Broker Name: CGS International
Date of Report: September 2, 2025
Singapore’s Lum Chang Creations: Riding Conservation Tailwinds with Robust Growth and Dividend Prospects

Introduction: Lum Chang Creations Surges Ahead in Singapore’s Property Development Sector

Lum Chang Creations (LUCC), a specialist in urban revitalisation and conservation construction in Singapore, has posted an outstanding FY6/25 performance with profit after tax and minority interest (PATMI) soaring 173% year-on-year (YoY) to S\$12.91 million. CGS International reiterates its ‘Add’ rating on LUCC, setting a target price of S\$0.81, reflecting a 47.3% upside from the current price of S\$0.55. LUCC’s asset-light business model, strong order book, and alignment with government conservation initiatives position it as a top pick for investors seeking growth and stability in the property development space.

Financial Highlights: Record Profits, Expanding Margins, and Growing Order Book

LUCC exceeded both CGS and Bloomberg consensus forecasts, delivering S\$12.91m PATMI. The company’s order book at June 30, 2025 stood at S\$112.8 million, underpinning revenue visibility for FY26. The surge in revenue and profits is attributed to new and ongoing project wins, as well as margin expansion driven by procurement savings.

Revenue Drivers: Conservation Projects and Government Tailwinds

LUCC has aligned its business strategy with Singapore’s ongoing conservation efforts, as outlined in the Urban Redevelopment Authority’s (URA) Master Plan. The company’s expertise in conservation and restoration works has positioned it to benefit from upcoming government tenders and niche market opportunities. Notable ongoing projects include Oriental Plaza, Temasek Shophouse, the National Museum, 44 & 46 Club St, and 2 Cavan Road, all secured in FY24-25 and scheduled for completion by FY26-27.
Future opportunities may arise from government plans to conserve assets such as 45 Armenian Street, the former St. Joseph’s Institution building, and Bukit Timah Turf City. LUCC’s management is actively tendering for new projects, with results expected soon.

Dividend Policy: Attractive Payouts Surpass IPO Commitments

A key highlight for investors is LUCC’s strong cashflow and dividend policy. The company has proposed a final dividend of S\$0.022 per share for FY25, representing 53.7% of PATMI—well above its IPO commitment of at least 30% payout for FY25-26. LUCC’s asset-light model translates into robust operating cash flow (FY25: S\$22.6m), minimal capex, and zero debt repayments.

Valuation and Market Performance: Strong Upside, Attractive Multiples

Despite reducing FY26F EPS forecast by 2.3% due to lower profit assumptions for non-controlling interests and updated share numbers, CGS International maintains its TP of S\$0.81. LUCC trades at compelling valuation multiples relative to its growth trajectory:

• Current Price: S\$0.55
• Target Price: S\$0.81
• Forward P/E (FY26F): 8.76x
• Dividend Yield (FY26F): 4.01%
• Price/Book (FY26F): 3.82x
• Return on Equity (FY25A): 74.4%

Major shareholders include Lum Chang Holdings Limited (71.1%) and Lim Thiam Hooi (13.3%). The free float stands at 15.6%.

Peer Comparison and Consensus Ratings

LUCC enjoys strong consensus ratings with 2 ‘Buy’ and 0 ‘Hold’ or ‘Sell’. Its price performance over the last 12 months has been exceptional, with an absolute gain of 46.7% and a relative gain of 43.8%.

Key Financial Summary and Ratios

ESG Analysis: Sustainability and Workplace Safety Drive Competitive Advantage

LUCC is a leader in urban revitalisation, handling conservation, restoration, and adaptive reuse projects along with interior fit-outs, asset enhancements, and retail solutions. The company’s ESG initiatives include:

• Environmental: Recycling and energy conservation efforts.
• Social: Charitable donations, employee volunteering, and pro-bono projects.
• Governance: Rigorous health, safety, and supplier assessments, with zero workplace fatalities since 2018.

Although no premium or discount is currently applied for ESG in valuations, LUCC’s commitment to safety, sustainability, and community engagement could enhance operational efficiencies and bolster its reputation for securing high-quality projects.

Balance Sheet and Cash Flow Strength

LUCC’s balance sheet demonstrates growing cash reserves, minimal debt levels, and rising shareholder equity. Free cash flow to equity remains robust, supporting ongoing dividend payouts and operational expansion.

Risks and Opportunities: What Investors Should Watch

Key Upside Catalysts:

• Higher-than-expected order wins
• Further margin expansion

Potential Downside Risks:

• Unfavourable government policy (e.g., local labour content ratios, increased levies)
• Heightened competition in the URS space, leading to pricing pressure and compressed margins
• Skilled workforce shortages, which could result in project delays and cost overruns
• Project defects resulting in claims and cost provisions

Conclusion: Lum Chang Creations Positioned for Sustainable Growth and Investor Returns

LUCC stands out as a highly attractive play in Singapore’s property development sector, backed by its niche expertise in conservation, robust financial performance, strong order book, and commitment to shareholder returns. Its alignment with government conservation priorities and ESG focus further enhance its competitive positioning. With substantial upside to target price, high dividend yields, and continued operational momentum, LUCC offers an appealing blend of growth and income for investors seeking exposure to Singapore’s dynamic real estate market.
Stock Recommendation Framework

• Add: Total return expected to exceed 10% over the next 12 months
• Hold: Total return expected between 0% and 10%
• Reduce: Total return expected to fall below 0%

Current rating: Add
Target Price: S$0.81
Current Price: S$0.55
Upside Potential: 47.3%

Contact Information

• Analyst: LI Jialin – +65 6210 8663 – [email protected]
• Analyst: LOCK Mun Yee – +65 6210 8606 – [email protected]