UOB Kay Hian Private Limited
Date of Report: 18 July 2025

Lum Chang Creations: Dominating Singapore’s Conservation and Interior Fit-Out Market with Explosive Growth

Introduction: Leading the Urban Revitalisation Charge

Lum Chang Creations (LCC) has rapidly emerged as one of Singapore’s leading players in urban revitalisation, conservation, and interior fit-out works. Backed by a robust orderbook, a niche market focus, and stellar financial performance, LCC is poised for remarkable growth, attracting investor attention with strong margins, high returns on equity, and an attractive dividend yield.

Company Snapshot: Lum Chang Creations at a Glance

• Share Price: S\$0.25
• Target Price: S\$0.39 (Upside: +56%)
• Market Capitalisation: S\$78.8 million
• GICS Sector: Industrials
• Major Shareholders: Lum Chang Holdings (71.1%), Lim Thiam Hooi (13.3%)
• FY24 NAV/Share: S\$0.05
• FY24 Net Cash/Share: S\$0.04
• Dividend Yield (FY26F): 4.9%

Investment Highlights: Why LCC Stands Out

• Dominant Niche Player: Founded in 2018, LCC boasts a 15.7% market share in Singapore’s urban revitalisation specialist (URS) industry. Its expertise covers conservation, restoration, interior fit-out, and addition & alteration (A&A) works.
• Proven Track Record: High-profile completed projects include St James Power Station, National Museum of Singapore, Bedok Community Hospital, and Singapore Marriott Tang Plaza Hotel. LCC has won prestigious awards, such as the URA Architectural Heritage Award (Distinction) for Conservation & Innovation.
• Robust Orderbook: As of 31 May 2025, LCC’s orderbook stands at S\$123 million, ensuring strong revenue visibility. New contracts worth S\$34 million have been secured in the first five months of 2025.
• High-Margin and Cash-Generative Model: Net margins have hovered around 10%, with ROE consistently above 30% for FY24-25. LCC operates a lean model by outsourcing lower-skill roles while retaining highly-skilled employees in leadership positions.
• Financial Strength: LCC is projected to hold S\$29 million in net cash by July 2025—about 37% of its market cap—bolstering its ability to pursue growth and deliver shareholder returns.

Financial Performance and Outlook: Stellar Growth Trajectory

LCC has delivered an explosive two-year revenue CAGR of 105% and earnings CAGR of 206% for FY22-24. The company’s robust order pipeline and expanding project types are expected to drive further growth.

Growth Drivers: Industry Tailwinds and Strategic Positioning

• Government Commitment: Strong focus on heritage preservation, with incentives and a growing pipeline of conservation projects.
• Adaptive Reuse Trend: Increased demand for repurposing heritage buildings, especially in high-value projects above S\$1 million.
• Sector Expansion: The URS industry is set to grow at a 6.8% CAGR from S\$380-450 million in 2024 to S\$470-550 million by 2027.
• Singapore’s Economic Strength: A robust construction sector underpins continued demand for LCC’s services.
• Oligopolistic Market: Only about five major URS players, with LCC holding a substantial share.

Valuation: Compelling Upside and Attractive Yield

LCC is currently trading at just 6.1x FY26F PE, which represents a significant 45% discount to its peers’ average of 10.9x. Despite this, LCC delivers superior metrics, including a net margin of 13%, ROE of 77%, a projected 32% EPS CAGR from FY24-27, and a strong net cash position.
The company has committed to a minimum 30% dividend payout for FY25 and FY26, supporting a 4.9% yield in FY26—among the highest in the sector.

Peer Comparison Table

Peer Company Profiles

• ISOTeam: Focuses on building maintenance and estate upgrading, delivering integrated renovation, repairs, and facility management for public and private clients.
• Alpina Holdings: Provides integrated building services, mechanical and electrical engineering, and A&A works, including maintenance and installation of M&E systems.
• Attika Group: Engaged in electrical and interior fit-out works, offering interior design, project management, joinery, builder works, metalwork, and furniture solutions.
• Lincotrade & Associates: Specialises in interior fitting-out and A&A works across commercial and residential properties, also designing show flats for marketing.
• LHN: Focuses on space optimisation across industrial, commercial, and residential segments, including property development, facilities management, and energy services.
• OKP Holdings: Operates in construction and maintenance with a focus on infrastructure, roads, bridges, and airport projects, alongside public infrastructure maintenance.
• Pan-United Corporation: Engaged in concrete manufacturing and logistics, with ready-mixed concrete, recycling, and waste management initiatives for sustainability.
• BRC Asia: A leader in prefabricated steel reinforcement solutions for concrete construction, including supply and installation of reinforced concrete products and structural steel.
• Hong Leong Asia: Operates across automobile services, technology development, and equipment leasing, with a focus on innovation and R&D.

Strategic Expansion Plans

LCC aims to:

• Expand regionally into Malaysia and neighbouring countries.
• Penetrate the high-end residential market through its subsidiary Lum Chang Decor.
• Pursue acquisitions, investments, and strategic partnerships in complementary businesses.

Operational Excellence: Workplace Safety and Awards

LCC’s unwavering commitment to workplace safety has been recognised through multiple awards, including the Workplace Safety and Health (WSH) Performance Gold Award in 2024. The company maintains a record of zero fatalities since its incorporation, underscoring its operational discipline and regulatory compliance.

Financials: Cash Flow, Balance Sheet, and Key Metrics

• Net Cash Position: Forecasted to hit S\$29 million in July 2025, rising to S\$35 million by FY27.
• Free Cash Flow: Projected to rise from S\$11 million in FY24 to S\$15 million in FY27.
• Capex: Minimal, supporting high free cash flow conversion.
• Dividend Policy: Minimum 30% payout in FY25 and FY26, providing stable returns.

Risks to Watch

• Revenue Volatility: Reliance on non-recurring, project-based contracts introduces unpredictability in order flow.
• Labour Dependence: Heavily reliant on skilled labour; shortages or changes in employment policy could impact operations.
• Workplace Safety: Accidents or regulatory breaches could disrupt projects and trigger penalties.
• Key Personnel Risk: No key man insurance for top executives; unexpected departures could affect strategic continuity.
• Foreign Currency Exposure: Although operations are mainly in Singapore dollars, foreign supplier contracts may introduce forex risk. No formal hedging arrangements are in place.

Key Milestones and Awards

• 2018: Incorporated as a specialist interior contracting firm. Secured major contracts for MRT stations and St James Power Station.
• 2020: Revenue surpassed S\$20 million. Additional contracts for Marriott Tang Plaza Hotel.
• 2021-2024: Steady stream of high-profile contract wins, regional expansion via JV, and launch of new subsidiaries for high-end residential and furniture manufacturing. Achieved S\$50+ million revenue in FY24. Multiple WSH and Green Mark awards.
• 2025: Secured A&A works for Seletar Mall and Oriental Plaza.

Management Team

The leadership team brings decades of experience across construction, finance, and property development. Notable members include:

• Yeo Gek Leong Clarence: Independent Chairman with extensive public sector leadership.
• Lim Ho Heng: Independent Director, former CFO at Yangzijiang Shipbuilding.
• Lim Thiam Hooi: Managing Director and founder, with 35+ years’ experience.
• Adrian Lum Wen-Hong: Non-Executive Director, currently Director of Property Development at Lum Chang Holdings.
• Yap Lay Hoon: Non-Executive Director and Finance Director at Lum Chang Holdings.
• Alice Ong: Group Financial Controller, with a strong background in accounting and financial management.
• Sik Wee Teng & Ivan Oktavianus: Project leadership with deep sector experience.

Conclusion: A Standout Investment Opportunity in Singapore’s Construction Landscape

Lum Chang Creations combines a dominant market share, strong financials, and a proven track record in Singapore’s niche urban revitalisation and interior fit-out sector. Supported by robust industry tailwinds, a healthy orderbook, and management’s strategic vision, LCC offers investors a compelling blend of growth, profitability, and yield at an undemanding valuation. As government heritage initiatives and the adaptive reuse trend gain momentum, LCC is set to deliver sustained returns and remain a key player in Singapore’s built environment transformation.