SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

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Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<figure class="editor-figure mceNonEditable"><img src="https://api2.sgx.com/sites/default/files/2022-05/LHN.PNG" class="editor-image img-responsive"></figure>
<div class="content-caption">LHN</div>
<p></p>
<p>For real estate veteran Kelvin Lim, the twin touchstones of adaptability and diversification are critical to future-proofing a business, and ensuring its continued success amidst constantly evolving industry dynamics.<br><br>“Adaptability and diversification are key to the success of any business,” said Lim, the Executive Chairman and Group Managing Director of SGX-listed real estate management services group LHN Ltd.&nbsp;<br><br>“When I joined the company in 1997, its focus was subleasing of spaces. However, I understood that in any kind of business, diversification and adaptation are important for sustainable growth, especially in a fast-changing environment like Singapore. We cannot simply focus on one industry because if we do, our growth will be limited,” he recalled.<br><br>“As a result, from a humble set-up with a simple business model of subleasing family-owned warehouses or factory space to industrial users, LHN has expanded into space optimisation, with facilities management and logistics services, to supplement the Group’s operations.”<br><br>In the same vein, Lim, who has accumulated over 25 years of experience in the property leasing, logistics services and facilities management businesses, believes in being an open-minded and versatile leader. He was appointed the Group’s Executive Director and Executive Chairman in 2015.<br><br>“The world is ever-changing, but with an open and flexible approach, we are always mentally prepared to overcome any challenge,” he added.<br><br>LHN has grown from its humble saw-milling roots into a real estate management services company, listing on SGX Catalist in April 2015.<br><br>Under its Space Optimisation segment, LHN secures master leases of old and under-utilised commercial, industrial and residential properties, and through re-designing and planning, transforms them into more efficient usable spaces. These properties are then leased out by the Group to its tenants.<br><br>“This allows us to grow the business without the enormous capital outlay associated with property acquisitions,” Lim pointed out.<br><br>“We further enhance the value and functions of these spaces by providing a full range of value-added services, such as facilities management, car park management and last-mile delivery service, which offer our tenants safe and conducive environments in which to operate and achieve maximum returns from their core business activities.”<br><br>LHN’s Facilities Management segment offers cleaning and related services, &nbsp;including pest control, repair and general maintenance, and car park management services to properties the Group leases and manages, as well as external parties. This business segment also offers energy management and worker’s dormitory management services.<br><br>The Group’s Logistics Services segment was established in 2003, and initially provided transportation services for base oil and bitumen to oil majors in Singapore.<br><br>“Today, we are Singapore's leading ISO tank logistics and transportation provider, with a self-owned fleet of over 400 vehicles. We offer container depot and container depot management services at four large container depots in Singapore and Thailand, with a capacity of up to 27,200 TEUs,” Lim noted.<br><br>With its niche market focus and strong financial performance, LHN Logistics successfully listed on SGX Catalist on 29 April 2022.<br><br>“Thanks to our lean and agile corporate structure, we have the advantage in trying new things, learning fast and moving forward. That’s why we’ve constantly explored new areas, and kept ourselves ahead of the curve,” he added.<br><br><strong>Leveraging Co-Living Trends</strong><br><br>So far, the Group’s outlook remains bright, thanks to rising demand for co-living and self-storage spaces. “The pandemic has resulted in an increased uptake of co-living spaces from local working professionals, young millennials, Singaporean couples and foreign expats,” Lim noted.<br><br>“Given these trends, we aim to gradually expand our Space Optimisation business network by adding to our portfolio 1,000 co-living units annually and 1,000 self-storage units biennially.”<br><br>Aside from rolling out six Coliwoo properties in 2022, the Group has also unveiled a brand new Coliwoo Hotel concept through the launch of its first co-living hotel property at 40 and 42 Amber Road. It will also subsequently unveil 115 Geylang and 471 Balestier as part of the Group’s Coliwoo Hotel portfolio.<br><br>“Our co-living hotel concept will differ from a typical hotel, focusing on creating a community living experience for flexible stays,” Lim explained.<br><br>“We expect this segment to grow, with more expats returning to Singapore as borders reopen. We also aim to provide flexible and affordable residential offerings, on the back of the continued increase in rental rates in Singapore.”<br><br>For storage spaces, the Group’s Work+Store has seen a steady increase in demand from various target groups, including individuals/homeowners and e-commerce businesses.&nbsp;<br><br>Work+Store is an innovative storage concept that meets the needs of small businesses requiring smaller workspaces with fully integrated storage capacity, accompanied by warehousing, facilities, and last-mile logistics services.&nbsp;<br><br>“As the e-commerce industry continues to thrive, there needs to be a conducive all-in-one space for daily storage and logistical operations, to maximise productivity and efficiency,” he noted.<br><br>“This allows for greater flexibility, especially when our users need to upsize or downsize their space to minimise costs and hassle. We will continue to update our offerings – services and facilities – for this target group as their needs evolve in tandem with the growth of the e-commerce industry.”<br><br>For its Facilities Management segment, the Group will continue to secure more external facilities management contracts by offering integrated services covering estate and building management, repair, maintenance and cleaning, pest control, as well as sanitisation and disinfection to its customers.&nbsp;<br><br>“We also plan to grow our market share in our carpark management business by offering smart parking solutions to optimise space utilisation,” Lim said.<br><br>In terms of its Logistics Services segment, LHN will continue to explore opportunities to expand its transportation fleet, container depot network and logistics customer base in Singapore, Malaysia, and rest of ASEAN.<br><br>“Overall, my vision is for us to be a S$500 million market cap company by the end of this decade, with a footprint that spans beyond Singapore, across the ASEAN region and Greater China, providing customers with the right solutions for every stage of their business life cycle,” Lim said.<br><br><strong>Smart Talent Management</strong><br><br>Despite robust prospects, competitive pressures remain intense, Lim acknowledged.<br><br>“Our strategy is to cultivate a lean, adaptable and innovative workforce that is in touch with the market, who can understand and anticipate what our customers need, and constantly evaluate suitable technologies to value-add our services,” he noted. “This has enabled us to compete effectively against our peers.”<br><br>Given the Group’s focus on developing its talent, the Great Resignation Wave that swept the globe in 2021 stoked management’s concerns of losing skilled personnel.<br><br>“Our employees are our most valuable asset. We believe highly skilled employees drive productivity, and happy employees grow business profit,” Lim pointed out.&nbsp;<br><br>“Hence, it’s crucial for us to constantly look into the personal and professional priorities of our staff, listen to their needs, and support them in developing the career path they want to pursue. Apart from financial incentives, building a nurturing and caring work culture ensures they remain motivated and empowered.”<br><br>Apart from its day-to-day operational needs, the Group is also focused on meeting its Environmental, Social and Governance (ESG) targets.&nbsp;<br><br>By restoring old buildings and recycling them into useful, modern spaces instead of demolishing them to build new ones, LHN is already advancing its ESG goals. “By doing so, not only do we increase their rental yield, we also save resources and reduce our carbon footprint,” Lim added.<br><br>The Group is also investing about S$1 million to set up 200 Electric Vehicle (EV) charging stations across its properties over the next three years. Solar panels have also been installed across some of its developments.&nbsp;<br><br>“We’re looking to cover most of our rooftop spaces with solar panels by rolling them out in at least three more sites each year. We’re also exploring energy storage solutions to utilise untapped electricity generated by our solar panels to supply power to EV charging stations,” he added.<br><br>Work can be all-consuming, but when this 45-year-old father of six is out of the office, self-care and family time are his priorities.&nbsp;<br><br>“Maintaining a healthy body is fundamental to achieving mental strength and resilience,” he said. “That’s why regardless of my busy schedule, I try to maintain a strict exercise and diet plan.”&nbsp;<br><br>Lim also makes it a point to spend quality time with his children. “My advice to my staff is this: Spend as much time with your family as you possibly can. A happy family brings positive energy and results in a great work performance,” he noted.<br><br>“A happy family is essentially the motivation for you to overcome all challenges in life.”<br><br><strong>LHN Ltd</strong><br><br>LHN is a real estate management services group, with the ability to generate value for its landlords and tenants through its expertise in space optimisation, and logistics service provider headquartered in Singapore. The Group currently has three main business segments: (i) Space Optimisation; (ii) Facilities Management; and (iii) Logistics Services. Under its Space Optimisation business, the Group primarily secures master leases of unused, old and under-utilised commercial, industrial and residential properties and through re-designing and planning, transforms them into more efficient usable spaces, which are then leased out by the Group to its tenants. The Group’s Facilities Management business offers car park management services and property maintenance services such as cleaning, landscaping, provision of amenities and utilities, and repair and general maintenance principally to the properties it leases and manages, as well as to external parties. Under its Logistics Services business, the Group provides transportation services, container depot management services and container depot services. The Group currently operates in Singapore, Indonesia, Thailand, Myanmar, Malaysia and Hong Kong.<br><br>The company website is: <a href="https://lhngroup.listedcompany.com/" target="_blank" rel="noopener"><strong>lhngroup.listedcompany.com</strong></a><br><br>Click&nbsp;<a href="https://www.sgx.com/securities/equities/41O" target="_blank" rel="noopener"><strong>here</strong>&nbsp;</a>for the company's StockFacts page.<br><br>For the full year ended 30 September 2021 financial results, click&nbsp;<a href="https://links.sgx.com/1.0.0/corporate-announcements/U2634FEPTBZKP1R0/692341_LHN%20-%20Press%20Release%20FY21%20e%20-SG.pdf" target="_blank" rel="noopener"><strong>here</strong></a>.<br><br>&nbsp;</p>
<p><strong>About&nbsp;kopi-C: the Company brew</strong></p>
<p><strong>Text: Jennifer Tan-Stanisic</strong><br><strong>Photo: Company file</strong><br><br><em>kopi-C&nbsp;</em>is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.<br><br>For previous editions of&nbsp;<em>kopi-C: the Company brew,</em>&nbsp;please click&nbsp;<a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10" target="_blank" rel="noopener"><strong>here</strong></a>. &nbsp;<br><br>For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to&nbsp;<a href="https://c/Users/tanje/Desktop/Working%20Files/kopi-C/jennifer.t@sgx.com" target="_blank" rel="noopener"><strong>jennifer.t@sgx.com</strong></a>.</p>


LHN

For real estate veteran Kelvin Lim, the twin touchstones of adaptability and diversification are critical to future-proofing a business, and ensuring its continued success amidst constantly evolving industry dynamics.  “Adaptability and diversification are key to the success of any business,” said Lim, the Executive Chairman and Group Managing Director of SGX-listed real estate management services group LHN Ltd.&nbsp;  “When I joined the company in 1997, its focus was subleasing of spaces. However, I understood that in any kind of business, diversification and adaptation are important for sustainable growth, especially in a fast-changing environment like Singapore. We cannot simply focus on one industry because if we do, our growth will be limited,” he recalled.  “As a result, from a humble set-up with a simple business model of subleasing family-owned warehouses or factory space to industrial users, LHN has expanded into space optimisation, with facilities management and logistics services, to supplement the Group’s operations.”  In the same vein, Lim, who has accumulated over 25 years of experience in the property leasing, logistics services and facilities management businesses, believes in being an open-minded and versatile leader. He was appointed the Group’s Executive Director and Executive Chairman in 2015.  “The world is ever-changing, but with an open and flexible approach, we are always mentally prepared to overcome any challenge,” he added.  LHN has grown from its humble saw-milling roots into a real estate management services company, listing on SGX Catalist in April 2015.  Under its Space Optimisation segment, LHN secures master leases of old and under-utilised commercial, industrial and residential properties, and through re-designing and planning, transforms them into more efficient usable spaces. These properties are then leased out by the Group to its tenants.  “This allows us to grow the business without the enormous capital outlay associated with property acquisitions,” Lim pointed out.  “We further enhance the value and functions of these spaces by providing a full range of value-added services, such as facilities management, car park management and last-mile delivery service, which offer our tenants safe and conducive environments in which to operate and achieve maximum returns from their core business activities.”  LHN’s Facilities Management segment offers cleaning and related services, &nbsp;including pest control, repair and general maintenance, and car park management services to properties the Group leases and manages, as well as external parties. This business segment also offers energy management and worker’s dormitory management services.  The Group’s Logistics Services segment was established in 2003, and initially provided transportation services for base oil and bitumen to oil majors in Singapore.  “Today, we are Singapore's leading ISO tank logistics and transportation provider, with a self-owned fleet of over 400 vehicles. We offer container depot and container depot management services at four large container depots in Singapore and Thailand, with a capacity of up to 27,200 TEUs,” Lim noted.  With its niche market focus and strong financial performance, LHN Logistics successfully listed on SGX Catalist on 29 April 2022.  “Thanks to our lean and agile corporate structure, we have the advantage in trying new things, learning fast and moving forward. That’s why we’ve constantly explored new areas, and kept ourselves ahead of the curve,” he added.  Leveraging Co-Living Trends  So far, the Group’s outlook remains bright, thanks to rising demand for co-living and self-storage spaces. “The pandemic has resulted in an increased uptake of co-living spaces from local working professionals, young millennials, Singaporean couples and foreign expats,” Lim noted.  “Given these trends, we aim to gradually expand our Space Optimisation business network by adding to our portfolio 1,000 co-living units annually and 1,000 self-storage units biennially.”  Aside from rolling out six Coliwoo properties in 2022, the Group has also unveiled a brand new Coliwoo Hotel concept through the launch of its first co-living hotel property at 40 and 42 Amber Road. It will also subsequently unveil 115 Geylang and 471 Balestier as part of the Group’s Coliwoo Hotel portfolio.  “Our co-living hotel concept will differ from a typical hotel, focusing on creating a community living experience for flexible stays,” Lim explained.  “We expect this segment to grow, with more expats returning to Singapore as borders reopen. We also aim to provide flexible and affordable residential offerings, on the back of the continued increase in rental rates in Singapore.”  For storage spaces, the Group’s Work+Store has seen a steady increase in demand from various target groups, including individuals/homeowners and e-commerce businesses.&nbsp;  Work+Store is an innovative storage concept that meets the needs of small businesses requiring smaller workspaces with fully integrated storage capacity, accompanied by warehousing, facilities, and last-mile logistics services.&nbsp;  “As the e-commerce industry continues to thrive, there needs to be a conducive all-in-one space for daily storage and logistical operations, to maximise productivity and efficiency,” he noted.  “This allows for greater flexibility, especially when our users need to upsize or downsize their space to minimise costs and hassle. We will continue to update our offerings – services and facilities – for this target group as their needs evolve in tandem with the growth of the e-commerce industry.”  For its Facilities Management segment, the Group will continue to secure more external facilities management contracts by offering integrated services covering estate and building management, repair, maintenance and cleaning, pest control, as well as sanitisation and disinfection to its customers.&nbsp;  “We also plan to grow our market share in our carpark management business by offering smart parking solutions to optimise space utilisation,” Lim said.  In terms of its Logistics Services segment, LHN will continue to explore opportunities to expand its transportation fleet, container depot network and logistics customer base in Singapore, Malaysia, and rest of ASEAN.  “Overall, my vision is for us to be a S$500 million market cap company by the end of this decade, with a footprint that spans beyond Singapore, across the ASEAN region and Greater China, providing customers with the right solutions for every stage of their business life cycle,” Lim said.  Smart Talent Management  Despite robust prospects, competitive pressures remain intense, Lim acknowledged.  “Our strategy is to cultivate a lean, adaptable and innovative workforce that is in touch with the market, who can understand and anticipate what our customers need, and constantly evaluate suitable technologies to value-add our services,” he noted. “This has enabled us to compete effectively against our peers.”  Given the Group’s focus on developing its talent, the Great Resignation Wave that swept the globe in 2021 stoked management’s concerns of losing skilled personnel.  “Our employees are our most valuable asset. We believe highly skilled employees drive productivity, and happy employees grow business profit,” Lim pointed out.&nbsp;  “Hence, it’s crucial for us to constantly look into the personal and professional priorities of our staff, listen to their needs, and support them in developing the career path they want to pursue. Apart from financial incentives, building a nurturing and caring work culture ensures they remain motivated and empowered.”  Apart from its day-to-day operational needs, the Group is also focused on meeting its Environmental, Social and Governance (ESG) targets.&nbsp;  By restoring old buildings and recycling them into useful, modern spaces instead of demolishing them to build new ones, LHN is already advancing its ESG goals. “By doing so, not only do we increase their rental yield, we also save resources and reduce our carbon footprint,” Lim added.  The Group is also investing about S$1 million to set up 200 Electric Vehicle (EV) charging stations across its properties over the next three years. Solar panels have also been installed across some of its developments.&nbsp;  “We’re looking to cover most of our rooftop spaces with solar panels by rolling them out in at least three more sites each year. We’re also exploring energy storage solutions to utilise untapped electricity generated by our solar panels to supply power to EV charging stations,” he added.  Work can be all-consuming, but when this 45-year-old father of six is out of the office, self-care and family time are his priorities.&nbsp;  “Maintaining a healthy body is fundamental to achieving mental strength and resilience,” he said. “That’s why regardless of my busy schedule, I try to maintain a strict exercise and diet plan.”&nbsp;  Lim also makes it a point to spend quality time with his children. “My advice to my staff is this: Spend as much time with your family as you possibly can. A happy family brings positive energy and results in a great work performance,” he noted.  “A happy family is essentially the motivation for you to overcome all challenges in life.”  LHN Ltd  LHN is a real estate management services group, with the ability to generate value for its landlords and tenants through its expertise in space optimisation, and logistics service provider headquartered in Singapore. The Group currently has three main business segments: (i) Space Optimisation; (ii) Facilities Management; and (iii) Logistics Services. Under its Space Optimisation business, the Group primarily secures master leases of unused, old and under-utilised commercial, industrial and residential properties and through re-designing and planning, transforms them into more efficient usable spaces, which are then leased out by the Group to its tenants. The Group’s Facilities Management business offers car park management services and property maintenance services such as cleaning, landscaping, provision of amenities and utilities, and repair and general maintenance principally to the properties it leases and manages, as well as to external parties. Under its Logistics Services business, the Group provides transportation services, container depot management services and container depot services. The Group currently operates in Singapore, Indonesia, Thailand, Myanmar, Malaysia and Hong Kong.  The company website is: lhngroup.listedcompany.com  Click&nbsp;here&nbsp;for the company's StockFacts page.  For the full year ended 30 September 2021 financial results, click&nbsp;here.  &nbsp;
About&nbsp;kopi-C: the Company brew
Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C&nbsp;is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  For previous editions of&nbsp;kopi-C: the Company brew,&nbsp;please click&nbsp;here. &nbsp;  For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to&nbsp;jennifer.t@sgx.com.

LHN: Optimising Space for Live-Work-Play Paradigms

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.</strong>&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
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<h3>Initiating Coverage</h3>
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<h2>LHN Limited</h2>
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<h3>COMPANY DESCRIPTION</h3>
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<p>LHN Limited and its subsidiaries (collectively defined herein as LHN) is a real estate management and logistics services group headquartered in Singapore with operations throughout Asia. LHN’s businesses are divided into three separate and distinct business segments, namely, the space optimisation business, the facilities management business and the logistics services business. LHN is listed on the Catalist of the Singapore Exchange Securities Trading Limited (SGX-ST) and on the Main Board of The Stock Exchange of Hong Kong Limited (SEHK).</p>
<h3>SUMMARY</h3>
<p>For the financial year ended 30 September 2021 (FY2021), LHN recorded revenue of S$121.0 million, a decrease of 9.9% yoy from S$134.2 million over the same period a year ago. The decrease was primarily due to the decrease in revenue from the Space Optimisation Business which was partially offset by the increase in revenue from the Facilities Management Business and Logistics Services Business. At the same time, cost of sales also decreased by 22.9% yoy to S$54.4 million. Accordingly, LHN’s gross profit increased by 4.6% to S$66.6 million FY2021 from S$63.6 million in FY2020. During the period, LHN reported profit attributable to equity holders of the company of S$28.1 million, representing a 16.2% yoy increase from FY2020. This translate to an earnings per share of 6.94 cents. Meanwhile, LHN has declared a final dividend of 1.00 cents to be paid on 24 February 2022 and an interim dividend of 0.75 cents was paid on 18 June 2021.</p>
<h3>RECOMMENDATION</h3>
<p>Based on LHN’s reported NAV of S$0.36, LHN currently has a P/B multiple of 0.84x and is trading at a discount of approximately 16% to NAV. Our peer comparison results show that LHN’s P/B of 0.84x is higher compared to its peer average P/B of 0.74x. Meanwhile, LHN may not be as attractive as its peers in terms of dividend yield. Our evaluation of the peer comparison analysis leads us to believe that LHN’s dual listing in Singapore &amp; Hong Kong could increase its market visibility and attract more investors, which could help justify its higher P/B valuation. At the same time, LHN’s low dividend payout ratio suggests that there could be room for higher dividends or that LHN could reinvest the earnings for growth opportunities which could support further share price upside. Accordingly, we believe there could be upside potential to LHN’s share price. Hence, we estimated a target price of S$0.480, which is its 52-week high. This target price is a 60.00% upside from the current share price of S$0.300. We believe this upside could be justified by the possibility of a further improvement to LHN’s financial performance as supported by the positive outlook for Singapore’s economy and for the industries that LHN are operating in. Further, LHN’s new acquisitions and new lease agreements could also underpin revenue and profit growth. Given the above, we believe a buy recommendation is warranted on LHN.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.




Initiating Coverage








LHN Limited




COMPANY DESCRIPTION




LHN Limited and its subsidiaries (collectively defined herein as LHN) is a real estate management and logistics services group headquartered in Singapore with operations throughout Asia. LHN’s businesses are divided into three separate and distinct business segments, namely, the space optimisation business, the facilities management business and the logistics services business. LHN is listed on the Catalist of the Singapore Exchange Securities Trading Limited (SGX-ST) and on the Main Board of The Stock Exchange of Hong Kong Limited (SEHK).
SUMMARY
For the financial year ended 30 September 2021 (FY2021), LHN recorded revenue of S$121.0 million, a decrease of 9.9% yoy from S$134.2 million over the same period a year ago. The decrease was primarily due to the decrease in revenue from the Space Optimisation Business which was partially offset by the increase in revenue from the Facilities Management Business and Logistics Services Business. At the same time, cost of sales also decreased by 22.9% yoy to S$54.4 million. Accordingly, LHN’s gross profit increased by 4.6% to S$66.6 million FY2021 from S$63.6 million in FY2020. During the period, LHN reported profit attributable to equity holders of the company of S$28.1 million, representing a 16.2% yoy increase from FY2020. This translate to an earnings per share of 6.94 cents. Meanwhile, LHN has declared a final dividend of 1.00 cents to be paid on 24 February 2022 and an interim dividend of 0.75 cents was paid on 18 June 2021.
RECOMMENDATION
Based on LHN’s reported NAV of S$0.36, LHN currently has a P/B multiple of 0.84x and is trading at a discount of approximately 16% to NAV. Our peer comparison results show that LHN’s P/B of 0.84x is higher compared to its peer average P/B of 0.74x. Meanwhile, LHN may not be as attractive as its peers in terms of dividend yield. Our evaluation of the peer comparison analysis leads us to believe that LHN’s dual listing in Singapore &amp; Hong Kong could increase its market visibility and attract more investors, which could help justify its higher P/B valuation. At the same time, LHN’s low dividend payout ratio suggests that there could be room for higher dividends or that LHN could reinvest the earnings for growth opportunities which could support further share price upside. Accordingly, we believe there could be upside potential to LHN’s share price. Hence, we estimated a target price of S$0.480, which is its 52-week high. This target price is a 60.00% upside from the current share price of S$0.300. We believe this upside could be justified by the possibility of a further improvement to LHN’s financial performance as supported by the positive outlook for Singapore’s economy and for the industries that LHN are operating in. Further, LHN’s new acquisitions and new lease agreements could also underpin revenue and profit growth. Given the above, we believe a buy recommendation is warranted on LHN.













(Non-SGX Report) Initiating Coverage - LHN Limited

<h2>10 Questions for LHN Limited</h2>
<p><strong>Company Overview</strong><br>Headquartered in Singapore, LHN Limited is a real estate management group and logistics service provider with strong presence across Asia. The Group has a distinguishing ability to generate value for its landlords and tenants through its expertise in space optimisation. The Group also provides complete facilities management and logistics services, which serve to complement its space optimisation business. <a href="https://www.sgx.com/securities/equities/41O" target="_blank" rel="noopener">Link to StockFacts company page</a></p>
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<li><strong>Could you elaborate on LHN’s business segments?</strong></li>
</ol>
<ul>
<li>The Group currently has three main business segments which are fully integrated and complementary to one another.</li>
<li><strong><em>Space Optimisation Business</em></strong> - We primarily secure master leases of unused, old and under-utilised commercial, industrial and residential properties. Through proper planning and re-designing, we transform these properties into more efficient and usable spaces, which are then leased out to our tenants. Space optimisation efforts allow us to enhance the value of properties by increasing their net lettable area as well as potential rental yield per square feet. Besides managing properties, we develop space concepts that suit the evolving requirements of the modern-day space users. Amongst them are our Work+Store self-storage and Coliwoo co-living space concepts.</li>
<li><em><strong>Facilities Management Business</strong></em> – We offer (i) cleaning and related services (pest control, repair and general maintenance); (ii) car park management services to the properties the Group leases and manages, as well as to external parties; (iii) energy management services and; (iv) worker’s dormitory management services.</li>
<li><em><strong>Logistics Services Business</strong></em> - We provide (i) transportation services; and (ii) container depot management services. We transport mainly International Organisation for Standardisation (ISO) tanks, containers, base oil and bitumen. The Group also provides container depot management services which include container surveying, cleaning, on-site repair and storage of empty general purpose and refrigerated containers(reefer).</li>
<li>In November 2021, we announced exploring the possibility to spin-off our Logistics Services Business via a proposed listing on SGX Catalist.</li>
</ul>

10 Questions for LHN Limited
Company Overview Headquartered in Singapore, LHN Limited is a real estate management group and logistics service provider with strong presence across Asia. The Group has a distinguishing ability to generate value for its landlords and tenants through its expertise in space optimisation. The Group also provides complete facilities management and logistics services, which serve to complement its space optimisation business. Link to StockFacts company page

Could you elaborate on LHN’s business segments?


The Group currently has three main business segments which are fully integrated and complementary to one another.
Space Optimisation Business - We primarily secure master leases of unused, old and under-utilised commercial, industrial and residential properties. Through proper planning and re-designing, we transform these properties into more efficient and usable spaces, which are then leased out to our tenants. Space optimisation efforts allow us to enhance the value of properties by increasing their net lettable area as well as potential rental yield per square feet. Besides managing properties, we develop space concepts that suit the evolving requirements of the modern-day space users. Amongst them are our Work+Store self-storage and Coliwoo co-living space concepts.
Facilities Management Business – We offer (i) cleaning and related services (pest control, repair and general maintenance); (ii) car park management services to the properties the Group leases and manages, as well as to external parties; (iii) energy management services and; (iv) worker’s dormitory management services.
Logistics Services Business - We provide (i) transportation services; and (ii) container depot management services. We transport mainly International Organisation for Standardisation (ISO) tanks, containers, base oil and bitumen. The Group also provides container depot management services which include container surveying, cleaning, on-site repair and storage of empty general purpose and refrigerated containers(reefer).
In November 2021, we announced exploring the possibility to spin-off our Logistics Services Business via a proposed listing on SGX Catalist.


10 in 10 with LHN Limited - Next-Gen Space Optimisation

Samudera Shipping Line / Equity Bottom-Up





In 2021, Singapore’s 150 most traded stocks contributed the lion’s share of the day-to-day turnover of the stock market, which included 18 stocks that saw a 10-fold+ increase in daily turnover from 2020, and another 15 stocks that saw a 5-fold+ increase in daily turnover.  
	 
	
The 18 stocks with the 10-fold+ increase averaged 166% price gains (138% median) over the year, while averaging 102% price volatility. Of the 18 stocks, OIO saw the highest increase in turnover, RH Petrogas saw the highest return, and Del Monte Pacific currently maintains the highest market cap.   
	 
	
The 18 stocks included Grand Venture which completed its transfer from Catalist to the Mainboard on 30 Nov. On 5 Jan, the company announced its third facility acquisition in Malaysia (in the space of two years), as it gears up to meet the anticipated growth in demand for its services from the semiconductor industry.  
	 
	The next 15 stocks with the 5-fold+ increase in daily turnover averaged 47% price gains (48% median) in 2021, while averaging 56% price volatility. Of the 15 stocks, Leader Env saw the highest increase in turnover, The Hour Glass saw the highest return, and Thomson Medical currently maintains the highest market cap.  

 More than 90% of the day-to-day trading turnover of Singapore-listed stocks in 2021 was generated by the most traded 150 stocks. With both macroeconomic and microeconomic factors at play, as many as 18 (12%) of these 150 stocks saw their trading turnover in 2021 grow more than 10-fold from 2020 levels. Another 15 (10%) of the 150 stocks saw their trading turnover in 2021 grow more than 5-fold.  
Many of the key macroeconomic drivers of 2021, including resilient investment, new global trade records, higher commodity prices and semiconductor demand impacted the participation in these stocks last year.  
On the microeconomic front, strategic efforts to restructure or pivot to new businesses for the sake of increasing shareholder value was also a key theme for the year. This was a relevant theme for OIO Holdings, which maintained the highest turnover growth of the 150 most traded stocks in 2021. During the year, the group, which had previously focused its core business on the provision of mechanical and electrical services and solutions, announced its intentions to expand into blockchain agency and related businesses. The company on 31 Mar acquired Moonstake for S$7.1 million (click here for more). The founder of Moonstake, Mitsuru Tezuka, is a Japanese national who has years of experience in the blockchain industry mainly in Singapore and Japan. KGI Securities noted back in December (click here &amp; here for more reports) that OIO Holdings was a relevant play to the decentralisation of the metaverse, along with another Catalist-listed company Vividthree Holdings.  The 18 of the 150 stocks that saw their trading turnover in 2021 grow more than 10-fold from 2020 levels are tabled below. The 18 stocks included Grand Venture Technology which completed its transfer from Catalist to the Mainboard on 30 Nov, and on 5 Jan, the company announced its third facility acquisition in Malaysia (in the space of two years), as it gears up to meet the anticipated growth in demand for its services from the semiconductor industry.




			Stocks with 10fold+ increase in Daily T/O
			
			
			Code
			
			
			2021 Avg. Daily T/O S$M
			
			
			T/O Growth (x) 
			
			
			2021 Net Insti. Inflow S$M
			
			
			Mkt Cap S$M
			
			
			% Price Change 2021
			
			
			% Volatility 2021
			
			
			Board
			
			
			% 2020 Price Change 
			
		


			OIO
			
			
			KUX
			
			
			         0.85
			
			
			18749
			
			
			0.9
			
			
			66.3
			
			
			133
			
			
			183
			
			
			CATALIST
			
			
			5
			
		


			RH Petrogas
			
			
			T13
			
			
			         1.64
			
			
			855
			
			
			-0.3
			
			
			151.2
			
			
			552
			
			
			144
			
			
			MAINBOARD
			
			
			-19
			
		


			Metech Intl
			
			
			V3M
			
			
			         0.98
			
			
			514
			
			
			-3.4
			
			
			47.0
			
			
			250
			
			
			161
			
			
			CATALIST
			
			
			-9
			
		


			Mercurius
			
			
			5RF
			
			
			         0.88
			
			
			445
			
			
			4.7
			
			
			88.9
			
			
			167
			
			
			115
			
			
			CATALIST
			
			
			-48
			
		


			LHN
			
			
			41O
			
			
			         0.81
			
			
			72
			
			
			1.4
			
			
			130.9
			
			
			68
			
			
			59
			
			
			CATALIST
			
			
			42
			
		


			Kim Heng
			
			
			5G2
			
			
			         0.54
			
			
			45
			
			
			0.5
			
			
			56.6
			
			
			144
			
			
			95
			
			
			CATALIST
			
			
			-40
			
		


			Golden Energy
			
			
			AUE
			
			
			         0.79
			
			
			44
			
			
			-0.8
			
			
			705.9
			
			
			80
			
			
			67
			
			
			MAINBOARD
			
			
			3
			
		


			Hatten Land
			
			
			PH0
			
			
			         1.36
			
			
			41
			
			
			-12.7
			
			
			80.6
			
			
			-31
			
			
			144
			
			
			CATALIST
			
			
			-18
			
		


			Fortress Minerals
			
			
			OAJ
			
			
			        0.59
			
			
			35
			
			
			-1.2
			
			
			205.0
			
			
			32
			
			
			70
			
			
			CATALIST
			
			
			28
			
		


			Samudera Shipping
			
			
			S56
			
			
			         0.59
			
			
			32
			
			
			-0.3
			
			
			307.3
			
			
			128
			
			
			44
			
			
			MAINBOARD
			
			
			59
			
		


			Grand Venture
			
			
			JLB
			
			
			         0.62
			
			
			23
			
			
			6.8
			
			
			396.9
			
			
			261
			
			
			50
			
			
			MAINBOARD
			
			
			25
			
		


			Sinjia Land
			
			
			5HH
			
			
			         0.52
			
			
			21
			
			
			-3.1
			
			
			20.5
			
			
			464
			
			
			143
			
			
			CATALIST
			
			
			-4
			
		


			CFM
			
			
			5EB
			
			
			         1.22
			
			
			18
			
			
			0.1
			
			
			18.9
			
			
			162
			
			
			138
			
			
			CATALIST
			
			
			135
			
		


			The Place Hldg
			
			
			E27
			
			
			         1.95
			
			
			18
			
			
			3.7
			
			
			405.8
			
			
			142
			
			
			89
			
			
			MAINBOARD
			
			
			83
			
		


			VCPlus
			
			
			43E
			
			
			         0.48
			
			
			17
			
			
			2.9
			
			
			68.3
			
			
			143
			
			
			113
			
			
			CATALIST
			
			
			-22
			
		


			Geo Energy Res
			
			
			RE4
			
			
			         2.06
			
			
			16
			
			
			29.5
			
			
			465.0
			
			
			82
			
			
			49
			
			
			MAINBOARD
			
			
			30
			
		


			Metal Component
			
			
			5DX
			
			
			         0.66
			
			
			12
			
			
			-0.9
			
			
			27.2
			
			
			104
			
			
			131
			
			
			CATALIST
			
			
			-23
			
		


			Del Monte Pac
			
			
			D03
			
			
			         0.56
			
			
			10
			
			
			7.3
			
			
			758.1
			
			
			107
			
			
			46
			
			
			MAINBOARD
			
			
			43
			
		

Source: SGX, Refinitiv, Bloomberg (Data as of 31 December 2021), Note Mkt Cap as of 10 Jan 2022

 

As detailed in the table above, the price gains of the 18 stocks varied from a 31% price decline for Hatten Land, to a 552% price gain for RH Petrogas. Traditionally a leading property developer in Malaysia specialising in integrated residential, hotel and commercial developments, Hatten Land has been progressively scaling up Crypto Mining activities, and has entered into two agreements to install and operate around 3,000 Crypto Mining rigs at malls owned or managed by Hatten Land, of which the Group expects to install and operate over 2,500 Crypto Mining rigs in 2022 (click here for more). As highlighted last week, RH Petrogas was also the strongest performer of the 100 most traded Singapore stocks in 2021, while posting a turnaround net profit of US$13.8 million in its 9MFY21 (ended 30 Sep), on the back of Brent Crude Oil futures rallying (from US$48.50/bbl to US$78.50/bbl on 30 Sep, to US$75.20/bbl by the end of 2021).  
Of the 18 stocks tabled above, Del Monte Pacific currently maintains the highest market capitalisation at S$758.1 million. After reporting net profit soared to US$63.3 million in FY21 (ended 30 April), reversing the US$81.4 million loss in FY20, Del Monte Pacific reported 1HFY22 (ended 31 Oct) net profit tripled YoY to US$54.1 million, supported by higher US and international market sales including the S&amp;W business in Asia.  In addition to the 18 stocks that saw the highest increase in daily turnover in 2021 among the 150 most traded stocks, another 15 stocks saw 5-fold+ increases in daily turnover over the year. Of the 15 stocks, Leader Environmental Technologies saw the highest increase in turnover, The Hour Glass saw the highest return, and of the 15, Thomson Medical Group currently maintains the highest market capitalisation.




			Stocks with 5-fold+ increase in Daily T/O
			
			
			Code
			
			
			2021 Avg. Daily T/O 

			S$M
			
			
			T/O Growth (x) 
			
			
			2021 Net Insti. Inflow S$M
			
			
			Mkt Cap S$M
			
			
			% Price Change 2021
			
			
			% Volatility 2021
			
			
			Board
			
			
			% 2020 Price Change 
			
		


			Leader Env
			
			
			LS9
			
			
			          0.94
			
			
			9.6
			
			
			-1.5
			
			
			105.9
			
			
			-8
			
			
			79
			
			
			MAINBOARD
			
			
			498
			
		


			APAC Realty
			
			
			CLN
			
			
			          0.75
			
			
			9.3
			
			
			8.3
			
			
			248.6
			
			
			62
			
			
			39
			
			
			MAINBOARD
			
			
			-9
			
		


			Koh Eco
			
			
			5HV
			
			
			          0.59
			
			
			9.3
			
			
			-1.9
			
			
			138.1
			
			
			61
			
			
			105
			
			
			CATALIST
			
			
			-43
			
		


			InnoTek
			
			
			M14
			
			
			          0.87
			
			
			9.2
			
			
			0.0
			
			
			175.0
			
			
			34
			
			
			34
			
			
			MAINBOARD
			
			
			26
			
		


			Tuan Sing
			
			
			T24
			
			
			          1.27
			
			
			9.0
			
			
			6.1
			
			
			558.7
			
			
			44
			
			
			35
			
			
			MAINBOARD
			
			
			-5
			
		


			Hong Fok
			
			
			H30
			
			
			          0.88
			
			
			8.9
			
			
			-5.0
			
			
			637.7
			
			
			3
			
			
			34
			
			
			MAINBOARD
			
			
			-6
			
		


			MM2 Asia
			
			
			1B0
			
			
			          0.94
			
			
			8.5
			
			
			6.1
			
			
			120.9
			
			
			-55
			
			
			69
			
			
			MAINBOARD
			
			
			-51
			
		


			The Hour Glass
			
			
			AGS
			
			
			          0.56
			
			
			7.5
			
			
			2.3
			
			
			1371.3
			
			
			155
			
			
			35
			
			
			MAINBOARD
			
			
			-1
			
		


			PropNex
			
			
			OYY
			
			
			          1.11
			
			
			7.1
			
			
			0.5
			
			
			617.9
			
			
			117
			
			
			39
			
			
			MAINBOARD
			
			
			51
			
		


			Sarine Tech
			
			
			U77
			
			
			          1.46
			
			
			6.8
			
			
			-0.3
			
			
			207.1
			
			
			48
			
			
			53
			
			
			MAINBOARD
			
			
			14
			
		


			Thomson Medical
			
			
			A50
			
			
			          2.83
			
			
			6.6
			
			
			20.1
			
			
			2221.0
			
			
			68
			
			
			51
			
			
			MAINBOARD
			
			
			-22
			
		


			Q&amp;M Dental
			
			
			QC7
			
			
			          2.63
			
			
			6.5
			
			
			9.2
			
			
			563.7
			
			
			54
			
			
			38
			
			
			MAINBOARD
			
			
			-2
			
		


			Oceanus
			
			
			579
			
			
			          4.30
			
			
			5.6
			
			
			-27.3
			
			
			704.6
			
			
			11
			
			
			95
			
			
			MAINBOARD
			
			
			575
			
		


			Totm Tech
			
			
			42F
			
			
			          1.12
			
			
			5.6
			
			
			15.3
			
			
			229.7
			
			
			114
			
			
			76
			
			
			CATALIST
			
			
			773
			
		


			Enviro-Hub
			
			
			L23
			
			
			          0.52
			
			
			5.0
			
			
			-0.3
			
			
			85.6
			
			
			0
			
			
			55
			
			
			MAINBOARD
			
			
			196
			
		

Source: SGX, Refinitiv, Bloomberg (Data as of 31 December 2021), Note Mkt Cap as of 10 Jan 2022.

 

While the stocks tabled above, averaged higher returns than the STI they also saw comparatively higher volatility over the year. The 15 stocks with the 5-fold+ increase in daily turnover averaged 47% price gains (48% median) over the year, while averaging 56% volatility. The 18 stocks with the 10-fold+ increase averaged 166% price gains (138% median) over the year, on average volatility of 102%. By comparison, DBS Group Holdings, Oversea-Chinese Banking Corporation and United Overseas Bank which averaged 21% price gains in 2021 saw 16% volatility.  



Stocks with Significant Trading Growth in 2021 – Metaverse At Play?

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
<div>
<h2>LHN Limited</h2>
<div>
<h3>FY22 set to outshine FY21</h3>
<div>
<ul>
<li>Bottom-line growth. Even though LHN’s FY21 (YE 30 Sep 21) revenue declined 9.9% YoY to S$121mn, net profit increased 16.9% YoY to S$28.9mn.</li>
<li>Upgraded FY22 portfolio. The 4 residential properties acquired in FY21 and 1 residential property acquired in 1QFY22 are expected to commence operations in FY22. These 5 properties will add a total of approximately 204 keys to LHN’s Residential segment. In addition, full year revenue contribution is expected from the 2 newly acquired JV properties under the Industrial segment.</li>
<li>Prime area lease: Mount Elizabeth. Through LHN’s subsidiary Erinite Properties, the company has entered into a lease agreement with Eastern Realty for the Mount Elizabeth property, which is due to commence operations at the end of 2022. Approximately 400 keys would be added.</li>
<li>Potential spin-off. LHN has proposed to spin-off and separate the listing of LHN Logistics on the Catalist board of SGX.</li>
<li>We maintain an OUTPERFORM recommendation but revised our TP down to S$0.44 based on a lower EPS and an unchanged 6.0x FY22F P/E.</li>
</ul>
</div>
</div>
</div>

Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.

LHN Limited

FY22 set to outshine FY21


Bottom-line growth. Even though LHN’s FY21 (YE 30 Sep 21) revenue declined 9.9% YoY to S$121mn, net profit increased 16.9% YoY to S$28.9mn.
Upgraded FY22 portfolio. The 4 residential properties acquired in FY21 and 1 residential property acquired in 1QFY22 are expected to commence operations in FY22. These 5 properties will add a total of approximately 204 keys to LHN’s Residential segment. In addition, full year revenue contribution is expected from the 2 newly acquired JV properties under the Industrial segment.
Prime area lease: Mount Elizabeth. Through LHN’s subsidiary Erinite Properties, the company has entered into a lease agreement with Eastern Realty for the Mount Elizabeth property, which is due to commence operations at the end of 2022. Approximately 400 keys would be added.
Potential spin-off. LHN has proposed to spin-off and separate the listing of LHN Logistics on the Catalist board of SGX.
We maintain an OUTPERFORM recommendation but revised our TP down to S$0.44 based on a lower EPS and an unchanged 6.0x FY22F P/E.





(Non-SGX Report) LHN Limited - FY22 Set to Outshine FY21

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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