LHN BROKERS’ DIGEST

Price target: Maybank Securities ‘buy’ 45 cents

Two new projects

Li Jialin and Eric Ong of Maybank Securities have kept their “buy” call and 45 cents target price for LHN after the co-living operator announced it is adding two new developments to its portfolio.

First, LHN won a government tender for the former Bukit Timah fire station, which will be refurbished at $7 million to become a mixeduse project with 60 serviced apartment units on levels 2 & 3, and a ground floor commercial F&B and retail operation.

According to LHN, this site will serve as a key community node for both the Rail Corridor and the surrounding precinct. It is expected to be open by June 2025.

“In our view, the Bukit Timah project should capitalise on LHN’s expertise and synergy across its business units in co-living, commercial and facility management,” write Li and Ong in their April 11 note.

Meanwhile, LHN is also teaming up with Oxley Holdings’ CEO Ching Chiat Kwong and his son Shawn Ching in a 5050 joint venture to acquire Wilmer Place, which is at 50 Armenian Street, near City Hall MRT Station.

According to the Maybank analysts, the office building could remain a commercial building or be re-purposed for LHN’s co-living business.

With a land area of 710.7 sq m, the leasehold building has a tenure of 99 years from May 1, 1947. This should enable the LHN, which is spending up to $24 million on this project, to expand its co-living offerings under its space optimisation business segment.

In total, LHN has six upcoming projects, including the Ministry of Health (MOH) hostel for 700 nursing professionals. To help fund this growth, LHN is offering commercial paper of up to $5 million, at a 6% interest rate.

With MOH proposing another 11 other sites, this suggests possible re-rating catalysts for LHN if it can secure more of these projects, according to the Maybank analysts. Their target price of 45 cents is pegged at eight times forward FY2024 earnings. —