Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/lhn-ltd" target="_blank" data-smartkarma-citation="entities:27234" rel="noopener">LHN Ltd (LHN SP)</a> to acquire an industrial property at Tuas South for S$21m; Expanding its Space Optimisation Business</h3><ul><li>LHN has accepted the OTP for the purchase of Tuas South Property for S$21m. The acquisition is expected to complete by 1Oct21 and will be financed by a mix of internal sources of funding and bank borrowings</li><li>The Tuas South Property is located at 55 Tuas South Avenue 1, with a land area of 51,655sqft and a remaining lease of ~39 years. The property has GFA of 129,138sqft and consists of (i) an 11-storey industrial building with a basement carpark; (ii) a part single-storey industrial factory; and (iii) a part single-storey industrial factory with two storey workers’ dormitory. This property is a foreclosed property and DBS Bank is selling it as the mortgagee of the property exercising its power of sale</li><li>LHN intends to operate the property under the industrial segment of its Space Optimisation Business to provide business spaces under the Business 2 zone for industrial developments as well as a range of value-added logistics support services to its tenants</li></ul><p>Comments: The Tuas South Property will add 2.9% of Industrial Space to LHN’s Space Optimisation Business, bringing total Industrial space to 1.83m sqft. LHN has been rationalizing its Industrial Space in FY20/21 by not renewing expired leases that are deemed underperforming. Including the 2 new JVs at 202 Kallang Bahru and 5 Toa Payoh, Industrial Space registered a net decline of -1.10m sqft (or -38.3%) over the last two years. We are positive on the acquisition given the strategic location and favorable price. The Consideration of S$21m translates to S$163psf, which is lower than the last two industrial property transactions along Tuas South Avenue 1 in 2020 at S$194psf and S$222psf, respectively (source: edgeprop). We expect future CapEx should be small as the property’s existing GFA of 129,138sqf is already at its maximum allowable plot ratio of 2.5 under the URA’s Master Plan 2019.</p>

SingaporeLHN Ltd (LHN SP) to acquire an industrial property at Tuas South for S$21m; Expanding its Space Optimisation BusinessLHN has accepted the OTP for the purchase of Tuas South Property for S$21m. The acquisition is expected to complete by 1Oct21 and will be financed by a mix of internal sources of funding and bank borrowingsThe Tuas South Property is located at 55 Tuas South Avenue 1, with a land area of 51,655sqft and a remaining lease of ~39 years. The property has GFA of 129,138sqft and consists of (i) an 11-storey industrial building with a basement carpark; (ii) a part single-storey industrial factory; and (iii) a part single-storey industrial factory with two storey workers’ dormitory. This property is a foreclosed property and DBS Bank is selling it as the mortgagee of the property exercising its power of saleLHN intends to operate the property under the industrial segment of its Space Optimisation Business to provide business spaces under the Business 2 zone for industrial developments as well as a range of value-added logistics support services to its tenantsComments: The Tuas South Property will add 2.9% of Industrial Space to LHN’s Space Optimisation Business, bringing total Industrial space to 1.83m sqft. LHN has been rationalizing its Industrial Space in FY20/21 by not renewing expired leases that are deemed underperforming. Including the 2 new JVs at 202 Kallang Bahru and 5 Toa Payoh, Industrial Space registered a net decline of -1.10m sqft (or -38.3%) over the last two years. We are positive on the acquisition given the strategic location and favorable price. The Consideration of S$21m translates to S$163psf, which is lower than the last two industrial property transactions along Tuas South Avenue 1 in 2020 at S$194psf and S$222psf, respectively (source: edgeprop). We expect future CapEx should be small as the property’s existing GFA of 129,138sqf is already at its maximum allowable plot ratio of 2.5 under the URA’s Master Plan 2019.

ASEAN Builder's Scoop (15Jul21) - LHN Expands Its Space Optimization Biz

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/lhn-ltd" target="_blank" data-smartkarma-citation="entities:27234" rel="noopener">LHN Ltd (LHN SP)</a> completes acquisition of eight units at Fu Yuen Building on Beach Road</h3><p>LHN has completed its acquisition of eight units in Fu Yuen Building at 75 Beach Road. It entered into an option to purchase the eight units in Apr21 for S$16.8m. LHN has completed the final payment towards the acquisition on 13Jul21. LHN will convert the entire third and fourth floors into its new headquarters office, and convert the fifth and sixth floors into a Co-working and Co-living space that will be managed by its residential brand, Coliwoo.</p>

SingaporeLHN Ltd (LHN SP) completes acquisition of eight units at Fu Yuen Building on Beach RoadLHN has completed its acquisition of eight units in Fu Yuen Building at 75 Beach Road. It entered into an option to purchase the eight units in Apr21 for S$16.8m. LHN has completed the final payment towards the acquisition on 13Jul21. LHN will convert the entire third and fourth floors into its new headquarters office, and convert the fifth and sixth floors into a Co-working and Co-living space that will be managed by its residential brand, Coliwoo.

ASEAN Builder's Scoop (14Jul21) - LHN Completed Fu Yuen Building Acq

<h2>Singapore</h2><h3>Condo and HDB rents continued to rise in May21; Volumes holding up well</h3><p>The rental market for both private apartments and HDB flats in May remained robust despite the tightened Covid-19 measures and border restrictions in place. Rents for condominium units rose by 0.3% MoM and are up 7.3% YoY. They are still down 11.4% from their peak in Jan13, according to SRX. HDB rents saw a slightly higher increase of 0.7% MoM and are up 7.9% YoY. However, they are still 9.2% off their highs in Aug13. With the May increases, condo rents extended their rise to five consecutive months, while HDB rents climbed for 11 straight months. Rental volume for condo apartments increased by 1.7% MoM to an estimated 4,603 units leased in May compared with 4,527 units in Apr. The number of units rented out last month are also 39.3% higher YoY, when Singapore was in its circuit breaker period. HDB rental volume in May saw a slight drop from Apr, down 0.9% MoM to an estimated 1,686 units from 1,702 units in Apr. HDB rental volume last month is 30.4% higher Yoy, though 8.5% lower than the five-year average volume for the month of May.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/212/219/original/image017.png?1623289645" class="editor-image img-responsive" data-smartkarma-image-id="212219"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/212/220/original/image018.png?1623289657" class="editor-image img-responsive" data-smartkarma-image-id="212220"></figure></section></section>

SingaporeCondo and HDB rents continued to rise in May21; Volumes holding up wellThe rental market for both private apartments and HDB flats in May remained robust despite the tightened Covid-19 measures and border restrictions in place. Rents for condominium units rose by 0.3% MoM and are up 7.3% YoY. They are still down 11.4% from their peak in Jan13, according to SRX. HDB rents saw a slightly higher increase of 0.7% MoM and are up 7.9% YoY. However, they are still 9.2% off their highs in Aug13. With the May increases, condo rents extended their rise to five consecutive months, while HDB rents climbed for 11 straight months. Rental volume for condo apartments increased by 1.7% MoM to an estimated 4,603 units leased in May compared with 4,527 units in Apr. The number of units rented out last month are also 39.3% higher YoY, when Singapore was in its circuit breaker period. HDB rental volume in May saw a slight drop from Apr, down 0.9% MoM to an estimated 1,686 units from 1,702 units in Apr. HDB rental volume last month is 30.4% higher Yoy, though 8.5% lower than the five-year average volume for the month of May.

ASEAN Builder's Scoop (10Jun21) - Condo/HDB Rents Continue to Rise in May21

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/lhn-ltd" target="_blank" data-smartkarma-citation="entities:27234" rel="noopener">LHN Ltd (LHN SP)</a> revamps 1557 Keppel Road into office and Co-living spaces</h3><p>Once the nine-years lease was up in Dec19 for 1557 Keppel Road, LHN, the master tenant of the state land, decided to repurpose the place on a fresh term of lease into an integrated space comprising office and co-living spaces, occupying over 96,299sqft. The renovations took about 10 months, with delays due to the pandemic. The co-living business at the development runs under LHN’s brand Coliwoo, which has a total of over 800 rooms in the city-state. Coliwoo also operates in other areas like Balestier, Boon Lay and Bukit Timah. To date, LHN says 50% of its office spaces are already leased out. Confirmed tenants include a digital media and financial consultancy firm, while arrangements are still pending with three other businesses: an architectural firm, a digital media consultancy and a FinTech company. There will also be a gym operated by Anytime Fitness, and an F&amp;B eatery catering to the office and residential tenants within the development. At Coliwoo 1557 Keppel Road, LHN has also carved out 47 co-living units ranging from 180-260sqft across two residential blocks. Due to pandemic-led lockdowns, Coliwoo has seen demand from locals increase to 30% from 10% previously.</p>

SingaporeLHN Ltd (LHN SP) revamps 1557 Keppel Road into office and Co-living spacesOnce the nine-years lease was up in Dec19 for 1557 Keppel Road, LHN, the master tenant of the state land, decided to repurpose the place on a fresh term of lease into an integrated space comprising office and co-living spaces, occupying over 96,299sqft. The renovations took about 10 months, with delays due to the pandemic. The co-living business at the development runs under LHN’s brand Coliwoo, which has a total of over 800 rooms in the city-state. Coliwoo also operates in other areas like Balestier, Boon Lay and Bukit Timah. To date, LHN says 50% of its office spaces are already leased out. Confirmed tenants include a digital media and financial consultancy firm, while arrangements are still pending with three other businesses: an architectural firm, a digital media consultancy and a FinTech company. There will also be a gym operated by Anytime Fitness, and an F&amp;B eatery catering to the office and residential tenants within the development. At Coliwoo 1557 Keppel Road, LHN has also carved out 47 co-living units ranging from 180-260sqft across two residential blocks. Due to pandemic-led lockdowns, Coliwoo has seen demand from locals increase to 30% from 10% previously.

ASEAN Builder's Scoop (21May21) - LHN unveils 1557KR Co-living and office space

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/lhn-ltd" target="_blank" data-smartkarma-citation="entities:27234" rel="noopener">LHN Ltd (LHN SP)</a> 1H21 results boosted by dormitory management contracts; Continue to ride on co-living trend</h3><ul><li>1H21 revenue increased 24.9% YoY to S$64.5m, primarily due to higher contributions from Facilities Management Business (+225.5% YoY) and Logistics Services Business (+6.0% YoY), partially offset by lower revenue from Space Optimisation Business (-33.6% YoY)</li><li>Space Optimisation: Revenue fell 33.6% YoY to S$19.4m in 1H21, due to lower contributions from Industrial Properties (-42.7% YoY to S$8.8m) and Commercial Properties (-53.8% YoY to S$4.1m), partially offset by higher revenue from Residential Properties (+28.9% YoY to S$6.5m). Lower revenues from Industrial and Commercial Properties were mainly due to expiry of 6 master leases, negative reversions, downtime at 1557 Keppel Road due to AEI works and IFRS 16 impacts. Occupancy for Industrial Properties -0.9pp YoY to 89.0% in 1H21 (vs. 89.9% in 1H20), while occupancy for Commercial Properties -15.3pp YoY to 69.2% in 1H21 (vs. 84.5% in 1H20). Meanwhile, higher revenue from Residential Properties was boosted by new serviced residence in Cambodia (started in 1Q21) and increase in revenue at 1A Lutheran Road</li><li>Facilities Management: Revenue increased by 225.5% YoY to S$31.6m in 1H21, mainly due to the increase in facilities management services provided for short-term contracts under the dormitory business</li><li>Logistics Services: Revenue grew 6.0% YoY to S$13.5m in 1H21, mainly due to increase in transportation services provided from the trucking business</li><li>1H21 PATMI increased 366.3% YoY to S$14.8m on higher other income and share of results from associates and joint ventures. 1H21 dividend came in at S$0.75c per share (+300% YoY), translating to an annualised dividend yield of ~4.5%. LHN’s cash and bank balances came in at S$36.3m, while net gearing (excluding IFRS16 impact) stood at 0.31x</li><li>LHN is currently trading at 4.3% FY21E dividend yield and 5.30x FY21E P/E</li></ul><p>Comments: 1H21 Revenue and PATMI form 52.2% and 59.1% of our full-year FY21E forecasts, respectively. We have expected 1H21 results to be higher than 2H21E due to the frontloading of dormitory management contracts (expected to end in 3Q21). With the resurgence of Covid-19 cases in Singapore, we do not discount the probability of LHN renewing the dormitory management contracts. Nonetheless, we believe its string of expansion plans for co-living business should provide steady growth moving forward. In addition to the new serviced residence in Cambodia (commissioned since 1Q21), 1557 Keppel Road and Nan’an China should also start contributing in FY21E. Meanwhile, newly acquired 320 Balestier Road (16Dec20), as well as proposed acquisitions of 40 &amp; 42 Amber Road (to be completed by 8Jun21), 8 strata units at Fu Yuen Building (subject to completion of two underlying options), and 115 Geylang Road (to be completed by 21Jul21) should drive growth in FY22E and onwards. We are currently reviewing our recommendations.</p>

SingaporeLHN Ltd (LHN SP) 1H21 results boosted by dormitory management contracts; Continue to ride on co-living trend1H21 revenue increased 24.9% YoY to S$64.5m, primarily due to higher contributions from Facilities Management Business (+225.5% YoY) and Logistics Services Business (+6.0% YoY), partially offset by lower revenue from Space Optimisation Business (-33.6% YoY)Space Optimisation: Revenue fell 33.6% YoY to S$19.4m in 1H21, due to lower contributions from Industrial Properties (-42.7% YoY to S$8.8m) and Commercial Properties (-53.8% YoY to S$4.1m), partially offset by higher revenue from Residential Properties (+28.9% YoY to S$6.5m). Lower revenues from Industrial and Commercial Properties were mainly due to expiry of 6 master leases, negative reversions, downtime at 1557 Keppel Road due to AEI works and IFRS 16 impacts. Occupancy for Industrial Properties -0.9pp YoY to 89.0% in 1H21 (vs. 89.9% in 1H20), while occupancy for Commercial Properties -15.3pp YoY to 69.2% in 1H21 (vs. 84.5% in 1H20). Meanwhile, higher revenue from Residential Properties was boosted by new serviced residence in Cambodia (started in 1Q21) and increase in revenue at 1A Lutheran RoadFacilities Management: Revenue increased by 225.5% YoY to S$31.6m in 1H21, mainly due to the increase in facilities management services provided for short-term contracts under the dormitory businessLogistics Services: Revenue grew 6.0% YoY to S$13.5m in 1H21, mainly due to increase in transportation services provided from the trucking business1H21 PATMI increased 366.3% YoY to S$14.8m on higher other income and share of results from associates and joint ventures. 1H21 dividend came in at S$0.75c per share (+300% YoY), translating to an annualised dividend yield of ~4.5%. LHN’s cash and bank balances came in at S$36.3m, while net gearing (excluding IFRS16 impact) stood at 0.31xLHN is currently trading at 4.3% FY21E dividend yield and 5.30x FY21E P/EComments: 1H21 Revenue and PATMI form 52.2% and 59.1% of our full-year FY21E forecasts, respectively. We have expected 1H21 results to be higher than 2H21E due to the frontloading of dormitory management contracts (expected to end in 3Q21). With the resurgence of Covid-19 cases in Singapore, we do not discount the probability of LHN renewing the dormitory management contracts. Nonetheless, we believe its string of expansion plans for co-living business should provide steady growth moving forward. In addition to the new serviced residence in Cambodia (commissioned since 1Q21), 1557 Keppel Road and Nan’an China should also start contributing in FY21E. Meanwhile, newly acquired 320 Balestier Road (16Dec20), as well as proposed acquisitions of 40 &amp; 42 Amber Road (to be completed by 8Jun21), 8 strata units at Fu Yuen Building (subject to completion of two underlying options), and 115 Geylang Road (to be completed by 21Jul21) should drive growth in FY22E and onwards. We are currently reviewing our recommendations.

ASEAN Builder's Scoop (14May21) - LHN Robust 1H21, Boosted by Mgmt Contracts

Singapore

LHN Limited provides property management services. The Company offers industrial, commercial, residential property management services, and other services. LHN also provides logistics services.

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LHN Ltd (LHN SP)

ASEAN Builder's Scoop (15Jul21) - LHN Expands Its Space Optimization Biz

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ASEAN Builder's Scoop (14Jul21) - LHN Completed Fu Yuen Building Acq

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ASEAN Builder's Scoop (21May21) - LHN unveils 1557KR Co-living and office space

LHN unveils 1557KR Co-living and office space; SUN rolls out tenant supports; HK starts REIT subsidy to rival SG, Japan; AGI weak 1Q21 results; LBS...

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ASEAN Builder's Scoop (14May21) - LHN Robust 1H21, Boosted by Mgmt Contracts

LHN robust 1H21, boosted by mgmt contracts; UHU riding on US consumer recovery; IREIT attractive 12% EUR yield; RLC eyes REIT listing by 2H21; MEG...

SCCM Asia Research

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