LHN will hold no more than 70% of Coliwoo post listing. In the shareholder circular, the assumed market capitalisation of Coliwoo Holdings ranged from $257 million to $359 million, raising $77 million to $108 million via new share issuance.
At the same time, LHN announced its 3QFY2025 ended June 30 business update, but analyst Paul Chew notes that there were limited financials, but occupancy remains healthy at around 97% for Coliwoo and industrial space. The pipeline of rooms for Coliwoo remains strong.
The current inventory of rooms for Coliwoo is 2184 rooms, and there are 776 rooms (or 35% growth) under construction, excluding new healthcare worker accommodation contracts. This includes the 382-room co-living site in Jalan Loyang Besar that LHN secured in a tender in June. The planned opening is 3QFY2026. “It will be a resort-themed chalet that can attract students from nearby Universities and employees working at Changi Airport. It can benefit from activity around the construction of Terminal 5,” says Chew.
In the pipeline are healthcare worker accommodation contracts pending an award this year. With more hospitals being built in Singapore, it will ensure that the demand for healthcare worker accommodation remains healthy.
Other opportunities include the conversion of business park spaces into co-living units. Some of the new sites will be available at rents of around $3,000 per month. “Rents are currently stable with high occupancy rates,” says Chew.
Meanwhile, after the uncertainty for the past few years, Work+Store's storage business is set to resume its growth. In the past, storage was primarily used for the safekeeping of personal items. Demand has now expanded to businesses and air-conditioned storage spaces that can afford to pay higher rents. Work+Store facilities provide affordable space for small business operators.
LHN is looking to also monetise some of its assets. Of the three assets LHN is looking to dispose, it has sold 115 Geylang Road for $25.8 million in July. LHN aims to deploy its resources to larger 100-room or more sites for Coliwoo, which will be more efficient to manage. Another two sites are pending disposal.
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LHN exited 1HFY2025 with a net debt of $226 million. Net debt will drop to $92 million from Coliwoo’s $108 million IPO proceeds and the sale of 115 Geylang Road for $26 million. “We expect LHN to raise its dividend payout with the stronger balance sheet. We expect any listing of Coliwoo to be in November,” says Chew.
Assuming FY2025 adjusted net profit of $13 million, Coliwoo valuations range between 20x to 27x PE. “A major re-rating of Coliwoo is underway due to its leadership and growth in the co-living hospitality sector,” says Chew, as he increases valuations to 13x FY2025 PE from 7x.
Hospitality and property management peers are trading at 25x. The discount is warranted for LHN’s smaller scale of operations. “With the listing proceeds, LHN will de-gear and pursue new space optimisation opportunities. Storage facilities are an area of growth. We are not expecting any special dividends from unrealised disposal gains,” says Chew.
As at 10.20 am, shares in LHN are trading at $1.01, soaring 8.6% for the day or 102% ytd.
