In the 1HFY2025 ended March 31, Coliwoo made up around 56% of profit before tax (PBT).
The key near-term catalyst, Tan and Li note, is the potential spin-off and initial public offering (IPO) of Coliwoo on the Mainboard of the Singapore Exchange, which LHN is preparing for.
“We expect LHN to use the proceeds to increase capital returns to shareholders and embark on more opportunistic investments. For FY2026, we expect Coliwoo’s revenue to grow by 20% y-o-y as Coliwoo Bugis and the recently awarded Coliwoo Resort Chalet would be completed,” write the analysts in a July 9 note.
LHN aims to secure 600 more keys through two new projects in FY2025.
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Tan and Li write: “Along with the completion of 50 Armenian Street, we expect Coliwoo’s revenue to grow by 29% y-o-y in FY2027, assuming 720 new keys in total.”
In the 1HFY2025, the group saw its first revenue contribution of $12 million from the sale of six strata-titled units at LHN Food Chain, a recently developed industrial property.
The analysts expect the sale of the remaining 43 units to support topline growth for FY2025 to FY2027.
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Besides this, LHN also has the Geylang property redevelopment in its pipeline.
Tan and Li note that the group’s industrial assets are historically more profitable than its other business segments, forming around 60% of the PBT margin. “Backed by an average rental step-up of 3% to 8%, we believe the industrial assets will be a key growth focus for LHN post-Coliwoo spin-off.”
LHN is currently trading at 6.1 times FY2026 price-to-earnings ratio (P/E), and the analysts’ target price is based on an FY2026 P/E of 10 times.
To CGSI, re-rating catalysts include the successful listing of Coliwoo, the acquisition of more industrial assets and potential special dividends.
On the other hand, key downside risks include declines in occupancy and rental rates and limited suitable assets for acquisition.
As at 2.01 pm, shares in LHN are trading 3.5 cents higher, or 4.61% up, at 79.5 cents.
