Growth is likely to be supported by a higher number of conservation shophouse transactions, strong government support for tourism and culture as well as the potential for more new and conservation buildings identified for adaptive use.
Lum Chang Creations’ strong order book of $132 million as at the 1HFY2026 also provides “clear visibility” for revenue growth over the next 18 to 24 months. Furthermore, the company will be able to continue taking in more projects.
“Based on its current resources, we see ample head room for Lum Chang Creations to scale its orderbook further and anticipate better margin for newer projects secured going forward, since it can now afford to be more selective,” Yeo writes in his March 12 report. “We expect subsequent projects to have shorter duration, higher yields and better margins.”
The analyst also sees longer-term growth drivers such as expanding into Malaysia, which the company sees demand for. “LUCC sees demand for conservation and restoration work in Malaysia, particularly in Kuala Lumpur. Its expansion into Malaysia is progressing well and we can expect slight revenue recognition from 2026,” Yeo writes.
For FY2025 to FY2028, Yeo expects the company’s margins to remain consistent, leading to an earnings CAGR of 31% for FY2025 to FY2028. For the 1HFY2026 ended Dec 31, 2025, Lum Chang Creations’ gross profit margin rose by 12.4 percentage points y-o-y to 33.5%, leading to a 104% y-o-y surge in earnings of $11 million.
Yeo has an initial target price of $1.13, representing an upside of 37% to its last-closed price of 82.5 cents as at March 13. His target price is based on a blended FY2026 - FY2027 P/E multiple of 15 times, which is in line with Lum Chang Creations’ “higher end peers”.
“The stock’s PEG (price/earnings-to-growth ratio) of [less than] one is attractive valued - at a compelling 12 times FY2026 P/E against our FY2025 to FY2028 earnings growth CAGR of 31%,” says Yeo.
To him, key downside risks include any loss of skilled labour, slower orderbook wins, as well as a slowdown in the pace of construction projects. That said, these risks are likely to be minimal given the company’s strong staff welfare and solid orderbook.
As at 4.10pm, shares in Lum Chang Creations are trading 3 cents lower or 3.6% down at 79.5 cents.
