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Singapore “Flyer” of the Week: LHN Ltd

Shares of LHN Ltd (SGX: 41O) rose 12% for the week to close at S$0.205 today. In comparison, the Straits Times Index (SGX: ^STI) dipped 0.2% during the same time frame. This makes the firm one of the biggest gainers in the Singapore stock market this week.

LHN Ltd is a real estate management services group that is involved in space optimisation. It also provides facilities management and logistics services to complement its space optimisation business. It has operations mainly in Singapore, Indonesia, Thailand, Myanmar and Hong Kong.

The chart below shows the different business segments under the group:

Source: LHN Ltd’s FY2017 Results Presentation

The company is looking to raise up to HK$99.1 million (around S$17.1 million) through a dual primary listing on the Hong Kong stock exchange. It will offer 42 million new shares at between HK$1.90 and HK$2.36 apiece. Trading in Hong Kong is expected to begin on 29 December 2017 under the stock code 1730.

LHN believes that listing in the country could help to expand its business in Hong Kong and China.

Already, its efforts in China are getting noticed. In March this year, Singapore’s Minister of State for National Development, Koh Poh Koon, mentioned LHN as an example of a company which has expanded its scope of business and has also ventured overseas.

He added:

“We need more of such examples. Expanding into new business areas or overseas markets is not easy.”

LHN had earlier incorporated a wholly-owned subsidiary in China to grow its space optimisation and real estate management expertise into the China market.

For the full year ended 30 September 2017, the real estate management services group’s revenue rose 1.5% year-on-year to S$106.3 million due to stronger contributions from its facilities management and logistics services segments.

However, its net profit slumped 84.7% to S$2.3 million mainly on the back of higher administrative expenses, lower share of results of associates and joint ventures, and fair value loss on investment properties. Administrative costs went up by 20.1% primarily due to expenses related to its dual listing in Hong Kong.

At S$0.205 per share, LHN is selling at 32 times its 2017 earnings and has a dividend yield of slightly less than 1%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.