Broker: CGS International
Date of Report: July 9, 2025

LHN Ltd: Unveiling Value in Singapore’s Fast-Growing Space Optimisation and Property Sectors

Investment Thesis: LHN Ltd Set for Impressive Growth and Value Unlocking

LHN Ltd stands at the forefront of Singapore’s real estate management industry, specializing in space optimisation, facilities management, and innovative property solutions across residential, industrial, and commercial segments. With key brands like Coliwoo (co-living) and Work+Store (self-storage), LHN is strongly positioned for multi-year growth.
Key highlights:

• Initiating coverage with an Add rating and S\$1.00 target price, implying 31.6% upside from S\$0.76, based on 10x CY26F P/E (vs. global peer average of 25x).
• Current valuation is undemanding at just 6.1x CY26F P/E, well below historical mean.
• Coliwoo’s potential spin-off and IPO could unlock significant shareholder value and provide capital for further expansion and returns.

Business Overview: Multi-Segment Revenue Drivers

LHN’s business is organized into three main segments:

1. Space Optimisation: Asset management of residential (co-living), industrial (self-storage), and commercial properties (co-working). Key brands include Coliwoo (co-living), Work+Store (self-storage), and GreenHub (co-working).
2. Facilities Management: Cleaning, building maintenance, and carpark management via subsidiaries Industrial & Commercial Facilities Management Pte Ltd (ICFM) and LHN Parking Pte Ltd.
3. Property Development: A new revenue generator since 2025, focusing on repositioning underperforming or strategically located properties for income or capital gains.

In 1H25:

• Space Optimisation: 54% of revenue (Residential 34%, Industrial 18%)
• Facilities Management: 28%
• Property Development: 17% (first-time contribution from the sale of six strata-titled units at LHN Food Chain)

Coliwoo: The Crown Jewel in Co-Living

Coliwoo is Singapore’s leading co-living platform and LHN’s primary growth engine, contributing 56% of 1H25 pre-tax profit. Since its 2019 launch, Coliwoo has scaled rapidly:

• As of March 2025: 2,595 keys across 26 properties
• Targeting 5,145 keys by FY27F, with 800 new keys to be acquired annually
• FY25F: 1,004 new keys expected (+40% YoY); pipeline includes Coliwoo Resort Chalet (159 Jalan Loyang Besar, >350 keys) and 50 Armenian Street
• Coliwoo’s occupancy rates have consistently exceeded 95%, with PBT margins of 29-44% over the past three years, despite a slower expat hiring outlook

Coliwoo employs a hybrid leasing model:

• 73% of keys via master leases and management contracts (asset-light, flexible, scalable)
• Remaining keys are owned or in joint ventures

The spin-off and IPO of Coliwoo, which LHN is preparing for, could value the business at S$250m (applying a 10x FY26F P/E, a 50% discount to global co-living peers). LHN is expected to retain at least a 50% stake, potentially unlocking S$125m in proceeds for capital returns and new investments.

Industrial Segment: High-Yield Growth with Work+Store

LHN’s industrial assets, particularly the Work+Store brand, deliver strong profit margins (PBT: 62-78% FY21-24) due to a hybrid leasing model and efficient cost structure. The segment is set for further growth post-Coliwoo spin-off:

• Climate-controlled units launched at 202 Kallang Bahru and Ang Mo Kio, with occupancy ramping up to 60% in 4-5 months and rental yields 30% higher than standard units
• Minimal capex required for further upgrades, as most units are already fitted with necessary infrastructure
• Property development revenue to be driven by the sale of remaining units at LHN Food Chain and redevelopment of Geylang property

Facilities Management: Expansion through Technology and Market Share

LHN’s facilities management segment is expanding through new cleaning contracts and carpark management growth:

• Divested loss-making carpark business in Hong Kong, China, in 1H25
• Focus on smart parking solutions and technology in Singapore
• Revenue expected to grow 11%/7%/7% in FY25F/26F/27F

Financial Performance and Forecasts

Key financial takeaways:

• Group EBIT expected to grow at a 19% CAGR over FY24-27F
• Gross margins to expand to 57-59% in FY25-27F, driven by operating leverage and higher-margin property development
• Net gearing to remain high (103-115%) due to capex for industrial and property development, but divestments and spin-off proceeds could provide relief

Dividend Policy and Capital Allocation

LHN has committed to a minimum dividend payout of S\$0.03 per share (at least 30% of profit, excluding fair value gains/losses and other adjustments) for FY25-27F. There is potential for special dividends following the Coliwoo spin-off.

SWOT Analysis

• Strengths: Diversified business, hybrid leasing model, strong track record, co-living market leadership (~30% market share)
• Weaknesses: Reliance on lease renewals (26 of 47 properties are master-leased), limited geographic diversification
• Opportunities: Coliwoo spin-off, regional SEA expansion
• Threats: Competition, regulatory changes, economic downturns

Industry Outlook: Resilient Demand Across Segments

Co-Living: Affordable Alternative Amid Rising Rents

• Private non-landed residential rental index rose 47% (1Q21-1Q25), driving demand for flexible, affordable co-living options
• Government initiatives and SLA tenders support further co-living and serviced apartment supply

Self-Storage: E-Commerce Boom Fuels Growth

• Singapore’s e-commerce market projected to hit US\$33.3bn by 2028F, at 8.9% CAGR
• Business owners account for ~40% of self-storage customers; current occupancy at 82%
• JTC allowing self-storage expansion in additional industrial estates; 700,000 sqm new space by end-2025F

Parking and Cleaning: Urbanisation and Hygiene Drive Demand

• COE quota increase (+21% YoY for May-Jul 2025) to spur parking demand; sector CAGR of 6.7% (2025-2031F)
• Cleaning and sanitation market benefits from post-pandemic hygiene focus, government certification, and technology adoption

Peer Comparison and Valuation

Key Risks

• Occupancy/Rental Decline: Short average leases (6-9 months) require sustained tenant inflow. Weak hiring and expat demand could pressure occupancy and rental rates.
• Fragmented Market, Competition: Singapore’s co-living market is nascent and fragmented, making scale and profitability challenging. Increased competition could lead to consolidation and price pressure.
• Master Lease Renewal Risk: Significant reliance on master-leased properties exposes LHN to renewal and re-tendering risk, potentially disrupting operations if not replaced efficiently.
• Asset Acquisition Constraints: Limited suitable assets for acquisition due to lack of government land sales for co-living, high property values, and short-tenure state tenders.

Company Background and Management

Founded in 1991, LHN has evolved from timber trading into a regional real estate management leader listed on SGX Catalist (2015) and HKEX (2017), with operations in Singapore, Indonesia, Myanmar, Cambodia, and China. Growth is underpinned by asset-light JVs, capital recycling, and sustainability-driven innovation.
Key management includes:

• Mr. Kelvin Lim – Executive Chairman, Executive Director & Group Managing Director
• Ms. Jess Lim – Executive Director & Group Deputy Managing Director
• Ms. Ch’ng Li-Ling – Lead Independent Non-Executive Director
• Mr. Eddie Yong – Independent Non-Executive Director
• Mr. Chan Ka Leung Gary – Independent Non-Executive Director
• Ms. Yeo Swee Cheng – Chief Financial Officer
• Mr. Wong Sze Peng, Danny – CEO, Work+Store
• Mr. Chong Eng Wee – Company Secretary

ESG Commitments

LHN demonstrates a robust ESG foundation, with Board-level oversight, regular management reviews, and public targets (e.g., -5% Scope 2 emissions intensity by 2028). Solar capacity, staff training, and social outreach are key focus areas, though absolute emissions may rise as the company expands.

Conclusion: LHN Ltd Poised for Re-Rating and Growth

LHN Ltd is on track for substantial value creation, driven by the fast-growing Coliwoo co-living platform, high-margin industrial assets, and new property development initiatives. Unlocking value via a Coliwoo spin-off, strategic acquisitions, and prudent capital management positions LHN as a compelling investment in Singapore’s dynamic real estate sector. Investors should watch for catalysts including the Coliwoo listing, industrial asset growth, and special dividends, while remaining mindful of market and operational risks.