CGS International
Date of Report: September 2, 2025
Lum Chang Creations: Riding Singapore’s Conservation Boom with Strong Earnings and Dividend Growth

Executive Summary: Robust Growth, Margin Expansion, and Strong Order Book Support LUCC Outlook

Lum Chang Creations (LUCC), a leading urban revitalisation specialist in Singapore, continues to impress with its stellar FY6/25 results, robust forward order book, and clear dividend commitment. As a key beneficiary of Singapore’s government-led conservation push, LUCC is strategically positioned to capture niche, high-barrier projects, all while maintaining an asset-light, cash-generative business model.

Financial Highlights: Stellar FY25 Results and Upbeat FY26 Guidance

LUCC reported a net profit after tax and minority interests (PATMI) of S$12.91 million for FY6/25, surpassing both CGS International and Bloomberg consensus forecasts. The bottom line surged 173% year-on-year, propelled by a 93% jump in revenue from ongoing and new projects, alongside notable margin expansion.

Key performance drivers:

• Gross profit margin for FY6/25 rose 1.6 percentage points to 19.7%, mainly from procurement savings.
• Net margin improved by 2.3 percentage points year-on-year to 11.9%.
• Order book at 30 June 2025 stood at S\$112.8 million, providing solid revenue visibility for FY26.

Strategic Positioning: Beneficiary of Singapore’s Conservation Initiatives

LUCC is well positioned to ride the wave of Singapore’s government-backed conservation efforts, highlighted in the URA Master Plan 2025. The company’s niche expertise in conservation projects sets a high barrier to entry, enabling LUCC to bid competitively for large-scale and complex assignments. Notable projects in the pipeline for FY26 and FY27 include Oriental Plaza, Temasek Shophouse, the National Museum, 44 & 46 Club St, and 2 Cavan Road, all secured in prior financial years and progressing toward completion.
Upcoming government tenders, such as those for 45 Armenian Street, the former St. Joseph’s Institution building, and Bukit Timah Turf City, are likely to bolster the project pipeline. LUCC’s management is actively tendering for these projects, and results are expected soon.

Dividend Policy: Generous Payouts Backed by Strong Cashflow

LUCC’s asset-light business model translates into robust operating cashflows, low capital expenditure, and zero debt repayments. For FY25, the company generated S$22.6 million in operating cash flow and is proposing a final dividend of S$0.022 per share, representing a payout ratio of 53.7% of FY25 PATMI—significantly exceeding its IPO commitment of distributing at least 30% for FY25-26. This dividend is subject to shareholder approval at the upcoming AGM in October.

Valuation and Market Performance: Upside Potential Remains Strong

CGS International reiterates its “Add” rating on LUCC, maintaining a target price of S$0.81 per share, reflecting a 47.3% upside from the current price of S$0.55. The valuation is based on FY27F EPS and a 12x P/E multiple. While FY26F EPS is revised down by 2.3% due to lower profit attributable to non-controlling interests and actual share count, the target price remains unchanged.

ESG Commitment: Safety, Community, and Sustainability

LUCC stands out for its strong track record in workplace safety—reporting zero fatalities since 2018. The company is committed to responsible business practices, balancing profitability with social responsibility through various charitable initiatives, employee volunteering, and pro-bono projects. LUCC provides regular safety training, assesses suppliers for compliance, and supports staff development through sponsored courses and seminars.
While LUCC has not formalized a corporate social responsibility policy, its ongoing environmental initiatives include recycling, energy conservation, and sustainable project enhancements. No valuation premium or discount for ESG is currently applied, but further progress in this area could enhance operational efficiency and share price performance.

Operational and Financial Position: Balance Sheet Strength and Cash Generation

LUCC’s balance sheet remains robust, with total cash and equivalents rising from S$11.48 million in Jun-24 to a projected S$98.91 million by Jun-28F. The company maintains minimal debt and strong equity growth, highlighting its financial stability and capacity for future expansion.

Risks and Investment Considerations

Key risks to LUCC’s outlook include:

• Potential changes in government policy, such as higher local labour content requirements or levies impacting margins
• Increased competition in the urban revitalisation segment, possibly leading to pricing pressure and margin compression
• Shortage of skilled workforce, risking project delays or cost overruns
• Project defects that could result in claims and onerous cost provisions

Analyst Coverage and Contact

• Analyst: LI Jialin ([email protected])
• Analyst: LOCK Mun Yee ([email protected])

Conclusion: LUCC Delivers on Growth, Margins, and Dividend Promises

Lum Chang Creations stands out as a prime play on Singapore’s conservation and urban revitalisation wave, underpinned by a strong order book, widening margins, and a clear dividend strategy. With robust financials, a debt-light balance sheet, and a niche market focus, LUCC offers investors a compelling blend of growth and income potential, with significant upside from current levels. The outlook remains bright as the company continues to secure and execute landmark projects in Singapore’s evolving built environment.