Lum Chang Creations (LCC) is a spin-off from its parent company Lum Chang Holdings. It comprises Lum Chang Interior, Lum Chang Decor and Lum Chang Brandsbridge.
LCC aims to raise gross proceeds of $8.75 million. One million shares will be available in the public tranche and another 34 million new shares will be offered via private placement.
In addition, there will be another 14 million in vendor shares. Including the vendor shares, the company seeks to raise a total of $12.25 million in proceeds.
With a total share base of 315 million, the company’s market capitalisation based on the IPO price will be $78.75 million.
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Based on its post-invitation FY2024 ended June 30 earnings per share of 1.5 cents, this IPO is priced at 16.7 times historical earnings.
“At the offer price of 25 cents and market cap of $78.8 million, valuations of 6.8 times forward and 5.9 times prospective price-per-earnings (P/E) are undemanding relative to its two-year net profit CAGR of 68%,” say Lim & Tan’s analysts.
“These valuations are also cheap versus industry peer group average of 11 times,” they add.
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They also point out that LCC’s estimated 4.8% FY2025 and 5.6% FY2026 dividend yields are “very attractive” versus the peer average of only 2.9%.
Priding itself on being “one of the leading urban revitalisation specialists in Singapore”, Lum Chang Interior, a key subsidiary under Lum Chang Creations, provides niche conservation and restoration works, interior fit-out works, as well as additions and alterations (A&A) works.
According to Lim & Tan, the urban revitalisation specialist (URS) industry in Singapore is looking like a prime breeding ground for growth.
The government’s commitment towards enhancing and protecting local heritage, as well as a robust outlook for private sector projects in Singapore’s construction industry provides ample opportunity for the industry to flourish.
This is underpinned by large-scale developments, ongoing refurbishment works and commercial urban rejuvenation projects, add analysts.
LCC’s 1HFY2025 net profit to equity holders increased 62% y-o-y to $5.3 million on the back of a 16% in revenue.
“We expect the positive momentum to continue in view of rising demand for conservation and restoration, interior fit-out and A&A works in the URS industry,” they add.
While LCC has no fixed dividend policy, the company intends to recommend at least a 30% dividend payout ratio for FY2025 and FY2026.
“We believe there is further value to be uncovered/discovered based on its decent offer valuations, dividend yield and outlook,” they add.
