| • LHN Limited has been attracting analysts' attention recently, leading to 3 reports being initiated this month -- with them chirpily citing a large upside potential to the stock price. • UOB KH has a target price of 55 cents while Maybank, 54 cents. Lim & Tan Securities: 50 cents. (Recent stock price: 39 cents). • The spark in the story is relatively new: LHN has emerged as Singapore's No.1 player in the co-living space. LHN entered this sector back in 2019 but has gained wider investor recognition only in recent times. • Co-living sounds unfamiliar to you? LHN's co-living brand, Coliwoo, caters to a diverse group of tenants such as freelancers, expatriates, exchange students, medical tourists and younger Singaporeans. They pay monthly rental S$2,900-S$5,800 per room. Coliwoo enjoyed a strong occupancy rate of 96.7% in 1HFY23. Read on ... |
Excerpts from Maybank KE report
Analysts: Li Jialin & Eric Ong
Here to stay
| A growing alternative asset class; Initiate BUY |
|
We initiate coverage on real estate management company LHN Ltd with BUY and a 12-month TP of SGD0.54, based on an undemanding 8x FY24E P/E.
This represents a steep discount to other bigger hospitality players’ average of 15x.
|
|||||
| Co-living sector in nascent stage |
The Covid-19 pandemic has caused a shortage of manpower and increased construction costs, resulting in delays in the completion of residential projects.
Coupled with soaring rental/hotel rates (c.30-40% since 2022), this has led to rising demand for interim leasing options, including those in the co-living sector, from both locals and foreigners.
We think that co-living leases are an attractive solution as they offer greater flexibility to tenants with their monthly renewal options.
| Strong beneficiary of concert/medical tourism in SG |
With Coldplay, Jacky Cheung and Taylor Swift all having sold-out concerts, these international stars are drawing regional audiences as Singapore is the main stop in Southeast Asia.
According to Klook, more than 600,000 fans from across the region have registered interest to buy concert packages for Taylor Swift, which may lead to a rise in short-stay accommodation demand.
Singapore’s recovering medical tourism also bodes well for LHN, especially its flagship property, Coliwoo Orchard, given its proximity (350m) to Mount Elizabeth Hospital.
| More capital recycling initiatives to drive re-rating |
| UPCOMING CATALYSTS |
| • LHN’s 84.05%-owned subsidiary, LHN Logistics, has received an offer from a Shanghai-listed company to acquire its logistics and transportation arm at SGD0.2266 per share. • Post-completion, a potential special dividend payout. • LHN's Golden Mile carpark and a redevelopment project at 55 Tuas South -- potential divestments. |
LHN’s 84.05%-owned subsidiary, LHN Logistics, has received an offer from Shanghai-listed company to acquire its logistics and transportation arm at SGD0.2266 per share.
If the deal goes through, the transaction is expected to generate SGD32m in cash proceeds (SGD0.078/sh) for LHN.
Post-completion, the deal would help to unlock shareholder value, enabling LHN to channel resources to another core business segment, as well as a potential special dividend payout.
LHN has also identified Golden Mile carpark (est. SGD40m) and a redevelopment project at 55 Tuas South (SGD21m) as potential divestments (total cash proceeds of SGD0.15/sh).
Full Maybank report is here.
UOB KH's report is here.
