel Road and 2 Mount Elizabeth Link.  

Logistics Services grew steadily from 13% revenue mix to 22% from FY14 ~ FY21. Margin range between 16% ~ 20% from FY17~21.

LHN is exploring the possibilty to spin-off Logistics Services as announced on Nov21.

Facilities Management business increased substantially from 9% to 46% revenue mix between these periods. Since turnaround in FY17, margin have increased to 33.6% in FY21. It is now the largest earning contributor with PBT of $18.6M.

Singapore constitute 91% of business followed by Thailand 3%, Hong Kong & Malaysia 2%, Cambodia & Myanmar 1% each. 

Financial - FYSep21

Revenue declined 10% while net profit increased 17% to $28.9M. Gross margin increased from 47.4% to 55.0% and associates $3.7M contribution were the main reason for profit growth. 

2H21 appear to signal softer outlook with revenue down 32% and profit lower by 36%. 

Opinion 

Logistics Services and Facilities Management are LHN performing assets. Should Logistics be spin-off, the group would be left with Facilities Management. It is unreasonable to expect FM to continue growing on steroid.

Residential Coliwood brand co-living space is LHN next potential growth driver. Majority of acquired properties should be operational by 2H22.

Meanwhile 2H21 results is indicating a softening market; and the possibility of a retracement in earning.