LHN Limited recently announced its 1QFY2024 ended December 2024 update, which saw a portfolio occupancy of over 90% for its assets (industrial, commercial and co-living). The two major projects, 55 Tuas South and GSM Building, are also proceeding as scheduled.
During the first quarter, the group successfully secured the master lease renewal for an industrial property at 34 Boon Leat Terrace. Coliwoo also launched its 15th co-living property, the Coliwoo Hotel Pasir Panjang, a four-storey establishment at 404 Pasir Panjang Road. It also managed a total of 2,153 keys across its Singapore’s Coliwoo co-living projects and overseas 85 SOHO projects.
On Jan 25, LHN secured two sites by the Ministry of Health (MOH) to provide accommodation for 700 public sector healthcare professionals (mainly nurses and allied health professionals). Operations will commence in 2H2024.
PhillipCapital, which has kept its “buy” call and 39 cents target price, believes that LHN’s advantage in securing this project is its operational experience in the co-living sector.
“Earnings visibility has improved as planned projects are underway and occupancy rates remain vibrant. We view the healthcare accommodation project as a new growth driver. Margins are unclear, but the project is capital light as the authorities provide the premises. Eleven more potential sites may be tendered out,” says analyst Paul Chew.
Maybank Securities has similar views, as it also kept its “buy” call and 45 cents target price.
See also: RHB initiates coverage on CSE Global with ‘buy’ call with TP of 58 cents
Analysts Li Jialin and Eric Ong say: “Overall, we note that operational performance remains positive on the back of a buoyant Singapore hospitality market. We expect momentum to pick up with more Coliwoo openings in 2H2024.”
The analysts note that the group’s total number of keys grew by 89 to 2,153 in 1QFY2024, while the two MOH contract wins in January will add at least 350 rooms to its portfolio.
In its overseas operations, LHN intends to rebrand its existing 85 SOHO assets in Cambodia/China to Coliwoo brand, while looking to expand to Jakarta, Indonesia. Management is confident of meeting its 800-key target per year.
See also: Suntec REIT biggest beneficiary from MAS’s ‘looser’ leverage, ICR rules: OCBC
“We also see incremental increase from the carpark service segment, with two projects (over 800 lots) added to its Hong Kong business. Additionally, LHN secured 24 new facility management contracts,” say Li and Ong.
Management also sees stable performance for the industrial and commercial segments. Building on its renewable energy portfolio, its energy subsidiary recently won seven new solar energy contracts with 1.7-megawatt combined capacity.
LHN is on track to open its three Coliwoo assets located at Arab St, River Valley, and Rangoon Rd in 2H2024.
“With GSM’s order for the sale obtained from the High Court, we expect LHN to complete the acquisition in May,” say the analysts, expecting the six-month renovation process to start end-FY2024.
Management is also on the lookout for new projects to expand its portfolio. Li and Ong expect more capital capital recycling into FY2025. Potential sale of assets is likely to emerge from the industrial segment (food processing factory 55 Tuas South and B1 light industrial Four Star Building).
As at 1.45pm, shares in LHN are trading at 34 cents.
