LHN GROUP - EMAIL TO IR REGARDING SHARE PRICE DROPPING BOMB

Quote on Prospect as in IPO prospectus (page222):

Based on our Directors’ knowledge and belief, we are optimistic about the growth of our Space Optimisation Business, Facilities Management Business and Logistics Services Business in Singapore and the ASEAN region.

According to the Industry Report, the ASEAN region is the seventh largest economy in the world and is projected to become the fourth largest economy by 2050. The ASEAN region remains strategically important and has drawn the attention of several major global players. Despite economic uncertainties, the ASEAN region is still expected to experience fast-paced growth over the next few years.

Our Directors believe that the new measures introduced by JTC in its revised sub-letting policy this took effect from 1 October 2014, along with the Singapore government’s focus on developing Singapore into a services economy and a business and logistics hub for the ASEAN regions are likely to create new opportunities for our Group’s business in Singapore.

In light of the above developments and barring any unforeseen circumstances, we are of the view that the future prospects for our Group’s business will remain positive and continue to grow.

FY15 results are out. Net profit down to only $4.22M compared to previous FY14's $12.76M. The decline is due to 3 one-off factors:
a. IPO expenses of $1.6M
b. Much lower fair value gain of properties of $0.6M compared to $5.8M previously
c. Expiry of HDB contract, hence losing a revenue of $6.3M (or lost profit of $1.25M)
Market may not take very well to this news when it opens tomorrow.

Looks like a defensive, stable, gradually growth yield play. Not much air - time it gets, so how to appreciate it?

I cannot help but notice that BNN's comments are quite cautious, which I tend to agree. When the share price shot up recently, I was of course very elated, but after I analysed the 3Q16 report, I decided to sell back most of my holdings and wait for a drop in price. Short of a gigantic push in 4Q, I doubt that FY16 will be better than the previous year. 9 months net earnings and free cash flows are worse that the same period last year. But that's just my own assessment. Please do your own due diligence. Cheers.